My Buy Watchlist for April

After my last buy of Magna I haven’t made any new purchases. However, I am always looking for new companies to add to my portfolio. There are currently two candidates on my April watchlist: Williams-Sonoma (WSM) and Accenture (ACN).

Williams-Sonoma (WSM) is a consumer retail company that sells kitchenwares and home furnishings through brands that include Williams-Sonoma, Pottery Barn and West Elm.

WSM is a dividend contender with 11 straight years of raising dividends. It’s current yield is a decent 3.15% with a current trailing payout ratio of 46%

Apart from it’s attractive dividend WSM is also attractively valued – the current P/E ratio is just 14.46 versus a 5 year historic average of 19.26. In fact WSM’s current P/E ratio is close to it’s 5 year low of 13.85. 

The conviction that WSM is undervalued is shared by more dividend growth investors given recent articles on Daily Trade Alert and Seeking Alpha. The chart below – with WSM’s price development over the last 12 months – indicates that a price below 50 is an attractive entry point.

Second on my list is Accenture plc. (ACN), a company providing consulting, technology, and outsourcing services worldwide. Accenture – like Williams-Sonoma – is a dividend contender, boasting 12 straight years of dividend increases.

The current yield is 1.93% with a current trailing 12 month payout of 36%. Although a yield below 2% is not something to be terribly enthusiastic about, the 5 year dividend growth rate (12.38%) certainly is.

Accenture’s current P/E is 18.55, close to it’s historic 5 year average of 17.79. As the picture below shows the company is certainly not cheap as compared to the last 12 months. However, given the dividend history, low payout ratio and high dividend growth I am looking to initiate a position.

Apart from these stocks there is also a book I’d like to buy –The Tao of Charlie Munger’. The book promises words of wisdom from Charlie Munger—Warren Buffett’s longtime business partner and the visionary Vice Chairman of Berkshire Hathaway.

What do you think about these two companies? What is your watchlist for the month? Leave a comment/reply to share your thoughts!

New Buy: Magna International Inc. (MGA)





As February was drawing to a close I decided to double my position in an ‘undervalued dividend powerhouse‘: I bought an additional 25 shares of Magna International Inc. (MGA) for a total of $1,080. In this post I break down my reasons for adding to the existing MGA position in my portfolio and what this means for my forward dividend income. 

Magna International Inc. develops, manufactures, engineers, supplies, and sells automotive products. It operates through North America, Europe, Asia, and Rest of World segments. The company offers body and chassis systems, and related engineering services; seating systems; and powertrain systems.

It also provides vision systems comprising interior and exterior mirrors, and closure systems. In addition, the company provides electronic systems, exterior systems, and roof systems. Further, it offers vehicle engineering and contract vehicle assembly services; fuel systems; engineering support services; and tooling and other products.

The company was founded in 1957 and is headquartered in Aurora, Canada with GM, Ford and Chrysler as main clients. In a recent investor presentation Magna displays it’s strength – being the global number one in many Product Areas.

Magna International Inc Market

My original purchase of 25 Magna shares dates back to May of 2016 when the stock was at $40.57.  Since then the share price did not move significantly – yet I still liked the company enough to double my position to 50 shares.

One of the reasons I wanted to double down on Magna is that the company is a dividend challenger, with 7 years of dividend increases. The current yield is  2.55% – lower than the average 3.5% yield I strive for in building my portfolio.

However, the payout ratio is at just 21.32%, leaving ample room for growth. Case in point: the company recently raised it’s dividend from $0.25 to $0.275, a very solid 10% increase. Although Magna is a Canadian company, all dividends are paid out in US Dollars.

Magna’s Earnings per Share (EPS) show an impressive 5 year annualized growth of +19.70%. The Price/Earnings (PE) ratio is 8.37, below the 5 year average of 10.35.  

Both the current as well as the 5 year average PE are lower than the industry average, indicating that Magna is currently undervalued as compared to other Auto Component companies

In their March 11 report S&P Capital IQ marks Magna as a 5 star strong buy with 12 month target price of $57. 

Given Magna’s dividend of $0.275  per share and it’s quarterly payout this recent buy means an addition of $27.50 to my forward dividend income.

What do you think about Magna? Leave a comment/reply to share your thoughts!

 

Portfolio Update: February 2017

In February my portfolio broke through the 70K ceiling – much of it owed to the continuing ‘Trump Rally’.  I also made two purchases, which were both additions to existing positions. In this post I cover these two buys and provide an update on my portfolio.

On February 14th I bought 34 shares of Qualcomm Inc. (QCOM) for a total of $1,882.92. Since I already owned 16 shares of Qualcomm this new purchase means a nice – and probably rounded out – position of 50 shares.

Close to the end of the month, on the 27th, I doubled my position in Magna International Inc. (MGA) for a total of $1080. In my next post I’ll set out my reasoning for buying more of this Canadian automotive supplier.

With these two new buys the total number of positions in the portfolio remains the same – 38  with a corresponding value of $71,689 (March 3).

At the end of February 2016 my portfolio consisted of 23 positions with a total value of $25,415.  The current portfolio value therefore represents a Year-on-Year (YoY) increase of 181%.

This YoY comparison is depicted in the graph below.