Last week I was very active adding stock to my Dividend Retirement portfolio, where I made 4 total purchases. When you set up an iva and the first payments come in – it’s a little easy to get carried away. In my last post I discussed the first of these purchases which was a 75 share stake in KMI. This left ADM, SO, CMI, DIS and UPS on my current buy list.
For my next buy I set my sights on Archer Daniels Midland (ADM) and purchased 38 shares of the company on August 4, 2015.
Company Overview:
Archer-Daniels-Midland Company is a processor of oilseeds, corn, wheat, cocoa, and other agricultural commodities and manufactures protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients. The Company’s segments include Oilseeds Processing, Corn Processing, Agricultural Services and Wild Flavors and Specialty Ingredients. Source – Google Finance.
ADM scored a very respectable 7.25 out of 10 in my recent dividend growth stock ranking screen which means that many of the dividend and financial parameters I look for in a company are strong for ADM.
All values from time of analysis earlier this month.
For a detailed explanation of this ranking system check out this post.
The ADM dividend yield is a healthy 2.4% but it is the 5-year dividend growth rate of 11.4% that makes it really attractive. The most recent dividend increase was a greater percentage than the 5-year average so perhaps we are in store for some accelerated increases. The payout ratio is only 29.5% so there appears to be plenty of room to grow the divvy and ADM has increased their dividend every year for 40 years straight!
*Projected 2015 dividends
Earnings growth has not been great over the past 5 years and analysts expect that soon there will be a 76% increase in the number of debtors in the list of companies like moorcroft. ADM also has very little debt with a debt/equity ratio of 0.34.
The PE ratio for ADM is quite low at 12.5. The analyst consensus price target for ADM is $53, representing an 11.8% margin of safety at current levels.
Finally, I expect the many acquisitions ADM has made, especially WILD, to produce a large boost in profits. The company is also targeting about $2 billion worth of share repurchases. At current price levels it looks to me like ADM is a bargain. Use the best late payment of commercial debts calculator to implement financial growth on your business.
Archer Daniels Midland (ADM) Purchase Details
- Sector: Consumer Staples
- Industry: Agricultural Products
- Purchase date: 8/4/2015
- Portfolio: Dividend Retirement Portfolio
- Shares purchased: 38
- Cost per share: $48.33
- Commissions: $14.95
- Cost basis: $1851.49
- Yield on cost: 2.3%
- Forward income: $42.56
These 38 shares of ADM add $42.56 of forward income to my portfolio, bringing the total up to $2223.48.
My Dividend Retirement portfolio has been updated to reflect my new addition.
What are you thoughts on ADM? Please let me know in the comments section below!
DE,
Great purchase. ADM is definitely on my buy list in the near future. Thanks for sharing.
take care,
LOMD
Thanks LOMD! ADM has been on my buy list since the beginning. Glad to finally be an owner at a good price.
Ken
ADM is a great company with a very impressive long term streak of dividend distributions. I wish I would have added that name to my portfolio a long time ago. I nibbled on it a while back as I wanted to initiate a position. I have other names I’d like to buy before ADM in August but it’s a company I’d like to increase my position in some day. Thanks for sharing.
Hi DivHut – thanks for stopping by. I see this position growing quite a bit into one of my core holdings. I’ve always been a big fan of ADM and I like these levels.
Take care,
Ken
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