If you have been following the stock markets, you know the markets have taken a beating over the few weeks. Due to the dip, the value of our dividend portfolio has taken a HUGE hit. I’m not too worried though. We are not going to use our portfolio today, tomorrow, or in the next few years. We’re still in the building stage of our early retirement journey. Part of my plan of achieving financial independence is through purchasing of dividend stocks. I love the idea of owning part of the company and having my money working hard for me while I’m busy dealing with my everyday life. The recent dip in the stock markets has provided an excellent opportunity to purchase additional solid dividend paying stocks. It’s like building a house, you want to buy the materials when they’re on sale, not when the materials are over-priced. The same analogy can be applied to dividend stocks.
One of the reasons for the drop in stock markets is the oil price as you can see from the chart above. All oil related stocks like Chevron, BP, Suncor, and Royal Dutch Shell have been dropping in price. Most of these stocks and are around the 52 weeks low. This was very different when I purchased Suncor about 2 months ago.
Seeing that the oil companies are around the 52 week low. I made 2 purchases recently.
First using US dollar dividend received in the RRSP account, I purchased 9 shares of BP PLC to add to our existing position.
BP is an integrated oil and gas company. The company operates in two business segments – exploration and production, and refining and marketing. Due to the Gulf of Mexico oil spill, BP stopped its dividend payment in late 20010 for 2 quarters but started paying dividend again in 2011. The dividend payments have been increasing year over year since 2011. Currently BP has a forward looking P/E ratio of 5.2, a 5.67% dividend yield, and a PEG ratio of 1.08. With numbers like these it’s hard not to get excited about owning BP. This purchase is relatively small in terms of dollar amount and BP continues to make up a very small amount of our dividend portfolio. This is my way of limiting risk on higher yielding stocks.
Continue the oil company purchasing theme, I also purchased 60 shares of Suncor Energy to add to our existing position.
Suncor is one of the biggest oil companies in Canada. The company explores, acquires, develops, produces, and markets crude oil in Canada and internationally. In addition, Suncor also transports and refines crude oil. There’s very little not to like about Suncor and the recent drop in price has given me more reasons to pull the trigger. This purchase allowed me to average down our cost basis.
These two purchases have added $88.08 into our annual dividend income.
I’m hoping that the stock markets will stay around the current levels for a few more weeks so I can continue purchasing solid dividend paying stocks at a bargain!