Wednesday, March 14, 2018

Recent Buy: Home Depot Inc. (HD)


I knew I was going to be able to make at least two purchases this month, but I wasn't sure when that would be. Well because of continued market turbulence, it was relatively early in the month. It's just too good of an opportunity to pass when the market  takes a dip. When the market goes down it provides two excellent opportunities. The first opportunity is that the dividend yields all go up. The second opportunity is that the return on principal is much greater. I'm a long term investor so I'm not too worried about the price of a stock as long as it continues to pay and raise dividends. 

However, being able to buy a stock at a discount will provide me a margin of safety in the future. 

If the stock doesn't perform well and I need to sell, then I won't have lost as much. Perhaps I won't lose anything and come out even all because I was able to buy at a discount in the first place. Long term investors should welcome market weakness with open arms. Unless it is the apocalypse or world war 3 there really shouldn't be cause for concern. The market will go back up and if you are able to take advantage of the weakness then your money will do twice as well once it does. 

On March 8th I was able to buy 6 shares of Home Depot Inc. (HD) at $176.80 a share. This adds $24.72 of yearly dividend income to my portfolio!

Some quick facts about Home Depot:
  • EPS of 7.39
  • P/E of 24
  • Current yield of 2.33%
  • EPS growth as follows
    • 1 year - 14.7%
    • 3 year - 16.2%
    • 5 year - 19.8%
  • Revenue growth as follows
    • 1 year - 6.7%
    • 3 year - 6.7%
    • 5 year - 6.2%
  • Dividend growth rate as follows
    • 3 year - 23.7%
    • 5 year - 25.1%
    • 10 year - 14.7%
  •  Dividend payout ratio at 55%

Even with such a mature company, Home Depot has continued to grow at an impressive rate. Their dividend has also grown with it as well and there is plenty of room for it to continue to grow in the future. 

Home Depot has been on my list forever and it rarely ever takes a dip to allow for a buying opportunity. This is an incredible company with staying power. They provide essential products for home improvement. They are the world's largest home improvement retailer. If you need to do any work on your house or apartment where do you go? You could order items on Amazon, but what if you needed it right away? Companies and contractors building and remodeling homes can't afford to wait for products to ship even if its a day or two. They also sell a lot of large items that would be too expensive to ship.

A company like this is not going away anytime soon. Building/remodeling homes is an incredible industry that will be around for a long time. 


Let me know what you guys think! What have you been able to buy with recent market weakness?

2 comments:

  1. Nice add. Like the payout ratio and their growth. Nice to be able to get such a stable name. I like your Exxon buy a little better but this is solid.

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    1. Yes, I really like Exxon a lot, but have wanted to buy Home Depot for a long time now. Thanks for stopping by!

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