I talked last month about how I had an excess of cash just sitting in my brokerage account, earning no interest and how I was kind of paralyzed by indecision. I decided that no decision was not really a good decision in this case, and so I put in some limit orders for stocks that I only had a 1/2 position in for some reason or another. Generally, I consider about $5000 US worth of stock to be a “full position.”
In the whole scheme of things, stocks aren’t actually that “expensive” right now if you look at historical P/E ratio averages. They’re kind of firmly in the “average” range. And, I’m investing for the long-term, so in theory, companies will keep increasing their earnings and their stock prices will keep going up to maintain the P/E ratio equilibrium that the market seems to find. And actually, I care more about companies increasing their dividends over time than I do about the actual stock price.
Anyway, here’s what I’ve ended up buying (around $3000 US of each company to bring it up to around $5000):
Coca-Cola (KO). They had lower profits than expected and had a massive dip (6%) in a single day, so I was able to get it a decent price. This is a company that isn’t going anywhere, even if they have a rough year or two.
Bank of Montreal (BMO). This Canadian bank has a fantastic dividend yield, in strangely quite cheap and like all the Canadian banks, is generally considered “safer” than their US counterparts due to stricter government regulations.
Lockheed Martin (LMT) . Yes, they are part of the most evil military-industrial complex, but put that aside and they are under 15 for a forward P/E, have a nice yield and the M-I complex truly isn’t going anywhere for a long, long time.
Wal-Mart (WMT). This retail giant seems to have fallen out of favor as of late, but the price is definitely right. Their forward P/E is only 14 and they have a strong history of increasing their dividends. They’re definitely big enough to weather any retail storms that might be in their future.