Welcome readers and thanks for visiting. I hope that all has been going good for you. The market has now officially closed over the 20,000 mark. What an amazing time to be in the stock market. Amazing as it is that the market is at a new high, it can still be troublesome to find some good buying opportunities out there. Even though it has been a couple of months since I have made a purchase, I finally decided to pull the trigger and make a buy.
Lately, I have had my eye on the retail sector and in particular Target. After some deliberation, I finally moved some cash and acquired some more shares of Target. I added 8 more shares of Target stock with an average price of $63.76. My Portfolio page has been updated to address the new addition. With me adding these shares at such a cheap price it enabled me to lower my cost basis from $73.97 to $69.75. It also increases my projected annual dividend income by $17.17 for a total of $372.52 annually. While this is not a lot, it will truly add up over years of compounding.
Currently, Targets dividend yields 3.73%, which to me is a great yield considering our current environment. The payout ratio on that dividend is only 41% based on current earnings. So I feel like there is still plenty of room for Target to increase their dividend even if they find themselves in a situation of decreased earnings. With a share price of $65 that means the price is currently 22.75% down from its 52 week high.
A lot of people are not big fans of traditional brick and mortar retail locations but I still like them. I know that the same store sales were down for Target and a lot of their sales are generated from their groceries which are bought in store but I think that this is more of a cyclical thing and that it will turn back around in time. Despite this there are still plenty of things to feel positive about as well. Look at the fact that they were able to increase their online sales by 34%. To me that gives an amazing outlook to the future of the company. To be able to grow their online sales during a time of declining in store sales will allow them to continue to be profitable while waiting for the in store sales to turn around.
There are a lot of people betting against brick and mortar retail stores but I still think there is money to be made with them. I know that the future looks questionable right now but until I see evidence beyond a reasonable doubt I will continue to acquire more. Only time will really tell if I am making a good decision or not. Hopefully I will be able to lower my cost basis more while I wait for the turnaround to happen.
Also on a side note, I have been adding some shares of Coca Cola (KO) as well. They are a great company that is a great defensive stock. I have been picking and choosing my buys here because I own the stock in my loyal3 account and I want to continue to be able to lower my cost basis. Since my Update in December 2016 I have added 2.5 shares. As long as I can keep lowering my cost basis here I intend to keep adding to my position.
In conclusion, I think I am strengthening my position in some great companies. I think they are well run companies with plenty of dividend growth left in them. I look forward to the future and seeing how good these stocks perform. I look forward to hearing any comments and questions that you may have about my recent buys. I would be very interested to hear about any stocks that you have recently purchased. Until then… happy investing!!!