Portfolio Update: New Addition (JNJ and BABA and GILD; February 18, 2015)

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Another busy morning of investing for me! I made three transactions today, and I guess you could say that Round 1 of funding is complete… for now.

It’s amazing how easy it is to spend money, isn’t it? Kind of like eating fresh fruit off a tree… It’s gone in an instant, but if you want to grow more food, be prepared to wait a long time for the seeds to sprout…

Although I still have got a good amount of ammo left, I’m going to set aside a large chunk of it until the markets can correct a bit so that I can pick up some quality dividend growth stocks at a more affordable entry point.

First Move

For today, I first decided to finish filling my position in Johnson and Johnson (JNJ). Previously, I initiated a position by acquiring my first 50 shares at $99.97/share. This morning, I added an additional 100 shares to the portfolio at $99.52/share. Although I got in at a slightly better price, I wasn’t able to really dollar cost average down much further… And I’m perfectly ok with that. I now own 150 shares total with a cost basis under $100/share. Since I’m planning on making JNJ a Core Holding stock for the long haul, I’m content with my entry point. If there are any future pullbacks, I would be open to the idea of adding even more shares, but if not, I’m happy with my current allocation. My first dividend anchor has been set! 🙂

In general, the markets aren’t cheap right now since the major indexes are all sitting at all-time highs. Still, if you poke around enough, you might be able to find selected discounts.

Second Move

For my next move, I decided to add some more shares of Alibaba (BABA). I’m sure I’ll get a lot of flak for this move, but BABA is so beat up right now, and trading at a huge discount relative to its peak price of $120/share set in November of last year; I couldn’t resist the temptation to add more shares and reduce my cost basis.

Looking back, I made the mistake of getting too caught up in the Alibaba hype last year, and was adding regularly at over $100/share. Similar to the Facebook (FB) IPO, once the hype dissipated and enough retail investors were lured in, the stock went crashing down. Now that sentiment has changed and many investors have been burned, nobody wants to touch the stock! But I look at it this way — If I was convinced of BABA’s growth story last year, what has changed (outside of the stock price) to cause me to think any differently now? I still see huge future growth potential and a cash cow machine in this company… So, I added to my position today and acquired another 100 shares at $87/share. My total BABA position is now 288 shares. By making this move, I reduced by cost basis from $105/share to $99.34/share. All in at less than $100/share, I’ll take it!

For the most part, my primary objective is building a dividend growth portfolio comprised of large cap blue chips. But occasionally, I will make exceptions to add some hyper-growth stocks as well. Quite frankly, I’ve just never been the type of investor to follow any hard and fast rules… The markets are just too dynamic, so I need to remain fluid… As I’ve mentioned before in the past, in addition to being an income collector, I’m always going to be on the lookout to find the next Apple (AAPL), or Google (GOOG), or Tesla (TSLA) stock before it takes off and soars. Yes, that can be a fool’s game (and perhaps no different than playing the lottery), which is why I only intend to allocate a small portion of my total portfolio to these type of endeavors.

Third Move

The final move for today has got me pretty excited. This next purchase was in Gilead Sciences (GILD), a company that I’ve been tracking for the last few months and one that was on my most recent Stock Watchlist.

I initiated a position and purchased 57 shares of GILD for $103.14/share. This is a company that has been increasing revenue and earnings at a good rate, but has fallen out of favor on the street due to concerns about the future pipeline and price erosion within its Hepatitis C business. Gilead isn’t the most diversified of the biotechs, focusing primarily in HCV and HIV solutions. But for what they specialize in, they do very well and are world class. GILD simply looks attractive at current valuations, and I wanted to take a flyer here. At this time, I’m not sure that I would want to make GILD a Core Holding in my portfolio, but I’m glad to own a stake in the company. GILD also plans on introducing a dividend payout later this year, which coincides well with my main objective — income producing assets. For now, I’m sufficiently allocated, although I wouldn’t mind the opportunity to dollar cost average down to under $100/share if I have that chance someday.

Closing Thoughts

I went on sort of a shopping spree today. Overall, I’m satisfied with the moves, and probably most pleased that I was able to increase my position in JNJ from 50 shares to 150 shares. Again, I want to make JNJ a Core Holding and anchor of my dividend growth portfolio.

Being able to reduce my cost basis on BABA was a victory as well, and hopefully the company will be able to turn things around later this year. I’m a long-term holder, regardless, so I can afford to be very patient here. I do realize that there is a huge lock-up right now, and over 429 million shares will be freed up on March 18, which can put further downward pressure on the short-term stock price. I don’t want to speculate too much, though, and am happy to pick up more shares at the current price of $87/share.

With GILD, I got the chance to pick up a large cap biotech at a reasonable price. I’m hopeful that growth will continue and this will look like a wise decision in a few years.

Now that Round 1 is over, I’m going to take a step back and regroup. Before making any further moves, I would like to see the market pullback a bit so that I can gain a better entry point into the more classic dividend growth stocks (KO, PEP, PG, T, etc.). Currently, my average dividend yield is very low, so I will need to mix in some telecoms or utilities to balance things out. It’s always a challenge trying to find the right compromise between growth and high dividend yield. So far, my focus has primarily been on growth, but I wouldn’t mind adding some solid 5% yielders into the mix.

Anyway, I’m off to grab some breakfast now… Happy Hunting everyone! 🙂

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Portfolio Update: New Addition (GILD; February 27, 2015)SpencerFerdiSFI Fightermark Recent comment authors
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William
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It is super easy to spend money – on investments at least. That’s the way it is for me. I’ve ‘spent’ $20k+ in a day without cringing at all. But when it comes to something as wasteful as a trip to the mall, I cringe having to pay sales tax on a $60 pair of jeans haha.

mark
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mark

Fi Fighter,

Watch this and let me know what you think.

https://www.youtube.com/watch?v=-0PrTkE5jG4

mark

FerdiS
Guest

Nice purchases, FI Fighter, particularly JNJ and GILD. I’m not super excited about BABA, but I understand your motivation. A little spice adds variety!

mark
Guest
mark

buy Walmart (WMT)! Don’t miss this boat its leaving the port soon.

Spencer
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Spencer

I suggest looking beyond Walmart. While Walmart has been in my portfolio since 2011, I’m not as excited about their growth prospects relative to others (they haven’t had 3 year average revenue growth >5% since 2010). If you have the patience, wait for reasonable entry points for V, NKE, or HRL (Mr. Stable). If you want companies priced as similar valuations today, I’d go with BRK or WFC.

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[…] purchase doesn’t help me reduce my cost basis, as I initiated a position last time at just about the exact same price of $103.14/share… In hindsight, I should have just […]

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