Coca-Cola (KO)!

[Kerim]

So I am enjoying the minor dip we are seeing in the market this week, and jumped in today to buy my first shares of KO ever. I only bought a few shares, as I don’t think it is cheap by any means. But I’ve just felt sort of naked as a committed dividend growth investor not owning any KO. And it rarely goes on sale, so this week’s pullback felt like as good a time as any to grab some. Indeed, its yield today is at the high end of the range it has been in since about the summer of 2010, which I always take as a sign of a better entry point.

And of course KO is pretty sound on the important dividend growth metrics. I’d list those here, but Dan Mac (a poster here) recently posted a very good and detailed write-up of KO over at his Dividend Growth Stock Investing site.

I picked up 25 shares at $39.18 – wish me luck!

[TomK]

Luck to you. I agree that KO does not go "on sale" too often. But every now and again it gives you a chance to back up the truck.

[EricL]

Good luck to you as well.

Not an owner of KO myself, currently own DPS instead. Definitely one that is my radar though!

[Dan Mac @DGSInvesting]

I'm with you on KO Kerim! I purchased some shares earlier this week on the dip as well. I think KO is one of those companies that you won't often find great bargains on so you need to take advantage of any dips you can if you want some shares. While I agree it isn't a bargain right now, I think it's a fair value for such a solid company with such a long history of strong performance. Hopefully management can continue that performance in the future.

I'm long KO and if it goes down more from here I'll probably be picking up more shares as I get the opportunities!
Thanks for linking to my article. Glad you found it interesting.

[scott]

I'm excited I found this forum, Kerim. Thanks to Dan Mac for mentioning it on his blog.

I originally owned KO back in 1996 but had to, unfortunately, sell it all to help pay for school. I knew nothing of dividend growth investing then either. Really wish I would have held onto it! Anyway, I'm now starting to invest in dividend growth stocks and Coca Coca is definitely one that I will be buying soon with a holding period of forever.

I've always tried to purchase, at a minimum, $2000 into a stock. My trades are fairly cheap at Schwab ($8.95), but I'm worried that too frequent trading will eat into profits. My concern is that I don't have the capital to purchase $2000 currently, but if I wait until I do I might miss on this minor dip. If the ex-dividend date were sooner I might make an exception to the >$2000 at a time rule. Is this a concern that you guys have or in the long run won't really matter.

[Kerim]

(08-16-2013, 11:54 PM)scott Wrote: I'm excited I found this forum, Kerim. Thanks to Dan Mac for mentioning it on his blog.

Welcome Scott! Very glad you found the forum and thanks for signing up and joining in. Thanks also to Dan Mac for the mention -- I truly appreciate it. At this early stage in a site's life, every link and new member means a great deal.

(08-16-2013, 11:54 PM)scott Wrote: I originally owned KO back in 1996 but had to, unfortunately, sell it all to help pay for school. I knew nothing of dividend growth investing then either. Really wish I would have held onto it!

School is in itself an important investment, but I know what you mean. It is important not to dwell on the past, but I wouldn't be able to help thinking (now and again) what those shares would be worth right now, especially if the dividends had been reinvested.

(08-16-2013, 11:54 PM)scott Wrote: I've always tried to purchase, at a minimum, $2000 into a stock. My trades are fairly cheap at Schwab ($8.95), but I'm worried that too frequent trading will eat into profits. My concern is that I don't have the capital to purchase $2000 currently, but if I wait until I do I might miss on this minor dip. If the ex-dividend date were sooner I might make an exception to the >$2000 at a time rule. Is this a concern that you guys have or in the long run won't really matter.

This is definitely something I keep an eye on, but I don't let it overshadow making the buys I want. It is of course important to keep transaction costs as low as possible. But as long as reinvestment is free, if you are following a buy and hold approach to your dividend stocks, I doubt you are trading so frequently that the transaction costs are harming your results. Like you, I prefer to buy in $2000 to $3000 chunks. At $7 per trade (Vanguard), that works out to one-third of one percent or less, which I think is great. However, sometimes I will buy $1000 of a stock, like my recent KO purchase. Given its price right now, I wanted some shares, but not yet a full position. In such a case I don't fret over paying seven-tenths of one percent in transaction costs. If I chose the stock well, it really shouldn't matter in the long haul, as you state.

[EricL]

(08-16-2013, 11:54 PM)scott Wrote: I'm excited I found this forum, Kerim. Thanks to Dan Mac for mentioning it on his blog.

