Micro Blog #2: Recent Market Dip and Dividend Opportunities

Despite all the excitement around the stock market with its ups and downs, it all comes down to one thing for me and that is income.My investment mission statement is to build dependable, predictable, and growing income regardless of what the market does day-to-day.

Even though the market has been in a nose dive for the past two days, cumulatively losing close to 2% of its value in just two days, my investment income hasn't changed at all.


My portfolio still churns out the same amount of cash today that it did two days ago before the recent market decline. The market ups and downs have no effect on how much cash the portfolio generates.

This is because when it comes to cash from dividends, the only thing that matters is the share count. Dividends are paid as cash per share. The more shares you have the more dollars and cents you earn in dividends.

Market dips of yesterday and today are good opportunities to add more shares of high quality dividend stocks or if you have been waiting for a hot blue chip stock like ABBV or PFE to cool off in this bull market, may be today was the day to get some.

Abbvie lost over 5% of its market value just today with no fault of its own and this is after a recent jaw droping earnings report. While Pfizer just came out with a great earnings report today, beating both top and bottom line while increase 2018 guidance, but despite its great earnings report, the stock got caught in the down market and lost over 3% of its value.


With today's decline, Pfizer dividend raised to 3.6%. That's a great yield for a blue chip stock that is a leader in its industry and a big benefactor of the tax reform. While Abbvie's dividend is on 2.45%, it is one of the hottest biotech/pharma stocks out there with double digit dividend and earnings growth.

Question to ask yourself?

When do you want to buy a company? When it is missing earnings, declining revenues, and have a murky future guidance like, cough cough, GE?  Or when it is firing on all cylinders like Abbvie and Pfizer, beating earnings and revenue estimates, while touting even higher guidance for the next year?

I would go with the latter. I would buy a company when it is performing well and has a potential to not only return more cash in the form of dividends, but also increase its earnings year after year, thus raising my total return.

Disclosure: I have full positions in both ABBV and PFE.
Disclaimer: Author of this article is not a licensed/registered financial or investment adviser and does not provide investment advice. Any mention of stock names/tickers in this article or website is not a recommendation to buy or sell. Please do your own due diligence before buying any stocks. This article is for informational and entertainment purposes only. Full disclaimer can be read here: Full Disclaimer

Comments

  1. Very true. It is the income that matters. I will investigate PFE/ABBV. Thanks!

    ReplyDelete
  2. Mr ATM. I have a special deal I could offer you on some GE shares. It's a great "value" play right now. Honestly, I just need to sell them so they don't irritate me everyday. Frankie from Fully Franked Finance told me it's like ripping a band aid off. Just gotta do it.

    As you know, last Friday ABBV had a huge pop of about 14%. Probably was due to give a little bit back before it moves higher again.

    History note, I worked at Abbott Labs for 10 years, 4 of them in what was called the Pharmaceutical Products Division (PPD). I was long gone by the time, but PPD became the spin off ABBV. I have never kept in touch with him, but the current CFO was a financial analyst colleague of mine when I was there in the early 90's. I moved on to another Abbott division and then to CFO roles in privately held middle market companies. High stress and long hours kept me on the path to FIRE. You know how it is!

    Tom

    ReplyDelete
    Replies
    1. Haha, I might consider buying GE if it goes under $5. The thing about stocks in loser companies is the longer you wait to rip-off that bandage, the more it's going to hurt. Now, of course, things could turnaround, but you have to ask yourself how long do you want to wait and suffer based on a hope. There is a cost to investor's psychology when holding something like GE.

      ABBV is a hot stock, I enjoyed seeing the recent 14% pop, though it has given back a few percent the past two days, but still a very hot stock. I think it could be the Boeing of pharma.

      Yeah, I remember reading about your background at the Abbott Labs. You probably got a lot of insight into Pharma business, would love to hear more about it. High stress and long hours, I know how it is. The worst part is, we pay for it later in life after we have left that environment as the effects of it lingers with us much longer. I know I'm still paying for it and why I'm adamant about living a healthy lifestyle. I'm just trying to reverse all the ill effects high stress have had on me during by time at Intel.

      Take care

      Delete

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