Recent Buys: TGT and UNH

I haven’t been very active in the buying department over the last couple of months because of work but I’m finally starting to turn that around.  I have made two purchases recently in my Dividend Retirement account – taking advantage of some overreactions in the market.

The two stocks I decided to buy were Target (TGT) and UnitedHealth Group (UNH).  In this post I’ll briefly go through my rationale for initiating these positions and I’ll provide the transaction details.

Target (TGT)

• Sector: Consumer Discretionary
• Industry: General Merchandise Stores
• Purchase date: 10/16/2015
• Portfolio: Dividend Retirement Portfolio
• Shares purchased: 33
• Cost per share: $75.37
• Commissions: $14.95
• Cost basis: $2502.16
• Yield on cost: 2.95%
• Forward income: $73.92

Company Overview:

Target Corp. engages in owning and operating of general merchandise stores. It also operates SuperTarget stores with a line of food and general merchandise items and offers an assortment of general merchandise, including many items found in the company’s stores and a complementary assortment, such as extended sizes and colors, sold only online.  Source – TradeKing.

My rationale for buying Target is quite simple.  It’s a great business, I shop there all of the time, the stores are always packed and they pay a reliable dividend, when handling a trading business you should also look in to the this post about Business Energy costs as you can save in the energy bills to invest more.  For these reasons alone I initiated a small position in my Dividend Empire portfolio earlier this year.  I left TGT on my watchlist hoping for an opportunity to buy a larger stake in my Retirement portfolio.  That opportunity came last week.

Walmart (WMT) recently lowered their guidance which caused their stock to plummet.  Several other companies, including Target, followed WMT down presumably on the assumption that Walmart’s woes meant trouble across the industry.

While this might be true, it is now priced into TGT so in my opinion there is a much greater potential for upside than there is for downside.  If Target dishes out some bad news the stock should be flat since it is expected.  If Target comes out with good news the stock will jump.

This is all short-term talk and it doesn’t really mean much for me in the long-term.  I just wanted to provide a rationale for entering this position when I did.  No matter what happens over the next few months one thing is for sure – I’ll be enjoying a large and growing dividend from a company I love.

UnitedHealth Group (UNH)

• Sector: Health Care
• Industry: Managed Health Care
• Purchase date: 10/22/2015
• Portfolio: Dividend Retirement Portfolio
• Shares purchased: 20
• Cost per share: $111.75
• Commissions: $14.95
• Cost basis: $2249.90
• Yield on cost: 1.78%
• Forward income: $40

Company Overview:

UnitedHealth Group, a U.S. leader in health care management, provides a broad range of health care products and services, including health maintenance organizations (HMOs), point of service (POS) plans, preferred provider organizations (PPOs), and managed fee for service programs.  Source – S&P Capital IQ.

UNH has been on my watch list for a very long time.  I missed the last couple of dips in this stock so I started watching it like a hawk.  When I saw it drop sharply again today I jumped all over it.

UnitedHealth Group has shown tremendous revenue and EPS growth over the past five years.  This growth is expected to continue with the recent acquisition of Catamaran, increases in Medicare and Medicaid memberships and their recent expansion efforts.

*Projected value

The dividend growth for UNH has also been phenomenal over the past five years.  Although the yield is currently a bit low, the dividend increases have been accelerating lately to match the rapidly rising stock price.

*Expected 2015 dividend total

These two purchases have added a total of $133.92 to my forward annual dividend total.  My Dividend Retirement portfolio has been updated to reflect my positions in TGT and UNH.

What are you thoughts on these buys?  Please let me know in the comments section below!

Disclosure: long TGT, UNH and WMT