I originally owned KO back in 1996 but had to, unfortunately, sell it all to help pay for school. I knew nothing of dividend growth investing then either. Really wish I would have held onto it! Anyway, I'm now starting to invest in dividend growth stocks and Coca Coca is definitely one that I will be buying soon with a holding period of forever.

I've always tried to purchase, at a minimum, $2000 into a stock. My trades are fairly cheap at Schwab ($8.95), but I'm worried that too frequent trading will eat into profits. My concern is that I don't have the capital to purchase $2000 currently, but if I wait until I do I might miss on this minor dip. If the ex-dividend date were sooner I might make an exception to the >$2000 at a time rule. Is this a concern that you guys have or in the long run won't really matter.

I can understand your feelings on wanting to wait until $2000 to keep your transaction costs down, but at $9 per trade, you would be paying just 0.9% on a $1000 purchase. At a nearly 2.9% yield on KO, you would make up nearly all of that transaction cost with your first quarterly dividend, not to mention if you think the stock is an attractive price right now the daily fluctuations are often more than 1%.

I agree that frequent trading can add up quickly on transaction costs, but as long as your aren't selling in and out of positions and doubling your costs, I think $9 on a $1000 transaction is pretty reasonable.

[Kerim]

(08-17-2013, 01:17 PM)EricL Wrote: I can understand your feelings on wanting to wait until $2000 to keep your transaction costs down, but at $9 per trade, you would be paying just 0.9% on a $1000 purchase. At a nearly 2.9% yield on KO, you would make up nearly all of that transaction cost with your first quarterly dividend, not to mention if you think the stock is an attractive price right now the daily fluctuations are often more than 1%.

I agree that frequent trading can add up quickly on transaction costs, but as long as your aren't selling in and out of positions and doubling your costs, I think $9 on a $1000 transaction is pretty reasonable.

Well, said, Eric.

[Dan Mac @DGSInvesting]

Hey Scott- I agree with what the others have said about making a buy with less than $2,000 ready. Personally I try to make my buys with at least $1,000 available. I use Scottrade and pay $7 commissions so this gives me 0.7% expense fee on the buy side and another 0.7% on the sell side (hopefully I never have to sell). I think over the long term as long as you try and keep trading costs below 1% you should be fine. Obviously the lower the better but if you really have a buy you want to currently make and you have enough capital to keep trading costs below 1% then I wouldn't hesitate to pull the trigger. Like others have said you'll recoup those trading costs pretty quickly and hopefully you are buying for the very long term.
The more capital you have the easier it is to keep trading costs low. It's definately good to always keep them in mind. I use to make $500 buys before I realized I was having to make up 2.8% before breaking even on a trade. I've since switched to making buys of at least $1,000. Unfortunately this means I don't get to make a buy every single month. Sometimes I have to save a month or two's savings up before I am ready for a purchase. As my income grows I'd also like to increase my purchase size to lower my transaction costs even more.

[scott]

(08-20-2013, 02:04 PM)Dan Mac @DGSInvesting Wrote: Hey Scott- I agree with what the others have said about making a buy with less than $2,000 ready. Personally I try to make my buys with at least $1,000 available. I use Scottrade and pay $7 commissions so this gives me 0.7% expense fee on the buy side and another 0.7% on the sell side (hopefully I never have to sell). I think over the long term as long as you try and keep trading costs below 1% you should be fine. Obviously the lower the better but if you really have a buy you want to currently make and you have enough capital to keep trading costs below 1% then I wouldn't hesitate to pull the trigger. Like others have said you'll recoup those trading costs pretty quickly and hopefully you are buying for the very long term.
The more capital you have the easier it is to keep trading costs low. It's definately good to always keep them in mind. I use to make $500 buys before I realized I was having to make up 2.8% before breaking even on a trade. I've since switched to making buys of at least $1,000. Unfortunately this means I don't get to make a buy every single month. Sometimes I have to save a month or two's savings up before I am ready for a purchase. As my income grows I'd also like to increase my purchase size to lower my transaction costs even more.

Thanks, Dan Mac. I did go ahead and buy around $1600 of KO. I'm hoping to add an additional $1500-1600 as soon as I get the chance.

[Kerim]

So a big down day today across the market, but sadly the things on my watch list are holding up pretty well. I was hoping KO would drift down today with the rest of the market and give me an opportunity under $38.

Alas.

[ChadR]

I'm also waiting to buy some more KO. Of course it was pretty much my only stock today to go up in value. Like you Kerim, I believe that under $38 is a buying opportunity for KO.