Thursday, November 6, 2014

November Investments

This month I had a lot of head scratching to do thinking about where to put my money.  I still had $10 trade commision credit with TradeKing that I needed to use by the end of this month, so I knew I'd make two purcahses in my TradeKing account.

ConocoPhilips (COP)

ConocoPhilips is an energy company.  Its primary focus is oil and natural gas exploration.  It employs over 18,000 people around the world.  It has been paying dividends since the 1930's, with annual increases for the last 13 years.  It popped up on my radar because the price has dipped to 79% of the 52 week high (mostly in seems due to dropped oil prices).  I happen to think the world is getting more energy hungry and minor and even major dips in oil prices are temporary.  I bought this stock for $69.55 / share. The annual dividend payout at this price will about 4.1%

American Realty Capital Properties (ARCP)

This was a gamble, and I know it going in, so when I get burned I'll have no one to blame but myself.  For those following the markets, American Realty Capital Properties is in trouble.  It made a mistake in reporting (bad, but not unheard of), it then tried to cover it up (very bad).  As a company that requires the good faith and trust of investors in order to grow (unlike McDonalds who just needs the faith and trust of hungry people who want a cheap burger), ARCP shot itself in the foot. 

I had previously bought shares of ARCP at $11.80.  The stock has since tumbled, losing a third of its value.  It has since climbed back slightly and I bought ~50% more shares at $8.51.  What that means is I've done some cost averaging and gotten the stock at $10.57 a share.  But why would I do this?

My first thought is that the company is not just its stock price.  They own over #30 Billion dollars worth of properties.  Further, as a REIT they are still required by law to pay out a dividend at least 90% of net income.  They are currently paying $1/share annually, so my investment should be yielding a juicy 9.4% dividend. So while other investors are going to shy away from this, I'm going to risk that the company still has legs, and there's money to be made while there's "blood in the streets."

No comments:

Post a Comment