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Portfolio Update: New Addition (NSC; September 20, 2012)

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The railroad industry was hit hard today, and all the major players were down: UNP, CSX and NSC. I used today’s bad news to initiate a position in Norfolk Southern (NSC). This is a stock that I have had on my watchlist for quite a few months, always waiting for a pullback to occur. I noticed that the stock price was down substantially after-hours yesterday, so I went to sleep last night anticipating that I would probably make a move today.

When I logged in this morning, the stock was down over 7.0% from yesterday’s closing price. I purchased 40 shares at $67.41/share. Little did I know that the stock would continue to freefall over the course of the day. NSC finally settled, down $6.58, or 9.05% for the day.

I’ve purchased many stocks in the past upon learning of forecasts being slashed, but I never expected this much of a drop in a single day. The last time I bought on the fear was over the Summer when PG was downgraded. It didn’t take long for that stock to rebound, so here’s hoping that this is just another case of Mr. Market over-reacting. In general, I don’t worry too much about trying to time the market, and I’m still happy to get in around the 3.0% yield point. I’ll probably add even more shares if it dips further.

Here is a breakdown of some numbers for those who are interested in the technicals, assuming an investment period of 7 years, starting from January 2005:

 

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{ 7 comments… add one }
  • Dividend MantraNo Gravatar September 20, 2012, 6:46 pm

    FI Fighter,

    Great purchase. You definitely weren’t alone on this one, as many of us dividend growth investors went long on this one after the bloodbath.

    Solid company that is trading at a very attractive long-term price point no matter how you slice it. Getting in at a 3% yield is especially nice, as that’s very high, historically, for this railroad.

    Now you just sit back and watch your dividends compound year after year.

    Best regards.

    • FI FighterNo Gravatar September 20, 2012, 7:19 pm

      DM,

      Yeah, the yield for NSC is pretty high when comparing to UNP and CSX. Honestly, I like them all, and wouldn’t mind eventually owning them all. Sort of like playing monopoly 😉

      There was definitely blood in the streets, and it looks like a lot of us dividend investors cashed in on the fear. I like NSC for long term growth, and as you said, will kick back and watch the dividends grow!

      Happy hunting!

  • Dividend Growth MachineNo Gravatar September 20, 2012, 7:07 pm

    Nice purchase! I’m beginning to wonder just how many of us young dividend investors bought NSC today. 🙂

    • FI FighterNo Gravatar September 20, 2012, 7:30 pm

      DGM,

      Yeah, I’m not too surprised a lot of us dividend investors jumped in at this opportunity. It’s not everyday your favorite stocks get discounted close to 10% 😉

      I hibernated for most of the Summer, so I am greatly looking forward to more opportunities to load up on quality companies.

      Cheers!

  • Compounding IncomeNo Gravatar September 21, 2012, 9:15 pm

    Haha I jumped on NSC too. It sucks having a pile of cash sitting around doing nothing which made this an easy decision for me.

    I liked reading through the charts you provided. NSC was a great investment for those who bought shares in 2005. It would be nice if history repeats itself, but I’ll settle for the dividends if nothing else.

    • FI FighterNo Gravatar September 23, 2012, 8:37 am

      CI,

      Great buy! I’m still holding most of my cash reserves, awaiting a significant pullback to make a bigger splash. Still, at these levels, NSC was hard to resist.

      Thanks. I hope the charts are useful. I arbitrarily picked the start date, just so I could see for myself what the dividend growth was in the last few years. It’s nice to see it is doing well and growing rapidly.

      Cheers!

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