Today I bought shares of HCP, Inc. (HCP), a real estate investment trust (REIT) that has a diversified portfolio of healthcare properties. I wrote about HCP in a recent article at Seeking Alpha shortly before starting a position in the stock last week. The sell-off among REITs continued in a strong way this week, giving me a nice opportunity to average down on my nascent position.
I bought 40 shares of HCP at the price of $39.25 per share plus commission, giving me a 5.33% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $21.00 from this purchase, which will add a total of $84.00 to my annual dividend income. My forward 12-month dividend total increases to $2,671. As I mentioned above, this purchase allowed me to average down, lowering my cost basis by 3.3% and raising my overall yield on cost to 5.17%. I now hold a total of 75 shares of HCP in my Roth IRA, which will provide me with quarterly dividends of $39.38.
I am satisfied with the size of my HCP position (portfolio weight of 3.3%), so I will not be looking to buy more shares anytime soon. However, I am closely watching other REITs and would like to diversify by adding a non-healthcare REIT to my portfolio. The most likely candidate is Realty Income (O), which has finally fallen back down into fair value territory. I lack sufficient cash for additional purchases this month, though, so I will have to wait and see where things stand in September.
I don't mind sitting on the sidelines for a bit because the workload at my new job is ratcheting up. The semester does not start until next week, but I already find myself very busy with a variety of things to do. Once the semester actually starts, things will probably get worse and my time will be even more constrained. As a result, I will likely be silent on the blogging front until my next monthly review.