Wednesday, January 20, 2016

Recent Buy #1, January 2016

Cold Weather Gremlin here to talk about a recent buy, and the weather of course!  This Friday is supposed to be the first winter storm of the season that the DC area receives.  For those of you unfamiliar with the DC area, suffice it to know that it does not take much to bring this area to its knees, and we are looking at potentially 12 inches (30.5cm) or more of snow.  I don't know what kind of winter you want or like, but I want to see snowmen, snowball fights, stuff closed down, and a general winter wonderland + outdoor hockey.  In fact, I am super pumped to the point of being 'hype' for this upcoming storm.  Anyway, aside from the storm I have some more good news.  I made a recent purchase in my Roth IRA.

Chubb Corp (CB) was recently acquired by ACE Insurance LTD (ACE).  As part of the deal I gained approximately 7.2 shares of "new" CB ticker that represents ACE stateside and around $750 for the deal.  That deal finally closed in my brokerage account today, and lucky for me its another one of those days were stocks are taking a serious beating.  I cannot thank the proverbial worry warts, Cautious Caleb's, and Negative Nancy's enough for a sweet buying opportunity.  After all, I intend to hold my purchases for a long time, perhaps forever.  In fact, I believe this will be the first of two to three purchases in my Roth this month as I will liquidate the remaining CB shares due to foreign tax implications in what is supposed to be my post-tax account.  So let's get on with it now, what did I buy?

Today I added shares of Ameriprise Financial, Inc. (AMP).  Side note, AMP is probably one of the coolest tickers out there, especially if you like music or work with electricity.  I bought 13 shares at $90.02 / share, plus a $6.95 commission.  The current P/E ratio is approximately 10.44 and yield is 2.97% (on current cost).  Looking at past dividend payouts, AMP has managed a 5 year DGR of 31.7% while keeping an approximate payout ratio of 31%.  AMP has an eleven (11) year history of dividend growth, and sports Tweed and Chowder factors of 19.8 and 32.1, respectively.  This purchase adds $34.84 to my forward 12-month dividend income.

It will be easy to sleep well at night with this stock.  On top of those nice numbers above, scanning the recent news you can see they are working hard to improve shareholder value in their brand.  AMP has authorized an additional, $2.5 billion in share repurchases; that is really nice, increasing my share value and potentially allowing for great dividend growth in the future.  It is doubly nice because as it states those are extra buybacks, so the theme is not a one off event.  I also see that it is ranked in the top places to work for the 10th year running; perfect I want my shares to hire the best talent to do the best job at really making these shares succeed.

This purchase was a tough one to make because I did not know if it was going to be my first buy or my last one with this influx of capital.  It was pushed to the front of the line because it just seems to be a grand value, buying a stock of such quality at this price.  I like the industry it is in too.  It is money with the purpose of making people more money with their money.  In a wealthy nation, or 'first world economy' it is easy to see the historic precedent that wealth begets wealth much faster.  It is similar to the snowball concept, or in board games like Monopoly* the idea being that once you have achieved a certain base of resources it allows for stockpiling and expansion of income generating resources at a theoretically exponential level.  Anyways enough science and history, here's to some new passive income and more to come.

What do you think of AMP?

I will update my portfolio page at the end of the month, keep enjoying winter everyone!

- Gremlin
- Long CB and newly long AMP.

*I would prefer to reference games such as Splendor, Agricola, or Dominion; however the point is made with the better known Monopoly.

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