It didn’t take too much arm twisting to convince me to add to my stake in Procter & Gamble Co (NYSE:PG) this week, especially after my colleague Lenny took the first step, backed up his talk, and purchased 10.1 additional shares of the company earlier in the month. I promptly followed his lead, purchasing more PG shares.
On Tuesday, I purchased 20 shares of PG, adding $53.52 in annual dividend income to my portfolio. With this purchase, I now own 51.4982 shares of the consumer stock giant that will produce $137.91 in annual dividend income to my portfolio. This is my first purchase of the 2017 and the first time I have stepped off the sidelines since I initiated a position in Realty Income in November 2016. Why did I purchase 20 more shares of PG?
Let’s take a closer look:
- We all know this market has been hot lately and the S&P 500’s P/E Ratio is at a level I personally have never seen before. With few values out there, one of the industries I have found some value compared to the market is the Consumer Goods market. PG’s P/E ratio may not be low by any standards, it is below the current market place, which means that it passes Screener #1 of the Dividend Diplomats Stock Screener.
- I love the fact that PG is a Dividend Aristocrat. Lanny and I have been talking a lot about how there have been many companies with stagnant dividend growth rate. PG’s dividend growth rate of late isn’t going to set any records, but I like the fact that the company still continues to increase their dividend. I’m hoping for a larger increase in April and I cannot wait to see what they have in store for us.
- I was not happy with the size of my position and I wanted to increase my stake in this stock. We talk often how this is one of our five foundation dividends stocks for a portfolio. I’ve been trying to build less larger positions recently versus more small positions recently. While I’m not quite doubling my position in PG, I will not own over $4,300 in the company and PG will be the third largest individual stock holding in my portfolio. We call it a foundation stock, so I wanted to make it such in my portfolio. Two of the other contenders for this purchase were Kimberly Clark Corp (NYSE:KMB) and Unilever plc (ADR) (NYSE:UL). However, with this mindset, I opted to increase one position by adding to PG versus holding two smaller positions. I’ll hopefully initiate a position in both companies one day too when I can make one massive purchase.
- I was able to buy this stock right before the ex-dividend date to ensure that I am going to receive a dividend on this purchase. So I won’t even have to wait one month to get my first dividend check. This point played a major role in the timing of my purchase and I may have waited a little longer if it weren’t for the rapidly approaching ex-dividend date.
Overall, I hope this provides some insight into why I decided to purchase PG at this time. At the end of it all, I just want to continue building positions in amazing companies that continue to grow their dividend income on an annual basis. I’m going to try not to over-think investing in 2017 as I look to accomplish my goals and take the no-brainer investment decisions while they are right in front of me. To me, adding to PG this month was that kind of a decision.
