Friday, March 11, 2016

Stock Hunting

The budget has been finalized, the funds are sitting in the account, and I’m ready to start throwing hundreds at the Stock Market Club like I’m going to die tomorrow. The feeling is common to so many investors just like me. When you’ve got money that you’ve moved to your investing account or had deposited from your last hard earned paycheck, you feel like the hunt is on. Where you were once a calm and collected individual with a tight hold on your stocks and your money, you now find yourself salivating at the mouth just waiting for a good discount stock to throw your money at to start making it work for you.

The problem we all too commonly run into however is that the market doesn’t always align with your paycheck or deposit. When you find yourself on the hunt with some money you may have come into the hunt at the worst season for a good looking buck. Instead you’ve found yourself in a field full of crows or maybe a spring buck or two that only shows two points. If there was ever a good time to hold strong to your money, this would be it. Just as a seasoned hunter knows never to take a two pointer so that it can live until the next season and have the potential to turn into a reasonable 5-6 point buck, you must do the same with your investing. Sometimes the market simply doesn’t have a deal just waiting to be snatched up. When you find yourself in that spot, turn your eyes elsewhere where they can do better work.

Since that time is now, I’ve turned my eyes towards the future investments that will undoubtedly become available later. I look at companies that may have the potential to turn into a good deal in the near future. That way when that deals comes, I have not only a small amount of capital to turn their direction but I instead have a large sum that can work twice as hard as it would have for a small deal I could have gotten sooner. I’m not saying that this is an easy thing to do. The human mentality edges us forward towards the buy of a company that could do a little work right away over a big payout later because the immediate reward can be so incredibly satiating. That feeling inside is such a monster that we all know can eat at our insides. Every bit of you is telling you trade, trade, trade so that you can grab the dividends but we have to stop that gut wrenching feeling and remember to be hunters.

With that being said, my current prospects have been placed on the horizon. Everything that I wanted to buy on my watch list is overpriced for where I would want to get in on them. This rules them out as a starting point. My eyes have then turned towards these companies:

PKG – Packaging Corp of America – 3.97% yield, 50.5% payout ratio, 5 year dividend growth
ABBV – AbbVie Inc – 3.95% yield, 45.6% payout ratio, 43 year dividend growth

I like how PKG works their business. It’s solid, the growth is steady, and they rarely seem to take hits. In addition, they have a solid dividend and their payout ratio is excellent. The downside to PKG is that the ex-dividend date just passed so it will be awhile before I get to ride their dividend train. The price however keeps them at a discount and leaves them on my current list of prospects. ABBV on the other hand is very similar with their business model except that I can still get in on the upcoming dividend. With a few weeks left before their ex-dividend date, I can get on board before they make that payment. Time will tell where I decide to place my bet but at this point I’m leaning towards ABBV as long as it doesn’t take off running before I can get onboard. I just want to make sure the rest of it checks out before I decide to get in on it.

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