09-12-2013, 04:43 PM
I bought another 25 shares of PM this morning at a price of $86.24. I’ve been accumulating PM since late 2012, at prices ranging from $83.26 to $87.93. In absolute dollars per share terms, today’s purchase is nothing to get too excited about – actually it is in the high end of the range of all of my purchases.
But that is not how I see it, because I’ve been buying PM since the dividend was only 77 cents per quarter. And for a dividend growth investor, I think a great way to look at the evolving stock price is relative to the income you are buying at the time of purchase. That’s really what yield is, after all: How much are you paying up front for the dividend? Before today, my “best” purchase of PM was in November 2012. I paid $83.26 for each share when the quarterly dividend was 85 cents, for an annualized yield of 4.08 percent.
With yesterday’s raise to 94 cents per quarter, today’s purchase at $86.24 blows all my previous PM buys out of the water – my starting yield on this batch is 4.36 percent. Given the dividend raise, even with the pop in share price yesterday, PM’s income is significantly cheaper to buy today that it was two days ago.
If the price hovers around where it is now, or (gulp) drifts lower, it will be hard for me to resist buying still more, even though I already have what most would call a full position at the moment.
But that is not how I see it, because I’ve been buying PM since the dividend was only 77 cents per quarter. And for a dividend growth investor, I think a great way to look at the evolving stock price is relative to the income you are buying at the time of purchase. That’s really what yield is, after all: How much are you paying up front for the dividend? Before today, my “best” purchase of PM was in November 2012. I paid $83.26 for each share when the quarterly dividend was 85 cents, for an annualized yield of 4.08 percent.
With yesterday’s raise to 94 cents per quarter, today’s purchase at $86.24 blows all my previous PM buys out of the water – my starting yield on this batch is 4.36 percent. Given the dividend raise, even with the pop in share price yesterday, PM’s income is significantly cheaper to buy today that it was two days ago.
If the price hovers around where it is now, or (gulp) drifts lower, it will be hard for me to resist buying still more, even though I already have what most would call a full position at the moment.