Dividend Growth Investor - Recent Investment
I made another investment today in an existing portfolio company. The company sells for 13 times forward earnings and yields 1.90%. It has managed to grow dividends at a rate of 15.70% over the past 5 years and 11.70% over the past decade. The last raise was in March 2023, when the company hiked quarterly dividends by 15%.
I went through the list of companies in the dividend growth investor portfolio as of November 30th, starting with the lowest weighting position. I reviewed each company for valuation and fundamentals, in order to determine if I want to add to it. I invested in another company yesterday following the same exercise.
I initiated a position in the stock at lower prices a few months ago. Unfortunately, the price has been going up since then, so I had to average up. I am going to average at a higher price again. While the price is going higher, which is something I generally dislike, I still believe it is attractively valued today.
In addition, as I had discussed previously, I try to allocate at least $500 - $1000 on cost for each company I initiate a position in. I like to build positions slowly, and over time. I take into considerations valuations, quality, fundamentals, as well as opportunity costs. I am a fan of diversification and spreading risk between many companies, and between time. I also like to test my assumptions as I build a position, and look for disconfirming evidence that would prevent me from risking more than I should be.
I have found that different companies and industries are available for sale at different points. It makes sense to acquire companies when they are available at a good price in relation to value. It is also important to realize that when investing, we are also dealing with imperfect information - the future is never going to be 100% predictable. And we are never going to be right. Hence we try to design systems and methods to protect us from the inevitable times when the assessment is incorrect. Hence the need to buy slowly over time, diversify and to buy other companies as well. This is why I try to allocate the $1,000 I invest monthly into several companies, rather than just one company at once. I like the diversification aspect, and the ability to build positions in multiple good companies.