New Buy: Accenture plc (ACN)

Right after I put Accenture on my watchlist for April the price dropped by about 4%… ah, the power! I made good use of this drop by buying 15 shares of Accenture plc. (ACN) for a total of $1814.76. In this post I break down my reasons for adding ACN to my portfolio and what this means for my forward dividend income. 

Accenture is a professional services company serving clients in various industries and in geographic regions, including North America, Europe and Growth Markets. The Company provides management and technology consulting services. Its segments include Communications, Media and Technology; Financial Services; Health and Public Service; Products, and Resources.

One of the reasons I put ACN on my watchlist is that the company is a dividend contender, with 12 straight years of dividend increases. The current yield is  2.03% – lower than the average 3.5% yield I strive for in building my portfolio. However, the payout ratio is at 40%, leaving significant room for growth. The 5 year dividend growth is an impressive 12.38%.

Accenture’s Earnings per Share (EPS) show a solid 5 year annualized growth of +13.66%. The Price/Earnings (P/E) ratio is 19.9, a little above the 5 year average of 18.02 but well below the IT industry’s 5 year average of 24.31.  

In their March 25 report S&P Capital IQ marks Accenture as a 3 star hold with a 12 month target price of $129. 

Given Accenture’s dividend of $1.21  per share and it’s biannual payout this recent buy means an addition of $36.30 to my forward dividend income.

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

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!