Portfolio Update: New Addition (CVX; December 15, 2014)

by FI Fighter on December 15, 2014

in Stock Portfolio Updates

It’s been a long while, but today’s transaction signals my shift in strategy back to dividend growth stocks. It’s kind of hard for me to believe, but prior to today’s purchase, I hadn’t picked up ANY dividend stocks since late 2012!

Two years later, I’m back where I started from. I used today as an opportunity to pick up 30 shares of Chevron Corporation (CVX) at $101.93/share.

Attractive Yield

With oil prices falling like rocks, the energy sector is down and there are a lot of good deals to be had. True, prices might still continue plummeting, but when the overall markets are sitting near all-time highs and you can snatch up CVX at over 4.0% dividend yield, it’s hard to resist. Actually, I wouldn’t mind if the share price continues to drop some more and the dividend approaches 5.0% yield… Wouldn’t that be something!

With that said, I’m noticing a number of stocks that look enticing right now, but unfortunately capital is light at the moment, so I’ll have to wait until the next round to act again. Kind of a bummer, but what can you do?

Thoughts

As I mentioned in the last few posts, my early FI gameplan is starting to shift to being more defensive (I have enough properties and I’m over-leveraged). I have quite a number of future appreciation plays in the portfolio (Bay Area rentals and Alibaba (BABA) stock), so what I really need to do is stash more cash and pick up some solid blue-chip dividend stocks. The supplemental income from the dividend stocks will surely help, but more importantly, I will have access to liquid capital that should be more immune to market noise than your typical growth stocks.

So, just like I was doing in 2012, I’m going to focus on the core with most of my new investments. Sure, I’ll probably still pick up some shares of Tesla Motors (TSLA) and BABA along the way (so hard to resist… like today!), but they won’t be my main focus.

I’ll swap out McDonald’s (MCD) for some telecoms like AT&T (T) and Verizon Communications (VZ). The rest of the core, I would like to keep the same and build around: CVX, Johnson and Johnson (JNJ), Procter and Gamble (PG), and The Coca-Cola Company (KO). PepsiCo (PEP) is another one I like as well.

But we’ll see how things go… Man, I almost forgot how EASY it is to buy stocks! Speaking of which, I’m still working on trying to secure a loan for Rental Property SH #3… And that’s not easy at all! 😉

Until next time!

{ 21 comments… read them below or add one }

1 RobNo Gravatar December 15, 2014 at 7:44 pm

Great pickup. I grabbed 29 shares of CVX today as well (leftover cash in the IRA) and plan on holding this for the next 30+ years. Great company and great time to pick it up…should pay off heavily down the road.

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2 FI FighterNo Gravatar December 16, 2014 at 7:01 pm

Rob,

Perfect coincidence! I had been sitting on the sidelines but couldn’t resist the latest dip.

All the best!

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3 MikeNo Gravatar December 15, 2014 at 10:47 pm

Sweet! Had my eye on CVX as well. A 5% yield would be crazy in the current market with rates so low.

Thanks for the update!

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4 FI FighterNo Gravatar December 16, 2014 at 7:02 pm

Mike,

We might just get there! But even at 4.0% or so, I’ll gladly take that for a blue chip such as CVX.

Take care!

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5 Retire Before DadNo Gravatar December 16, 2014 at 4:00 am

FIF,
I’m a long time CVX shareholder. I haven’t bought any in a few years, but at these prices, I think I may add some to my DRIP. At this yield, this is a purchase that will pay off for many years.
-RBD

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6 FI FighterNo Gravatar December 16, 2014 at 7:03 pm

RBD,

Yup, I agree, and these type of opportunities don’t always present themselves everyday. Unless any other crazy real estate deals come up, I would like to just buy and hold this one for the long haul.

Cheers!

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7 BryanNo Gravatar December 16, 2014 at 6:00 am

I’m not a single stock picker, but I did buy the energy ETF based on current years poor performance of the sector.

One thing to watch for on yield is the very possible short-term drop in yield due to a lower price on oil. Afterall, what do you think pays those fat dividends? I believe in the big picture this will be a very short-term thing if at all and the sector is going to continue to do well for decades. Finally something to buy on the cheap this year!!!!

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8 FI FighterNo Gravatar December 16, 2014 at 7:05 pm

Bryan,

Do you mean increase in yield with oil (hence the stock price) moving down?

