Friday, August 9, 2013

Stock Bought: HCP

Yesterday I bought shares of HCP, Inc. (HCP), a real estate investment trust (REIT) that has a diversified portfolio of healthcare properties. I provided some quantitative data on HCP in a comparison of healthcare REITs that I posted earlier this week. Instead of posting a brief analysis of the stock here, I decided to try something different and wrote an article about HCP for Seeking Alpha that was published today.

I bought 35 shares of HCP at the price of $41.80 per share plus commission, giving me a 5.00% yield on cost. (I set my limit price specifically to get that yield on cost.) At the current dividend rate, I can expect to receive quarterly dividends of $18.38 from this purchase, which will add a total of $73.52 to my annual dividend income. My forward 12-month dividend total increases to $2,587. The stock went ex-dividend at the start of August, so I will not receive my first dividend payment until November. This purchase was made in my Roth IRA, which is a particularly good place for holding a REIT because the dividends would be taxed as ordinary income in my taxable account. I funded the purchase by contributing $1,400 to my Roth IRA, much of which came from the moving expense reimbursement I received earlier this week.

I am glad that my portfolio finally has some exposure to real estate. I will be continuing to explore this sector, with the goal of eventually owning a diversified group of 3-5 REITs that specialize in different categories. I have not yet decided what I will buy next for my portfolio, but funds have become available for another purchase. Yesterday I received my moving-related salary supplement, about half of which will soon become new capital for investment. Depending on what opportunities I see, I might make two purchases this month!

Personal update: The delayed paperwork needed to officially start my new job (see my July review) has finally been approved and should be delivered next week, which is great news.

12 comments:

  1. I do not seem to be getting the posting alerts even though i am subscribed by feed burner. Not sure if anyone else facing the same issue.
    Irrespective to that, the blog is extremely useful and motivating. I have been following for last 12 or more month. Cannot wait for your Q3 review and next purchase, analysis.

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    1. Anonymous: Thanks for your comment. I don't know anything about feed burner, so I cannot say what might be wrong. Sorry!

      I'm glad you find my blog to be useful and motivational. It is nice to be part of a great blogging community of like-minded dividend growth investors.

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  2. Congratulations on your blog, I've discovered a week ago and honestly I like it.
    Good luck with your new job, and keep up the spirit.

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    1. Magallanes: Thanks, and welcome to my blog!

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  3. Nice addition. Because of demographic trends I think healthcare exposure in the United States (or anywhere else for that matter) is never a bad idea.

    Furthermore I agree with the above posters, blogs like this motivate me deeply! Thanks for this. I've started my own since last month to monitor my own progress. Have a look if you like!

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    1. Robin: Thanks, I appreciate the feedback. I'm glad my blog is motivational and I will check out your blog.

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  4. DGM, it is a cool idea setting a price of entry based on YOC. I have never thought about it that way. Thanks for bringing it up!

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    1. Martin: You're welcome. Once I've determined the approximate price that I'm willing to pay for a stock, I sometimes find it helpful to set a limit price that will give me a predetermined YOC.

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  5. Hello DG Machine:

    It was very nice to find your blog two weeks ago. I am enjoying it.

    I am a spanish investor who is beginning investing in USA stocks. I have KO, NYX (in a few days ICE ;)), INTC and HCP, as you have.

    I purchased it at 45 $ moreless and I am thinking in add more of then at this prices. It has very potential, it is very diversified and I like it sector very much. In a few days I cash it dividend ;).

    Now I answer to you... what about CHRW, have you analize this?. I think it is a good opportinity near 51-52 dollars.

    Thanks for your blog, good luck with your new job and greets from Seville, in the southern of Spain.

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    1. Allegretto: Thanks for visiting my blog! It sounds like you've made a good start with investing in American-based stocks.

      I have been watching CHRW for a few months now. It has a good dividend growth history and the stock appears to be moderately undervalued. The company has strong revenue growth but it has recently struggled to translate that into earnings growth. Some of that seems to reflect difficulty with integrating recent acquisitions, but the company also seems to be hurting from competition. I think management can eventually turn things around and earnings growth will resume. For the time being, I will continue watching, and if the stock becomes even more undervalued then I might give more consideration to starting a position.

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  6. Why do you say your dividends would be taxed as ordinary income if held in taxable account? Would not your dividends eventually become preferred income and taxed at lower dividend rate?

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    1. Anonymous: The taxation of REIT dividends is actually somewhat complicated. There are indeed circumstances under which the dividends would not be taxed as ordinary income. This page at REIT.com provides some details:

      http://www.reit.com/REIT101/REITFAQs/TaxesandREITInvestment.aspx

      Fortunately, given that the dividends will be received in my Roth IRA, I won't have to worry about taxes on them at all.

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