Thursday, October 12, 2017

Recent Buy - Campbell Soup Co (CPB)

During this past year I have been acquiring shares of some great consumer staple companies.  Earlier this year, I picked up shares of General Mills (GIS) and J.M. Smucker Co (SJM) and have been adding to them.  Now I have a another new position that I am excited about.  Details of the purchase are as follows:

On Wednesday, Oct. 11, 2017, I purchased shares in Campbell Soup Co.



Purchased: 44 shares x $45.70 = $2,011 (commission free)

Annual Dividend Income: $61.60 ($0.35/sh paid quarterly in Jan, Apr, July, and Oct)

P/E ratio: 16 (vs. S&P @ 22)

Debt to capital < 50%: Yes, 47%

Interest coverage ratio of at least 3:1: Yes, 12.5

Current dividend yield > 1.5x S&P yield: Yes, 3.0% vs. S&P @ 2.0%

Payout ratio < 60% (or <85% for utilities): Yes, ~45%


Expected growth of 5% or better: Yes, however, may be inconsistent from year to year as has been the during this past decade.  Nonetheless, I expect both earnings and dividend growth will outpace inflation and be at least 5% or better on average over the coming 10+ years.

Metrics reflected above were retrieved from Morningstar.com and/or CFRA's stock report.

My kids devour the Pepperidge Farm Goldfish Crackers we buy from Wal-Mart or Costco on a regular basis.  The forward income generated from this purchase would equate to the cost of roughly a dozen or so boxes annually; so at least we will now be seeing a larger fraction of this expense return to our pocket.  I purchased this stock a day before the ex-div date so I will be collecting a dividend payment at the end of this month.

As referenced above, I have been purchasing GIS and SJM in recent months, both of which I hold in my Fidelity 401(k) Roth account.  I will likely be making additional purchase of either of the two aforementioned stocks within the next month if current valuations hold steady or decline further.  I hold CPB in my taxable brokerage account at Merrill Edge.

What do you think, anyone else watching this stock closely?  What stock are you watching closely?

2 comments:

  1. I'm sure you were expecting this comment. Man oh man does this stock analysis look similar and similar to my last watch list :) Congrats on the great purchase. My niece and nephew also devour goldfish snacks like it is no ones business. Reasons 1-5 of why I love consumer staple stocks.

    Bert

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  2. Bert,

    Thanks for stopping by and commenting. CPB and many other stocks in the same sector have been too expensive to consider in recent years. I am glad to finally see a retreat in valuations to a level I am more comfortable with to the point where I am willing to initiate and build a position.

    PIV

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