Monday, March 5, 2012

Stock Bought: NSC

Today I bought shares of Norfolk Southern (NSC), a major North American railroad company. I wrote about NSC when I increased my position in it at the end of January, so I will merely state that I continue to think it offers great value and will be a good long-term dividend-growth stock.

I bought 15 shares of NSC at the price of $67.62 per share, which is less than the price of my existing position, so I was able to average down. I now have a total of 50 shares at an average price of $71.96 per share, giving me a 2.61% yield on cost. At the current dividend rate, I can expect to receive quarterly dividends of $23.50. NSC will now contribute a total of $94.00 to my annual dividend income.

I had not planned to add to my NSC position, but the stock's price has been declining this year (despite no bad news or change in the company's fundamentals), compelling me to take advantage of it being "on sale." Perhaps it will go down even further in a broader market correction*, but I cannot predict whether or when that might happen, so I decided to buy it now. I find that making regular purchases each month is less stressful than trying to time the market. This purchase makes NSC the third-largest position in my portfolio (after PM and MCD), which is as large as I feel comfortable having it at this time. Thus, my focus will now be on increasing other positions or adding new positions to my portfolio.

* Update (March 6): Of course, that is exactly what happened the very next day; see my post Keeping Things in Perspective.

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