Sunday, June 14, 2015

Recent Buy - Parker-Hannifin Corp.

Hi Everyone,

I fell behind a little bit with getting this post out, but its been a busy couple weeks.  This purchase actually occurred on June 6th.  It looks as if I'll make another purchase here pretty quickly because of the RAI/LO merger.  I received quite a decent chunk of funds for my shares.  I might just buy RAI to stay in the tobacco area, or maybe split the funds between RAI and MO.  Not sure what I'll do with those yet.  My wife and I had a record month of May on the savings front and that has opened up the opportunity to invest some extra capital which is always an amazing feeling!  

With this purchase, my wife and I have put a total of around $26,000 to work since the beginning of 2015.  My goal of investing roughly $40,000 is coming ever so close! We are just about half way through the year and our total is just a tad more than 50% of the way there.  We are in a great position to reach this goal.  I moved away from the REIT area with this purchase but I feel this is a great time to start a position so without further ado...

We purchased 16 shares of Parker Hannifin Corp (PH) at $121.75.  This purchase adds $40.32 of annual dividends to our account.

We now own 16 shares of PH as this was a new addition which means we are invested in 36 individual companies.  With recent dividend increases, dividend reinvestment and this new position, our forward dividends now stand at around $4,235.85 for the next 12 months. Our portfolio will be updated to reflect this purchase.

PH Chart:


P/E:  15.75
Yield:  2.11%
Market Cap:  16.5B
Dividend Growth Rate (10yr):  15%
Dividend Growth:  58 years
Payout Ratio: 33%

After quite a few REIT purchases (OHI, DLR, WPC) we decided to go a different direction this time.  After doing some research, there is plenty to like about PH.  First of all, look at that chart above, its beautiful.  Then, you add in dividend growth of 58 consecutive years and its getting better.  Finally, you put an average 15% dividend growth rate on the stock and you'd be hard pressed to find a better stock in the market at this time.  With the market still around all time highs, PH falls in an undervalued company with a PE of only 15.75.  Over the past year and a half, the stock has not really gone anywhere so it looks like a good time to start a position.  The stock is consolidating, perhaps right before the next break out!  If you put a 20 PE on this stock (roughly the S&P PE) you are looking at a $153 stock.

After putting some high yielding REIT's into our portfolio, its nice to get a nice dividend growth stock into the mix.  I realize the yield isn't all that great, but growing at a 15% clip, by the time I am ready to retire the yield on cost will be more than the REIT's we own.

With that being said, my wife and I are still looking to buy some REIT stocks if they continue to stay depressed.  I realize I am a bit behind but I am still looking to put post together discussing the other picks we are looking at such as:  OHI, MO, GLP, DPS, DE, T and BA.  And hopefully letting you readers get to pick what we should buy next!

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?



  1. An absolute gem of a company. I recently did a stock analysis and really liked what I saw...would really love to own this company and have been looking for good opportunities....although the current valuation is really good.

    Have seen your comments on some other blogs and have been meaning to stop by and say hi. Finally got a chance to do it.

    Best wishes

    1. I read your analysis on SA and just backed up my prior research that PH is a great company. The current valuation is a great starting point but if they happen to fall, it will only provide an even better starting point.

      Thanks for finally stopping by! Be sure to stay awhile haha

      Enjoy your evening.