Today was a busy day. As I mentioned in yesterday’s watchlist, I was eyeing Abbott Laboratories (ABT). Although the original plan was to not make any more purchases this month, I did go ahead and transfer more funds to my brokerage account, just in case. I thought I would put in a feeler for ABT today, using a limit order. I knew I would be busy in meetings all day today, so I placed a limit order last night, in the event ABT dropped some more. What little did I know! The market was in freefall, sending Wall Street down to its biggest one day drop in four months.
With the limit order fulfilled, I initiated a position with ABT and purchased 21 shares for $66.23/share. I wouldn’t say I got in at a bargain basement price, but this is a company that I have been wanting to add since the beginning of the year. Since I am investing for the long haul, I am not too concerned with the initial entry price. The 7% pullback from earlier this week certainly helps from a valuation standpoint.
I know Abbott plans on splitting into two companies come January 2013, but I feel comfortable owning both, especially after Abbott confirmed its future dividend plan for both companies. AbbVie will pay an annual dividend rate of $1.60/share. The new Abbott will pay $0.56/share. The combined annual dividend of both companies is $2.16. Since the current annual dividend is $2.04, this represents an increase of 5.9%. Not too bad. Factoring the new yield, this investment will add $45.36/year in passive income.
Here is how ABT’s dividend has fared in the past 10 years:
After the ABT order was fulfilled, I had a few minutes during lunch to sneak out of the meeting so that I could browse the web. The next purchase I made was one that was almost completely based on impulse. In retrospect, I don’t even think I spent more than five minutes before making up my mind to buy. I knew I had to get back to the meeting, so I just went with my instincts.
This next company I added was one that came swooping in from underneath the radar. I must confess, I haven’t spent much time conducting any kind of research on it. This company has never even appeared on my Watchlist, or Wishlist.
All I know is that Air Products and Chemical (APD) is a company that is a dividend aristocrat, having increased its dividend for over 30 years straight. They sell atmospheric gases (oxygen, nitrogen, etc.) and other specialty gases for industrial use. They are the world’s largest supplier of hydrogen and helium (inert gas used in MRI machines, silicon wafer production, etc.). APD shares dropped over 6% today after they released FY 2013 guidance.
I used the drop as my signal to buy. I purchased 20 shares at $80.50/share. At the current dividend payout of $0.64, this will add $51.20/year to the passive income stream.
ABT and APD both payout on the same month, and the next distribution is in November (although I missed both ex-dividend dates). This is a nice bonus, since it helps spread out my dividend income (most of my holdings are in the December rotation).
Here are the technicals for APD over the past 10 years. The dividend has been growing quite nicely: