Recent Buy :: Target and VYM

Hopefully all of my fellow American readers were able to enjoy a Happy Thanksgiving and an extended weekend. We hosted our first Thanksgiving and overall it was a great day spent with family.

While taking some time to unplug from the blog and social media, I was able to jump online briefly on Black Friday and make a couple of purchases for my dividend portfolio.

One of the purchases was my standard monthly contribution to the Vanguard High Dividend Yield ETF while the second was one of my most underweight positions that I’ve wanted to add to for some time but just didn’t feel that the price was right–Target.

Brief Background on Target

Target Corporation is a company that is familiar to many within the United States, and my Canadian readers might be familiar with as a result of the company’s brief yet unsuccessful expansion into the north.

The fact that comes to a surprise to many is that Target was founded in 1902, as it wasn’t until more recent years that their expansion really began to spread across the United States. The company is headquartered in Minneapolis, Minnesota and as of earlier this year the company operated 1,826 stores.

There has been a growing concern that companies like Target would face a steady decline due to the power of companies like Amazon and Walmart that are dominating the online space, however Target has been diligently working on improving their e-commerce experience.

In addition, from the perspective of the in-store customer, I know that my wife and many of our family and friends flat out refuse to shop at Walmart because their stores are dirty and unorganized. Target on the other hand tends to be spotless and well organized throughout, and it is not unusual for people we know to go into the store for one or two items and leave with a cart full of items.

Target By the Numbers

I’ve been wanting to add to my position in Target for awhile now, as it has been one of my most underweight positions, however the price was at a level that I felt was too rich for new capital.

Fortunately, the market volatility coupled with what I consider to be an overreaction to a modest earnings miss of $0.02 for the third quarter hammered the stock down over the last week with much of that decline coming in a single day.

However, looking beyond that and considering facts such as how Target had a 5.3% increase in comparable store traffic, 3.2% increase in comparable store sales, and 49% increase in comparable digital channel sales had me eager to add to my position.

That last point gives me reason to believe that Target is capable of competing online with the big boys as well, and they should continue to improve as this is an area of focus at a corporate level.

According to Simply Safe Dividends, Target Corporation checks in with a Dividend Safety Score of 75 meaning they consider the dividend to be safer than the average company’s dividend.

Target has a long-standing history of increasing their dividend as well with 51 years of consecutive increases, which places them in the category of Dividend Kings that have had 50+ years of rising dividends.

Speaking of rising dividends, while Target has slowed in recent years, they have a history of healthy dividend increases.

Given a recent focus on remodeling existing stores and now revamping their toy department in an effort to capitalize on the closure of Toys ‘R Us stores, I am expecting modest growth in the mid to high single-digits for the next few years.

Adding to Target Position

With the sharp drop in Target’s stock price last week after their earnings announcement, I was able to do some discount shopping on Black Friday by adding to my position.

Here is a summary of my order:

I was able to add 15 shares at $67.45/share and that will add an additional $38.40 in projected annual dividend income.

Overall, this increases my position in Target to 22.05 shares.

While still not one of my larger positions by any means, I am happy that I had the chance to move them up from the most underweight position at a price that I feel is quite attractive.

Adding to VYM Position

As I make an automated monthly contribution of $525.00 to my Vanguard account and use that to purchase additional shares of the Vanguard High Dividend Yield ETF, I won’t include any additional background or analysis.

This purchase is truly on a “set and forget” basis where I buy monthly regardless of price as I am comfortable with a more hands-off dollar cost averaging approach with this diversified holding.

Here is a summary of my order:

The 6 shares of VYM at $82.82/share will add an additional $15.30 to my projected annual dividend income.

Overall, my position in VYM now stands at 132.667 shares.

Once I reach a holding of 200 shares in VYM, I may redirect that monthly contribution to my Fidelity account to invest in other DGI holdings but for now will continue to add to this ETF.

Wrapping Up

While I may not have been a traditional Black Friday consumer, I was able to make two stock purchases at what I consider to be attractive prices and in the case of Target received a healthy 10-15% off coupon.

Considering that I had originally been watching Target for an additional purchase at a price below $80.00/share, being able to pick up 15 shares below $68.00/share was a fantastic opportunity and one that I believe will pay off in the long run. I’d still like to add a bit more but will continue to remain patient and see if I can obtain an even better price.

Overall, I was able to add an additional $53.70 in projected annual dividend income.

That brings my current total up to $5290.63 and leaves me only $209.37 away from reaching my revised goal of $5,500 in PADI!

Had I reset my goal to $5,250 as I initially contemplated, I would have already surpassed that as well. Therefore I feel that the bar was reset at an appropriate level, and while it won’t be easy to achieve, I do think it is is within reach if the right buying opportunities present themselves over the next month.

Do you currently own TGT or VYM?

What do you think about these purchases?