Recent Buy - Bayer AG (BAYRY)

Part of my routine each morning is to open the Yahoo! Finance application on my phone and see what the market is up to.  On Tuesday morning, it was clear heading into the market open that the market would open in negative territory based on where the DOW futures where trading leading into the open.  One stock on my watch list stood out like a sore thumb and it is a current holding of mine, namely, Bayer AG.  Within the first few hours the stock had fallen > 8.5% which brought it back down to similar levels as when I first picked up shares not too long ago.  As the week progressed, the valuation continue to decline with the rest of the market and I continued to buy.  See below for the details on this most recent purchases.

Purchased: 70 shares x $19.58 (avg. price) = $1,370.60 (+$0 commission)

Total share count for BAYRY now stands at 120 with this latest purchase.

Dividend Income: $60.30 ($0.8614/sh paid annually in May or Jun.)

Forward P/E ratio: 9.0 vs. S&P 16.4

Debt to capital < 50%: Yes, 27.18%

Interest coverage ratio of at least 3:1: Yes, 7.46x (as of Mar 2018)

S&P and/or Moody's credit rating of BBB+/Baa1 or better: Yes, A-/Baa1

Current dividend yield > 1.5x S&P yield: Yes, 4.39% vs. S&P @ 1.95%

Per Bayer's own website, the company has paid dividends since 1952 and has increased the dividend annually since 2010.

Payout ratio < 60% (or <85% for utilities): Yes, 51.6%

Comments: I initiated a position in Bayer AG last month which you can read more about here.  The drop in this past week was a combination of the latest decision concerning the RoundUp herbicide lawsuit and the general pessimistic view Mr. Market developed toward the end of the week.  In August 2018 a jury verdict awarded the plaintiff in the case $289M for damages.  Per multiple articles this morning, the Judge has reduced the award to $78.6M (less than 1/3 the original amount).  According to a Bloomberg article, "there are already another 8,700 plaintiffs arguing that the key ingredient in Roundup, glyphosate, causes cancer -- so extrapolating the level of the current award for all the cases points to a liability of about $680 billion, Ian Hilliker, an analyst at Jefferies LLC in London, wrote in a note to clients."  To some that may appear very frightening, after all, this is nearly 10x BAYRY current market CAP. Based on the studies I've searched for an found, there is no conclusive evidence that the use of the herbicide causes cancer.  Bayer's response, according to the Bloomberg article reads as follows:

In addition, Bayer AG has an entire webpage dedicated to its rebuttal to allegations of its herbicide causing cancer, which can bee seen here.  Needless to say, I remain convinced that the benefits of owning BAYRY given the current circumstances relative to valuation greatly outweighs the risks and I am happy to be a buyer when, as Baron Rothschild once described, "...there's blood in the streets."