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For those new to the blog, I like to keep my readers up to date on portfolio changes. One of the reasons I started this blog was to educate others, but also improve my own investing. By keeping an open book of my portfolio and changes to it, I hope to generate discussion so that others can see how I put my investing philosophy into practice. My main goal is financial freedom. I plan to achieve this goal by investing in dividend growth stocks and using the dividend payments to cover my expenses. I’m a long way off from retirement, but hopefully this blog and my portfolio updates will keep me on track.
On June 10, 2013 I bought shares of Suncor Energy at $31.84 as it was below my target price of $32. I think there will be opportunities to buy Suncor Energy at a lower price, but what’s the point of having a target price if you don’t use it. Suncor Energy pays out a quarterly dividend of $0.20 and I bought at an entry dividend yield of 2.5%. It’s been awhile since I’ve purchased any stocks, so it was nice to add to my portfolio. My last stock purchase was back in February 2013 when I bought Intel at $20.50.
The past few days I’ve written articles on how to identify undervalued dividend growth stocks by comparing current dividend yield to historic averages and how to find target prices quickly. After writing these articles I realized that Suncor Energy was undervalued, so I performed a dividend stock analysis of Suncor Energy to see if I should invest.
I discovered that Suncor Energy doesn’t have a very good ROE, but other than that it shows some good dividend growth fundamentals. They have a strong dividend growth history with 10 years of consecutive dividend increases, and annual average dividend growth rates around 16% to 20%. The most recent dividend increase of almost 54% is a very good sign from management that they expect good things in the future. Their payout ratio is reasonable and their dividend is sustainable. Because the dividend policy may be changing it is harder to predict the future dividend growth based on past payout ratios, but my guess is that future annual dividend growth will good at around 10% or higher.
After the Dividend Stock Analysis was completed I was happy to invest in Suncor Energy.
What do you think of my latest addition?
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Thanks for the detailed analysis. I would not have looked at Suncor if not for you, and I purchased a position yesterday.