In the past week, I have dipped into my savings pool, and have also dipped into my margin by buying more Target (TGT). I was also thinking of buying more Exxon Mobil (XOM) and General Mills (GIS), but I stopped myself. Given the fact that Warren Buffett announced he had amassed a large position in Exxon Mobil, it was a good idea to just wait for the initial euphoria to calm down a little.
I realized that I need to replenish my savings pool, which should have 3-6 months of savings in cash. I also need to plan for my SEP IRA contribution in 2014, plus any estimated taxes I would owe for 2013. The SEP IRA is part of my plan to cut tax expenses as much as I can. As part of this tax minimization strategy, I am also funding a Roth each year. My funding for 2013 is complete, and I just finished up building the allocation for 2013 this week.
As a result, I should really not make much in terms of stock investments at least until early 2014. I have a put on Coca-Cola (KO) that I sold a few months, which could result in some cash outlay if exercised in January 2014.
I still am finding some value, like in the case of Target, Exxon Mobil and General Mills, where I would like to build out a decent sized position. I guess I would have to wait, which could probably mean that I face an above average risk of missing out if they keep going higher.
Incidentally, my top two holdings are also attractively valued at the moment — Kinder Morgan Inc (KMI) and Philip Morris (PM). Unfortunately, I have too much allocated to them already, which means I would have to hold off on adding to my positions there.
Target operates general merchandise stores in the United States. This dividend champion has rewarded shareholders with higher dividends for 46 years in a row. Over the past decade, Target has managed to raise dividends by 18.60% per year. Currently, the stock is attractively valued at 16 times earnings and yields 2.60%. Check my analysis of Target for more details.
Exxon Mobil engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products. This dividend champion has rewarded shareholders with higher dividends for 31 years in a row. Over the past decade, Exxon Mobil has managed to raise dividends by 9% per year.
In addition, Exxon Mobil is one of the largest and most consistent share buyback programs in Corporate America. Between 2003 and 2013, the number of shares decreased from 6.66 billion to 4.64 billion. Currently, the stock is attractively valued at 12.50 times earnings and yields 2.60%. If you can wait until you get slightly better entry prices after the enthusiasm from Warren Buffett’s recent purchase wanes, you might get better entry yields at 2.80% or so. Check my analysis of Exxon Mobil for more details.
General Mills produces and markets branded consumer foods in the United States and internationally. This dividend achiever has rewarded shareholders with higher dividends for 10 years in a row. Over the past decade, General Mills has managed to raise dividends by 8.70% per year. Currently, the stock is attractively valued at 17.50 times forward earnings and yields 3%. Check my analysis of General Mills for more details.