Portfolio Update: New Addition (LNCO; December 31, 2012)

I had a feeling today might be a “disappointing” day for buying. Over the weekend, members of Congress re-iterated their confidence that a deal to avert the Fiscal Cliff could be reached before the end of the year. As such, even though an official deal still hasn’t been made at this time, the markets have rebounded nicely today on the positive news.

Time to Move On

I was afraid something like this would happen, which is one of the reasons why I elected to make a small purchase with The Southern Company (SO) last week. I had some more cash on hand, which I was hoping to deploy today to score deals on some more bargains.

Unfortunately, with the markets rebounding, prices didn’t dip to as low as I would have hoped for. Nonetheless, I decided to use some cash today to make my final purchase of 2012. I added 61 shares of LinnCo (LNCO) at $36.00/share. LNCO was on my most recent watchlist, and I believe the current price is attractive. Last time around, in early November, I purchased 63 shares for $39.15/share.

Today’s action allows me to average down my cost basis on LNCO, and add $43.31/quarter ($173.24/year) in dividend income, using the current dividend payout of $0.71. This should give my February payout a big boost. LNCO is currently sporting a 7.86% yield. As I’m seeing just now, LNCO also no longer trades at a discount to Linn Energy (LINE), which closed today at $35.24.

Summary

The Fiscal Cliff looks like it may very well come and go without making any lasting impact on the market. Go figure. With all the news and media coverage this (non) event has generated, I must say, this would rank it up there as perhaps the biggest dud of the year (right up there with the Mayan Apocalypse). This goes to show the importance of sticking with a plan. By this time next year, will anyone even remember the Fiscal Cliff of 2012? Probably not, so let’s just ignore this short-term news and keep building up our portfolios.

Happy Hunting and Happy New Year’s everyone!

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Converting Net Worth into Cash FlowMartinFI FighterCompounding IncomeBrick By Brick Investing | Marvin Recent comment authors
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JC @ PassiveIncomePursuit
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That’s why I started to deploy cash last week at what I felt were good not great values. I wish I would have pulled the trigger to make another purchase today but there will be other opportunities. I was thinking it might turn into a non-event so I figured good prices on solid companies was worth purchasing and if the market completely sells off I still had some dry powder ready. I thought that the markets would stay pretty flat then sell off some toward the end of the session today, so much for that. Now we play the waiting game to see if Congress really does reach some kind of deal. I did read somewhere that one of the rumored agreements was to increase the LT capital gains and dividend tax rates to 20%, which would be nice that capital gains wouldn’t have such a huge tax advantage. Of course I’d prefer that it stayed at the 15% rate.

Dividend Growth Machine
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Nice purchase. I need to do some research on LNCO. It looks like a compelling investment opportunity, but I don’t know enough about it yet.

Brett @ wstreetstocks
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Great stock, it has strong fundamentals. Have you looked into NOV, they are my favorite energy play.

Brick By Brick Investing | Marvin
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Dud is right! Don’t feel too bad I was caught up in all the “hype” too. But now we’re picking up good companies at the start of what “should be” a nice bull run.

Compounding Income
Guest

Nice I bought some at more or less the same price last week. It looks like the market is going to rise today, good timing there. I’m done buying Linn for a while because I am trying to rely less on high yielders. I find that when it comes time to sell a high yielder it is difficult to replace the lost income!

Martin
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I agree about the hype called fiscal cliff. What’s funny is that politicians call it “the greatest tax cut in history” and everybody ends up paying higher taxes in 2013. However, we survived prior this mess and tax cuts, we will survive after that too. We need to invest more so our income can cover the taxes and still produce enough income.

Thanks for the LNCO tip, I checked it out and this company doesn’t meet my criteria, so I have to pass it on.

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[…] and wanted to attack $300/month. In the process, I made some stupid investment decisions, such as buying shares of Linn Energy (LNCO) because the dividend yield was pushing north of 5% at the […]

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