My wife and I continue to be blessed with the way this year has shaped up. Personally, these buy posts make me hungrier than ever to keep saving, keep making money and keep investing. The income that we are starting to make every month is could put a significant dent into our expenses. If you jump over to our Portfolio page, you can see that we almost have an entire month of expenses taken care of if we so choose to quit our day jobs. Eleven more months to go and we are home free!!
The next couple of months are going to be extremely busy with activities and such going on just about every single weekend. Between weddings, birthdays, parties, etc. hopefully we will still be able to keep saving at the pace we have been the past 2 months.
In my last post, I asked you readers what company I should buy after the RAI/LO merger gave me about $1,700 of capital to work with. I received quite a few comments but ultimately I decided to buy Boeing (BA).
With this purchase, my wife and I have put a total of around $28,000 to work since the beginning of 2015. My goal of investing roughly $40,000 is coming ever so close! We are about half way through the year and our total is 70% of the way to our goal. So now for the numbers...
The next couple of months are going to be extremely busy with activities and such going on just about every single weekend. Between weddings, birthdays, parties, etc. hopefully we will still be able to keep saving at the pace we have been the past 2 months.
In my last post, I asked you readers what company I should buy after the RAI/LO merger gave me about $1,700 of capital to work with. I received quite a few comments but ultimately I decided to buy Boeing (BA).
With this purchase, my wife and I have put a total of around $28,000 to work since the beginning of 2015. My goal of investing roughly $40,000 is coming ever so close! We are about half way through the year and our total is 70% of the way to our goal. So now for the numbers...
We purchased 14 shares of Boeing (BA) at $144.16. This purchase adds $50.96 of annual dividends to our account.
We now own 14 shares of BA as this was a new addition. We are now invested in 37 individual companies.
BA Chart:
P/E: 18
Yield: 2.90%
Market Cap: 100B
Dividend Growth Rate (3yr): 20%
Dividend Growth: 3 years
Dividend Growth: 3 years
Payout Ratio: 43%
As you can see from the stats above, BA has not had the long streak of dividend growth like our last pick Parker Hannifin but, they have been paying dividends since 1937. In a cyclical business like the one BA is in, that's a major positive. An even better positive is that BA has a backlog of planes to produce that goes out for 7 years! Barring another recession and companies pulling out of these orders before the planes are delivered, investors have a long runway (pun intended) ahead to estimate earnings effectively.
With BA priced at just 18 times earnings and a nice showing at the Paris Air Show, I see no reason why this stock is not worthy of a purchase. There has been speculation that BA might buy UTX's helicopter business so this could be a future catalyst to propel earnings a bit higher as well.
BA doesn't quite have the 3.65% yield that LO did at the time they merged, but if BA keeps growing the dividend as fast as it has been the last few years, the yield on cost will catch up rather quickly. The payout ratio is favorable at below 50% so there is definitely room to grow.
You can check out all the other purchases we have made for the year on my Stock Purchases and Sells page.
With BA priced at just 18 times earnings and a nice showing at the Paris Air Show, I see no reason why this stock is not worthy of a purchase. There has been speculation that BA might buy UTX's helicopter business so this could be a future catalyst to propel earnings a bit higher as well.
BA doesn't quite have the 3.65% yield that LO did at the time they merged, but if BA keeps growing the dividend as fast as it has been the last few years, the yield on cost will catch up rather quickly. The payout ratio is favorable at below 50% so there is definitely room to grow.
You can check out all the other purchases we have made for the year on my Stock Purchases and Sells page.
So there you have it, the next building block on the path to the American Dividend Dream! What do you think, good purchase, bad purchase? What are you looking to buy next?
ADD
Congrats on your buy. I hear loud and clear what you are saying about these buy posts wanting you to save and invest even more! It really is infectious. I get that way seeing other bloggers posts as well!
ReplyDeleteSpeaking of buy posts, you just made quite a few purchases a few days ago, nice job!! Especially the diversifying aspect of your purchases. You've got quite a hefty WPC position there, stay tuned and you'll see my position is growing rapidly as well.
DeleteThanks for posting
Interesting purchase, ADD. I was just reading an article on the global airline industry and how BA and Airbus are ramping up the production for their new aircrafts - 737 in case of BA. Interestingly enough, they are also cutting back on the bigger 747 down from 1.5 to 1 aircraft per month. Looks like the A380 is a clear winner when it comes to bigger body, but theres also a huge market for the smaller 737 and 777 models.
ReplyDeleteIve been thinking about picking up something in the defense sector - and BA is definitely on my shortlist there. Financials look great.
Congrats on buying this quality company.
Best wishes
R2R
Yes, the bigger planes are not selling as well but Boeing is looking to develop an "in-between" plane... not the small version but not the big version. Hopefully that will spur some demand.
DeleteI was in the same position as you... Not much of anything that deals with the defense sector directly. The biggest thing is Boeing has such a huge backlog that as long as they can produce results, they are going to do well for quite a few more years. The pullback and PE ratio presented a great opportunity to initiate a position.
Cheers
All right! It was my first choice when you asked; glad to see you chose it! Very good purchase. Heh, now I have to compare from now on: will my PCP outperform your BA? :)
ReplyDeleteAs an aside, for your "Purchases and Sells", do you want to indicate which is which on that page? May make it a bit easier to read. Just a suggestion.
PCP has definitely pulled back quite a bit and has seemed to form a nice base at around the $200 level. BA seems to be a bit more established than PCP as they are a 100B company and PCP is only around 30B but the competition is on! As long as both companies get us to FI as quick as possible, than I'm happy.
DeleteI will certainly include which are buys and sells. Currently they are all buys!!
Thanks for commenting
BA is a great company. They have a long backlog, and for their size airplanes, they only have EADS/Airbus as competition. Plus, they do military stuff too.
ReplyDeleteAs the amount of airtraffic expands internationally, and air fleets are replaced, BA will do very well
BA continues to impress me. It's a bit cyclical but as long as they continue to manage the down times as well as the up times, they will be in a fine position. With these recent dividend increases, they appear to have confidence that the upward trend will continue. Very little competition is a great place to be in!
DeleteCheers
Solid buy with BA. For such a great company with a nice dividend track record you'd think it'd be more popular among the dividend bloggers but it's not. You don't really see this one in many portfolios. Congrats on your new buy and forward dividend income.
ReplyDeleteIt could be due to such a cyclical nature for the stock. At the same time, there are quite a few bloggers with DE and CAT, so who knows. I like my chances with BA continuing to produce solid results for the next 5-10 years. After that, we shall see. I will hold it forever if the investment thesis stays intact so lets hope thats the case.
DeleteThanks
ADD,
ReplyDeleteGot to give you a lot of credit for buying BA up here. I've had them for quite a few years now. Welcome to the group of shareholders!
I wish I had bought them a few years ago! But they are cheaper than the overall market and the aviation business is definitely in an uptrend. Thanks for the warm welcome
DeleteI'm don't know about the buy, but as for the dividends, it's only 2.5% a year. It doesn't seem like a lot to me. But then again, BA's future capital gains may be significant. I don't know much about the aviation industry.
ReplyDeleteIt's not the current income I'm so worried about... its the future dividends when we are closer to retirement. With average 10% increases, 15-20 years from now that 2.5% dividend will seem paltry in comparison. I wouldn't mind some significant capital gains either!
Delete