The Thinking Behind My January Buys

Given that January was a busy trading month by my standards, I thought I’d post on the activity to give more detail on the decisions.

See my January activity below (this will not be boring):

January trades

Date

Type

Company

Market

Quantity

Executed Price

30-Jan-18

BUY

AZN

LSE

5

£50.69

30-Jan-18

BUY

RDSB

LSE

10

£25.55

30-Jan-18

BUY

NVDA

NDQ

1

£172.80

30-Jan-18

BUY

WWE

NYS

5

£24.97

30-Jan-18

BUY

MU

NDQ

4

£30.90

30-Jan-18

BUY

MSFT

NDQ

3

£66.98

30-Jan-18

SELL

BP.

LSE

39

£5.12

All trades took place on the 30th since that’s the day that there’s a discount on the commission fee from my broker. Instead of £12.50, I paid £3.95 per trade. This is still quite high and definitely not sustainable. When the new tax year kicks in, I expect to be trading on either Vanguard or Freetrade.io.

BP

I still hold 166 shares of BP. It’s a great company. The idea here was to sell some of the profit to rebalance the portfolio.

It’s sad to see these shares go as BP has been such a powerhouse with the dividend payments. However, whilst dishing out these dividends,  BP has been growing their debt & pension burdens. Couple this with the cyclical nature of oil and it’s clear why I had to average down.

I could be tempted back in if the price goes below £4 a share.

Microsoft

I’ve had my eye on Microsoft for some time now. Unlike other stock giants like Amazon or Google, Microsoft pays a dividend!

Whilst Microsoft’s best growth years are surely in the past, the future should hold many more years of dividend growth. The current yield is 1.27% and the dividend has grown for 14 consecutive years.

Microsoft is making solid progress with AI and cloud technologies so I’m confident revenues will be protected as PC usage declines. I may have overspent at the current price but I don’t think this will matter in the long run as dividends continue to grow & new technology is leveraged for productivity gains.

Micron Technology

This is the most speculative buy on the list. Micron specialises in memory and digital storage.

I wanted a company that is strong in the semiconductor space and Micron ticks that box. Micron has extremely strong fundamentals and has performed well compared to rivals.

Their customer base includes heavyweights like Facebook & Google, which is always a good sign. Although Micron sits in a cyclical industry, I expect demand for semiconductors to continue to trend upwards as long as technological innovation persists.

WWE

This company is 1 I’ve wanted to buy for an awfully long time. The price was posted around the $20 mark for most of 2017 until it broke out in November. It’s disappointing to buying at the higher price but this is a company I’m happy to buy and hold for a long time.

They pretty much have a global monopoly on professional wrestling & they continue to expand into new countries. Revenue streams are multiple with income from live events, TV deals, licensing, advertising & WWE’s own online streaming service.

To top off, WWE also pays a steady dividend!

NVIDIA

Heres a stock that nearly doubled in 2017. I may be late to the party but I think there’s still plenty of upside in the long-term.

NVIDIA primarily makes graphics processing units (GPUs) for computer gaming with great success. What makes NVIDIA such an exciting buy is that growing tech industries are highly dependent on these GPUs. NVIDIA now helps power the following industries: blockchain (mining), cloud computing, mobile, automotive, VR, AR & machine learning/AI.

Most of these industries have exponential potential & NVIDIA is set to benefit as they grow.

At the same time, NVIDIA pays a very small dividend (<1%) which is unusual for such a tech-heavy company. I don’t expect the dividend to grow substantially anytime soon & I would prefer they prioritize paying down debt instead.

Shell

Much like BP, Shell is a dividend-paying powerhouse & an oil industry monster. This is a pure income play.

I’ve grown the portfolio’s oil exposure but diversified the risk. If oil prices nosedive I’ll obviously still take a big hit, but 1 management team won’t determine my fortune.

Recently, Shell has been on an intriguing buying-spree. They’ve invested in a blockchain company, bought First Utility outright, invested in a solar company & bought an electric car charging company!

Hopefully, these investments help keep the dividends high way into the future.

AstraZeneca

Another income play here for the portfolio, but AstraZeneca doubles up as a defensive stock being in the pharmaceutical industry.

AstraZeneca hasn’t had any dividend growth in the last few years but the payout hasn’t changed and the dividend cover has hovered solidly above 1.5. As for the dividend yield, it’s only been below 4% once in the last 5 years.

I’m not expecting major growth from AstraZeneca though I could easily be wrong. If a crash or downturn occurs then I expect a robust performance from AstraZeneca.

Key takeaways

 

  • I need a new broker

    my stock and shares ISA mean I pay no capital gains tax or income tax on dividends which is lovable but my broker is just not good enough! each month I have to wait until the day that they have their monthly share dealing commission offer otherwise the fee is too high for the levels I want to trade at. The offer doesn’t extend to funds either so ETFs are out of the question.

  • Stock prices tumbled globally just days after these buys

    More sad timing than bad timing (i refuse to even try to time the market). This is a short-term annoyance but I’m not spooked. Patience is key.

  • Stock picking is fun but index investing is essential

    I want to continue to buy companies that I believe can perform for me in the long term but I need to to be index investing at the same time to have a portion of the portfolio matching the market.

  • Dividends dominate 5 of the 6 buys all pay a dividend. Dividend payers help to reduce risk as the cash flow can be used to reinvest in further buys

Please remember, this is not investment advice. Always do your own research!

I’m eager to hear if you think that any of these buys are stupid. Comment below so we can discuss!⬇

10 Replies to “The Thinking Behind My January Buys”

  1. I like the buys, especially MSFT. Rebalancing your portfolio every now and again is a good thing. Comb it over and get rid of the losers and put the capital where it can work better for you. Or trim positions that may be too big and reallocate. Looking forward to seeing these buys in action this year.

  2. I started my engineering career at MU and worked there for few year in the late 90s. I can tell you MU knows how to play memory game. It’s in a highly commoditized business of memory chips, but MU knows how to cut costs and improve efficiencies. Also, with the push for more data hungry technologies, the price for NAND and in general flash memory continues to stay strong which is a good thing for MU. I do wonder if Intel at some point would buy MU, given Intel’s new focus as a Data Company.

    I would have owned MU if it paid dividend.

    1. Yeah, you’re right, too high.

      In the new financial year, I will switch broker.

      My broker never has a discount for ETF’s so I would have to pay £12.50 to buy, on top of that my broker charges a transaction fee of 0.5% and this is all before I pay any of the fees for ETF its self!

  3. Intersting picks. I think the Microsoft buy is a great buy, I think they have a bright future ahead and I would like to own them as well.

    I do not invest in oil stocks, but thats my personal decision.

    NVIDIA is also interesting, especially with the whole crypto business.

    The Micro buy is also similarly intersting, I might look into them as welll.

    What do these buys add to your total forward income?

    1. Yeah, I’m confident about MSFT. I think it will be a great long-term dividend buy.

      I think I bought NVIDIA at a high price but I will happily buy more if I can buy for less than I originally paid.

      Micron seems underpriced to me, I think they will lead in the semiconductor industry. However, if dividends are everything to you then Oracle, Intel & Western Digital may be worth a look too

      These buys should add £25.31 to my forward dividend (depends on exchange rates & withholding tax).

      I’m curious, why don’t you buy oil stocks?

Speak your mind :)