It was Thanksgiving last week and everyone got so excited by Black Friday. I suppose I should have been out buying things but I made some good buys on Wednesday (stocks) and I did purchase my wife something online at 74% off. I think that is enough shopping. Besides, I don’t care to be hit over the head with a waffle iron by a lady 4 times my age that have more fervor than I do.
I actually had some decent activity in my portfolio this week. I let go of two companies that I thought were interesting but really, I didn’t feel good about in the long term and it is a good early learning experience. Those two companies were Ford (F) and Annaly (NLY).
There was a lot of hype about the new Mach-E electric Mustang these past couple of weeks and I think that is what kept pushing me to hold my Ford stock but I realized during the process, after reading both good reviews and bad reviews of the car, lots of people saying, 50K is a good number of orders. 140K is what they need to survive. 30K is enough. I really just didn’t feel like owning a company that sucked me in with all that. And yes, you do get over informed when you read a lot of articles, but really, I think I saw the automotive industry as such a flashy, attention pushing sector where sales may not be consistent, car dealerships are not places that generally leave a good taste in your mouth. I think it was good time to go.
Selling that Ford stock of around $142.63 allowed me to purchase more of some companies that I think are a little more stable, all happening through my auto-invest:
Getting rid of NLY was probably a long time coming. It was in there as a riskier investment mainly because it comes with a higher yield and a big pay out that I was hoping would help to get me over that $10 auto-invest number sooner so my money could compound. They only held a 5% stake in a sector that had 25% share of my portfolio so really only about 1-2% of my full portfolio. I sold it for $1.76 and that got put into my NRZ company, another higher yield company but one that I am a little more confident in as they are still profitable and have been consistent in dividend growth a bit since their inception not too long ago.
Even though Black Friday was tempting, I was able to add about $450 to my portfolio this week. AAAANND because I have my portfolio take care of the investing for me after I choose my companies, I had 11 buys that took up $450.62 (because I still had some cash left over in my cash balance from the last time.) Really cool stuff.
One of the positions I added to was 3M or MMM company. At first, I was thinking, nah, everyone has them and everyone says to get them or not to get them. I finally just realized that I have some much stuff at my office that is from MMM that I just decided to look into their company facts:
Here are the main things I look at when picking a company.
- Does one of my favorite investors on YouTube own it? (Just kidding, that’s not real)
- The real #1, Do I know that company or the things they do? And do I like them? (Usually this is a big indicator if I am willing to trust them with my money or if I feel that the values of the company align with my goals.) 3M: 55,000 Products
- Does that company pay a dividend and how high is that dividend yield? Is it low? is it abnormally high? (is there a reason? Ex. Visa has a low Div Yield. Costco has a low Div Yield. AT&T has a high Div Yield.) 3M: 3.38%
- What is the company Payout Ratio? Usually you hear that below 60% is great. Other REITs can be around the 70-90% range because they have special tax advantages. Most of my companies have around 30-60% payout ratio such as Costco and Disney. 3M: 63.72%
- Have they been paying dividends for long? If so, have they increased their dividends? If not for long, have they increased them since they started. I usually only go with companies that have been around a while, and therefore, have a standing record. JNJ, one of my favorite holdings, has been paying for 57 years. 3M: 61 years of Growth.
- P/E Ratio. I really just want this number close to 15. Usually if it’s too far under, I am questionable about what is going on in the company, and if it is way over, I don’t feel safe looking into it mainly because I don’t have as much knowledge and this is a good indicator about a company. 3M: 20.12
- The last thing I really look at is if they have dropped from their 52 high and what percentage. Sometimes, a company will fall a bit just because of the general market fear or something like McDonald’s (MCD) where the CEO creates a problem that isn’t really reflective of the company’s future growth. If a company is near the top of their all time high, I get nervous getting in mainly because I don’t know enough to predict that other investors will want to go even high hoping someone else will go even higher. So I put together a list of Watchlist companies and then I compute their % drop from their 52 week high. This could mean they are good buy… this could mean that they are on a down hill slide. I will never pick a company based on this but it could be a good supplementary item if the rest of the company looks pretty good. 3M: 29.65% Drop from 52 Week High.
So really, I think getting into 3M was a good idea. The stock is relatively low priced compared to before, plus it is a good strong dividend company and I expect to be paid dividends for a long time from them.
It seems that holidays are always shorter weeks for actual buying but great weeks to listen in and hear about different companies and add to my knowledge so I am better at making decisions when the time comes. Until then, I will probably keep these companies for now in my Roth IRA and just see what happens. As I move into next year, I will probably cut down the companies in the portfolio and go a bit more broad in a few funds and go more finite in my other accounts. Thanks for reading and until next time.