Recent Buys: TGT and UNH

I haven’t been very active in the buying department over the last couple of months because of work but I’m finally starting to turn that around.  I have made two purchases recently in my Dividend Retirement account – taking advantage of some overreactions in the market.

The two stocks I decided to buy were Target (TGT) and UnitedHealth Group (UNH).  In this post I’ll briefly go through my rationale for initiating these positions and I’ll provide the transaction details.

 

Target (TGT)

  • Sector: Consumer Discretionary
  • Industry: General Merchandise Stores
  • Purchase date: 10/16/2015
  • Portfolio: Dividend Retirement Portfolio
  • Shares purchased: 33
  • Cost per share: $75.37
  • Commissions: $14.95
  • Cost basis: $2502.16
  • Yield on cost: 2.95%
  • Forward income: $73.92

Company Overview:

Target Corp. engages in owning and operating of general merchandise stores. It also operates SuperTarget stores with a line of food and general merchandise items and offers an assortment of general merchandise, including many items found in the company’s stores and a complementary assortment, such as extended sizes and colors, sold only online.  Source – TradeKing.

 

My rationale for buying Target is quite simple.  It’s a great business, I shop there all of the time, the stores are always packed and they pay a reliable dividend.  For these reasons alone I initiated a small position in my Dividend Empire portfolio earlier this year.  I left TGT on my watchlist hoping for an opportunity to buy a larger stake in my Retirement portfolio.  That opportunity came last week.

Walmart (WMT) recently lowered their guidance which caused their stock to plummet.  Several other companies, including Target, followed WMT down presumably on the assumption that Walmart’s woes meant trouble across the industry.

While this might be true, it is now priced into TGT so in my opinion there is a much greater potential for upside than there is for downside.  If Target dishes out some bad news the stock should be flat since it is expected.  If Target comes out with good news the stock will jump.

This is all short-term talk and it doesn’t really mean much for me in the long-term.  I just wanted to provide a rationale for entering this position when I did.  No matter what happens over the next few months one thing is for sure – I’ll be enjoying a large and growing dividend from a company I love.

TGT Dividend Growth

 

UnitedHealth Group (UNH)

  • Sector: Health Care
  • Industry: Managed Health Care
  • Purchase date: 10/22/2015
  • Portfolio: Dividend Retirement Portfolio
  • Shares purchased: 20
  • Cost per share: $111.75
  • Commissions: $14.95
  • Cost basis: $2249.90
  • Yield on cost: 1.78%
  • Forward income: $40

Company Overview:

UnitedHealth Group, a U.S. leader in health care management, provides a broad range of health care products and services, including health maintenance organizations (HMOs), point of service (POS) plans, preferred provider organizations (PPOs), and managed fee for service programs.  Source – S&P Capital IQ.

UNH has been on my watch list for a very long time.  I missed the last couple of dips in this stock so I started watching it like a hawk.  When I saw it drop sharply again today I jumped all over it.

UnitedHealth Group has shown tremendous revenue and EPS growth over the past five years.  This growth is expected to continue with the recent acquisition of Catamaran, increases in Medicare and Medicaid memberships and their recent expansion efforts.

UNH Earnings and Revenue Growth

*Projected value

 

The dividend growth for UNH has also been phenomenal over the past five years.  Although the yield is currently a bit low, the dividend increases have been accelerating lately to match the rapidly rising stock price.

UNH Dividend Growth

*Expected 2015 dividend total

 

These two purchases have added a total of $133.92 to my forward annual dividend total.  My Dividend Retirement portfolio has been updated to reflect my positions in TGT and UNH.

What are you thoughts on these buys?  Please let me know in the comments section below!

Disclosure: long TGT, UNH and WMT

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4 Responses

  1. DE,
    Great purchases! Over a 100 dollars in forward income is a nice leap. Keep up the great work and thanks for sharing!
    LOMD

    • Dividend Empire Dividend Empire says:

      Thanks buddy! It feels good to be buying again. There are lots of interesting opportunities out there right now.

      Take care,

      Ken

  2. Alan says:

    Why did you pay a commission for TGT instead of buying it at Loyal3? And why pay such a high commission? I pay much less at Ameritrade.

    • Dividend Empire Dividend Empire says:

      Hi Alan – great questions. I made these purchases in my 401k account that is offered through my employer. Unfortunately I don’t have a choice of brokers for this account. However, I feel blessed that my 401k allows me to purchase stocks instead of just mutual funds. I also tend to make larger purchases in this account so the commissions become negligible (~0.5% of my purchase price).

      I own a small piece of TGT in my other dividend portfolio (Dividend Empire Portfolio) which I purchased through Loyal3.

      Thanks for stopping by!

      Ken

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