Hi Everyone,
I just logged into my retirement account and noticed that the RAI, LO merger has gone through. My 33.69 shares of LO turned into 9.89 shares of RAI and a deposit of $1,717.10 into my account.
So what would you do?
Would you immediately buy shares in RAI? Would you spread the money out into other stocks? Would you buy a different tobacco company like MO or PM to stay in the same area as LO but could provide better returns than RAI that has a PE of 25?
I currently have a list of 5 other stocks that I would like to be a part owner of so I could easily spread the money out into those. They are OHI, DPS, DE, T and BA.
At the time of the LO merger, I was receiving roughly a 3.65% yield on my money so I would like to get at least that through a single purchase or a combination of different companies so I do not lose out on any dividend income.
I'm leaning towards buying some more OHI since they are still depressed a good bit and then some DPS because they have fallen from their highs by roughly 8%. I'd be looking to initiate a position on a 10% pullback.
Any advice is greatly appreciated. One of my best picks is now gone... :( If I had it my way, LO and RAI would have never merged, but so is life.
Lets try to pick out my next best performer!!
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ADD,
ReplyDeleteFeels good to have some cash to shop with, huh? :)
I'm not going to buy RAI with the cash. I once read something about how you'd be best off most of the time by just buying shares in the acquirer when a situation like this presents itself. However, I think RAI is expensive and I'm also kind of glad to have my tobacco exposure reduced somewhat.
Not positive where I'm going to go yet, but I'm probably going to buy a bit more of what I've been buying recently. I'm also interested in boosting some small positions, like AAPL.
Have fun shopping!
Best regards.
Fresh cash is always a positive! Just wish I had a whole bunch more of it! I agree that RAI is a bit expensive so I may hold off on buying any of them. You have quite a bit more exposure to tobacco than I do so that's why I was looking at some of the other players.
DeleteAAPL would be a good place to park some of the cash. They are a tremendous company.
I look forward to seeing what you buy as well
Thanks for posting
My 2 cents from your list are that i like DPS now. 50% payout ratio, eps estimates lookig good and i would expect another nice dividend raise. Negative is they dont satisfy your initial yield of 3.65%.
ReplyDeleteYea, I like DPS a lot right now. I wish the payout ratio was a bit lower but EPS is definitely looking good and a dividend increase is always nice. The yield I'm not so worried about because I could buy another REIT and that could get me an average rate.
DeleteThanks for the comments
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I actually like every single one of your choices besides T. Personally, I like BA the most since I'm bullish on aerospace. Think DPS is a bit pricey, DE is too cyclic for me, and OHI still has the whole interest rate situation to go through. If not BA, I think OHI is best. Just my $0.02.
ReplyDeleteGreat problem to have! Liking all the choices that is. I had a purchase in to buy BA today at 143 and it opened at 144 and just kept on going... oh well. I really like BA right now and begging the market to drop it back down one more time to initiate a position but just can't seem to help me out. DPS a bit pricey sure, but 10% less than a month ago. DE is cyclical and that has ran a bit too much recently. At $80 I would really like it. Just didnt have the capital a couple months back. OHI/a REIT and BA is where I'm leaning right now. The combination of yields would hit my 3.65% goal too
DeleteCheers
I just sold my RAI shares and bought some XOM. I already own both PM and MO so losing LO was not a big deal to me. With the extra cash in hand I am on the lookout for my next purchase and I'm not certain what it will be just yet. I did recently purchase T as well so I doubt ill add to that. Well see. Thanks for the post.
ReplyDeleteReading your post right now! Nice purchase. I like T just to see what happens with DTV merger. BA/OHI is where I'm leaning right now.
DeleteKeep up the great work over there
I used my LO dough to purchase more shares of LMT and CAT.
ReplyDeleteBoth wise choices. I do not have any companies that deal with US defense/military like LMT. However, my job is tied to the government contracting industry so I try to stay away from that industry a little bit. Otherwise, I'd definitely look into buying CAT at some point.
DeleteThanks for posting