Friday, 5 June 2015

New Purchase - Baxter International

I've been buying shares of BAX since May 2013. Two years later, I'm still under water, so what better time to buy more.

When reading www.seekingalpha.com, I'm left with the impression that the stock price is suffering because earnings have been stagnant and mgt has not clearly stated what the dividend will look like when the company splits in July this year. 

The earning from 2003 to 2014 are:


$1.52$0.62$1.52$2.13$2.61$3.16$3.59$2.39$3.88$4.18$3.66$3.56

The purpose of the split is to enable each company to grow faster, hopefully increasing EPS thereby supporting an increasing dividend. Time will tell and I'm in on healthcare for the long run. The population of first world countries is aging and generally, people do not have health active lifestyles.

Number of shares purchased
45
Price per share
$65.20
Commission
$9.95
Total cost per share
$65.42
Total cost
$2,943.95
Annual dividend per share
$2.08
Initial dividend yield
3.18%
Increase in forward 12-month dividends
$93.60

My dividend income is now $8,781 per year.

4 comments:

  1. Avg Dividend Yield,
    Over the long term, I think the two companies will do very well. Sure, I see some uncertainty with the spinoff, but you are getting 2 quality companies out of it. Even if the combined dividends are lower, I do see a consistent history of growth.
    D4S

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    Replies
    1. I'm looking forward to the split even if the div decreases. I read that BAX has excellent mgt, and to me that's very important.

      I should have kept my ABT stock when they split, but sold just before they did. Error of a novice investor it was.

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  2. I like the buy ADY. Although we have not yet pulled the trigger, BAX is on our short list. A company with a 3.2% yield and a 7 year history of consecutive dividend increases and a payout ratio of 52%. Plus, its near its 52-week low right now! I think I just might have talked myself into at least putting in a limit order for the coming month. :)

    Thanks for sharing your buy...BTW, we've added it to our Collection of Recent Buys. :)

    Best wishes and continued success my friend. AFFJ

    ReplyDelete
    Replies
    1. I was looking to add something different than oil & gas and REITs. I chose BAX for some of the factors you pointed out plus it's trading at a discount to its average dividend yield. If you're lucky, you might get it a few dollars cheaper.

      I noticed you made some good buys yourself. Keep up the good work.

      Delete