I have broken those transactions, and instead of putting the usual amount I put per each investment at a time, I am going to separate that into four purchases. Basically I am going to spread purchases over three – four months, in an effort to take advantage of any corrections.
Particularly in Target’s case, I might be value hunting too early, as prices could easily fall into the low to mid $50s, especially if investors get particularly pessimistic about the company. Lower prices would be very welcome in general however. These were a partial lot purchases, as I am conserving resources in case my Coca-Cola (KO) January puts I sold are exercised. I also like to build my share positions slowly.
The bull market of 2009 – 2013 has trained investors to put money to work as soon as possible. Otherwise, they witnessed steep increases in prices for quality dividend stocks while waiting in cash, and had to pay those higher prices later in order to get a piece of the action.
As a contrarian investor, I try to do the opposite of what everyone else is doing. As a result, I never chase rising prices, but try to rationally allocate my capital in the best values at the moment. I also try not to get excited too much even for the best dividend paying stocks. This could be expensive, as I would end up overpaying for the future stream of dividend payments.
My goal is to buy future dividend income growth at reasonable prices today. If I get in on a 7 – 10% dividend growth at 2% and a P/E of 20, rather than at 3% at a P/E of 20, I will generate lower future dividend incomes over time.
Full Disclosure: Long MCD, TGT