Today I've made my first stock purchase of April - BAE Systems plc. I had a great wage this month, and I've also received an additional cash lump sum from the decision to sell half of my car to Miss FFBF, I've written about the car sale in more detail on the post - Life without car update.
With my monthly wage and lump sum from the car combined, I had £3,317.39 to buy shares with. As I'm new to DGI, I made the decision to spread the risk and buy shares in 3 x different companies. I'm aware that buying shares in 3 x companies will increase the amount I'm charged, but this amount is still less than 1.6% per purchase, which I'm comfortable with. My decision is also factoring in portfolio weight. My portfolio has 5 out of 10 companies that have more than 10% weight. I want to continue increasing the amount of dividend paying companies in my portfolio to balance out the total risk.
I bought 276 shares at a price of 393.47p per share, which came to £1103.37.
BAE Systems plc paid out a 4.6% dividend for 2013. It's averaged a 5.3% yield over the last 5 years. It's one of the most consistent dividend growth paying companies in the UK. It has increased it's dividends for the last 16 years apart from 2003 to 2004 where it held the same dividend payment.
The dividend grew 3.08% from 2012 to 2013. The dividend has grown at a rate of 6.79% over the last 5 years. The recent increase is a little lower than I usually go for, but the long term growth consistency and the high dividend payment more than makes up for it in my opinion.
They had 2.09 dividend cover for this year, and have averaged 2.26 cover for the last 5 years. As mentioned in my previous 'Stock Purchase' posts, I look for a dividend cover above 1.5, so BAE Systems plc comfortably meets this requirement for me.
The share price was less than 6% off the 52 week low. I believe this offers me an opportunity to own a part of the company at a relatively low rate. As a Dividend Growth Investor, my priority is the companies consistent dividend yield and dividend growth. If I'm able to purchase the shares at a lower than normal rate, it will allow me to buy more shares, which will in turn lead to more shares and dividends to benefit from. I'm really happy with BAE Systems plc meeting all of my thresholds markers. I'm really satisfied with my purchase!
I've now updated my portfolio to reflect this purchase.
I'm now watching the Tesco and GlaxoSmithKline share price to see if I can purchase them at a lower rate. Tesco's annual report will be coming out tomorrow, so I wanted to wait for that to come out before purchasing it, as it's likely to encounter a price drop.
GSK's ex-div date is due in the next 3 weeks, so I'll track the share price between now and then.
Both companies are very close to their 52 week low, so I'm likely to act on it soon. I will update you all when I've made another purchase.
Do you own BAE Systems plc? How has it performed for you? Have you made any purchases this month?
Labels: Stock Purchase