Monday, 15 December 2014

New Purchase - BP


On December 15, I added to my position in BP.

Number of shares purchased
100
Price per share
$35.2458
Commission
$9.95
Total cost per share
$35.35
Total cost
$3,534.53
Annual dividend per share
$2.40
Initial dividend yield
6.8%
Increase in forward 12-month dividends
$240.00


I now hold 333 shares of BP at an average cost of $41.29/share.

I also used three free transactions and sold my shares in HCP, DLR and CRC, thereby reducing my annual dividends by $373.60. I never planned on holding the REITS for a long time and given that I made some decent returns on them, I want to use the money to increase my exposure to energy (ALA.TO, BTE.TO, WCP.TO, KEY.TO, SU.TO, COP, CVX, ESV, NOV, OKE, OXY, RDS.B and XOM) and perhaps healthcare (e.g. GSK). As for CRC, I only had 16 shares which were received from the OXY spinoff.

My dividend income is now $7,958.19 per year.

Sunday, 14 December 2014

A Look at Chevron


These days, everyone’s eyes are on oil & gas, and to a lesser extent, materials. How much lower can commodities go?

Bloggers have been buying stocks like BP, BBL, COP, CVX, ESV, NOV, OKE, OXY, SU, RDS.B and XOM. My own energy holdings are in the RED and I’m looking to average down.

Below is my analysis of CVX.

Average Dividend Yield Analysis*

CVX:US
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2003
$43.50
$30.66
$0.35
$0.35
$0.365
$0.365
$1.43
4.66%
3.29%
2004
$56.07
$42.00
$0.365
$0.365
$0.40
$0.40
$1.53
3.64%
2.73%
2005
$65.98
$49.81
$0.40
$0.45
$0.45
$0.45
$1.75
3.51%
2.65%
2006
$76.20
$53.76
$0.45
$0.52
$0.52
$0.52
$2.01
3.74%
2.64%
2007
$95.50
$64.99
$0.52
$0.58
$0.58
$0.58
$2.26
3.48%
2.37%
2008
$104.63
$55.50
$0.58
$0.65
$0.65
$0.65
$2.53
4.56%
2.42%
2009
$79.82
$56.12
$0.65
$0.65
$0.68
$0.68
$2.66
4.74%
3.33%
2010
$92.39
$66.83
$0.68
$0.72
$0.72
$0.72
$2.84
4.25%
3.07%
2011
$110.01
$86.68
$0.72
$0.78
$0.78
$0.81
$3.09
3.56%
2.81%
2012
$118.53
$95.73
$0.81
$0.90
$0.90
$0.90
$3.51
3.67%
2.96%
2013
$127.83
$108.74
$0.90
$1.00
$1.00
$1.00
$3.90
3.59%
3.05%
2014


$1.00
$1.07
$1.07
$1.07
$4.21


2015


$1.07
$1.07
$1.07
$1.07
$4.28



11y ave
3.95%
2.85%

5y ave
3.96%
3.05%







3y ave
3.61%
2.94%







5y
$108.04
$140.54







3y
$118.69
$145.56






Super Cheap
$90.30


The table shows the 3 and 5 year average dividend yields to be 3.61% and 3.96%, respectively. Using the current annual dividend of $4.28, one would have to pay $108.04 for a 3.96% dividend yield.

So the current stock price of $102.38 is quite attractive.

However, buying the stock at its low in 2009 would have earned you an initial yield of 4.74%. Using the current annual dividend, that corresponds to a stock price of $90.30 today (see “super cheap” price in the table above).

Graham Price

CVX’s 2011, 2012 and 2013 EPS were $13.44, $13.32 and $11.09. 3Y Ave EPS = $12.62.
CVX’s BV is $82.60.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $153.13

Cyclically Adjusted Price to Earnings Ratio

CVX’s 10Y Ave EPS = $9.35
CAPE = Stock Price / 10Y Ave EPS = $102.38 / $9.35 = 10.95
A CAPE below 20 is good.

Conclusion

Based on the Average Dividend Yield, Graham Price and CAPE, CVX is attractively priced.

I have also done this type of analysis for BP, ESV, NOV, OXY, RDS.B and SU. The results show that all of these names, except for RDS.B, are attractively priced. I would like to average down on my energy holdings, but given my current "paper" losses, I'm being very careful.

And if the Saudis goal really is to give it to Iran, Russia and Irak, oil prices will have to remain depressed for some time.


*My method is not perfect as the stocks low price may have occurred before the annual dividend increase.