CVX is a dividend aristocrat and has been paying out and increasing dividends for 25+ years. It has seen its fair share of storms, so I’m not worried about their ability to keep on truckin.

Best wishes!

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9 BryanNo Gravatar December 17, 2014 at 5:34 am

No, I mean a lower dividend. I’m an efficient market guy, so that theory tells us the current stock price is already adjusted for the lower cash flow streams based on the current market price of oil and as such, is accounting for an anticipated lower dividend in the short-term.

However, i’m only an efficient market guy in the broad sense and believe there is some psychological/momentum inefficiencies like we are seeing currently with the energy sector or financial sector in ’08 and ’09. Great time to buy.

For a hell of a lot more risk, you could also begin placing bets on Russia’s long-term economy. That country is rich with natural resources which is usually a great long-term bet. The only thing preventing me from pulling the trigger on that is the geo-political forces at hand.

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10 markNo Gravatar December 16, 2014 at 8:46 am

Too bad if the price of Oil remains at its current price or under $85 a barrel CVX will have no other choice but to cut their dividend and the stock will fall like a rock. If you want a speculative oil play why not pick up BP? their dividend is far greater…for now ;).

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11 markNo Gravatar January 19, 2015 at 12:21 pm

BP pop 7% on friday. Sold lock stock and barrel baby.

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12 markNo Gravatar January 21, 2015 at 12:54 pm

BP making daddy rich.

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13 Rat Race QuitterNo Gravatar December 16, 2014 at 10:21 am

When it comes to solid blue chips, nothin beats the Dividend Aristocrats!

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14 DofuNo Gravatar December 16, 2014 at 2:53 pm

CVX dividend payout ratio is 38% while BP’s is closer to 91%. This means BP is far more likely than CVX to cut their dividend after Capex is reduced. CVX and XOM in my opinion won’t be cutting their dividends anytime soon. However don’t expect them to raise it either while oil prices remain so low.

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15 HMBNo Gravatar December 16, 2014 at 6:53 pm

Good pick. I have CVX, as well as a few others in this sector and yeah they’ve gone down some in stock price. However, the dividend has stayed the same and I’ve been paid, so I’m happy as I’m sure you will be.

– HMB

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16 Asset GrinderNo Gravatar December 16, 2014 at 7:14 pm

Cvx can ride out low oil unlike smaller companies. I think u will be rewarded if u hold onto it in the long run.! Good day and grind on!

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17 Mr. FrugalwoodsNo Gravatar December 17, 2014 at 4:27 am

Any particular reasoning for CVX vs other big oil plays?

I’m a big fan of buying when things look the darkest, and it seems like we’re getting there with the oil market.

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18 No Nonsense LandlordNo Gravatar December 17, 2014 at 5:29 am

I recently sold XOM, as I noticed over the past 4 years I owned it, it greatly lagged the S&P. And, the S&P has almost the same dividend, 1.75% vs. ~3%.

Go for growth in the early years, I am not sure fad stacks like BABA and TSLA are going to be great long term. Highly risky. And is you swap out, high in taxes.

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19 MarkNo Gravatar December 17, 2014 at 5:44 am

no non sense landlord,

I’m not an expert in electric cars by any means so I cannot comment on Tsla. baba on the other hand is a play on the Chinese economy and its consumers. This will be a positive trend for the remainder of our lives. As far as taxes long term federal capital gains are only 15%. Show me another way I can make money and pay less than 15% taxes -legal way of course ;).

@dofu, oil prices are especially low but the question is not if they will rebound it’s when. Looking at the charts the prices may stagnate for a prolonged period and if that’s the case the dividend cut will be inevitable for the majors just as it is for the minors. Pick up some shares of oil play but don’t go all in thinking you found the winning ticket. A neutral stance is warranted not an overweight one. I’ll watch the charts and keep you posted.

Until then stay strong.

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20 FerdiSNo Gravatar December 17, 2014 at 3:02 pm

I picked up 25 shares of CVX yesterday, doubling my shares. Great to secure a yield of over 4%! Good that you’re back into dividend paying stocks — good luck!

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21 A Frugal Family's JourneyNo Gravatar December 18, 2014 at 9:20 pm

Great buy FI Fighter. We also saw it near $100 but missed the opportunity. Glad to see you got in before the recent bounce. CVX is a great long term stock! AFFJ

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