Share purchases: May 2017

By | June 12, 2017

Author: Mr DDU & Mrs DDU.

Disclaimer: Stocks mentioned on this blog are for general entertainment/documentation purposes only, following our own investment journey and decisions. Nothing in this article should be considered investment advice nor is intended to be investment advice. Please click here to continue reading our disclaimer. By viewing any page on this blog you are agreeing to the linked terms & conditions.

We’re into month 5 of our new investment strategy. Now that we’ve been successful with our IVF, we’ve decided to put at least $1,000 a month towards buying shares.

So, let’s get into it:

What we bought: WAM Research (ASX:WAX). We bought 398 WAM Research shares at $1.375 each, with a dividend yield of 9.03%.

We already owned WAM Research and posted about them here and here earlier this year. In-case you haven’t read those articles, here’s another summary:

What WAM Research do: It is a Listed Investment Company that has produced market-beating returns for many years. It turns a good portion of those investment returns into big dividends. It keeps a large cash balance on hand for protection and for opportunities. It generally focuses on the smaller end of the Australian equity market.

A few numbers:

Market Capitalisation: $255 million

Dividend increase streak: 8 years

In its latest results for 6 months to 31st December 2016 it announced:

Latest dividend increased by: 5.88%

Latest earnings per share (EPS) decreased: 20% (This looks odd, but it’s simply that they didn’t grow the portfolio as much as in the previous period).

Operating cashflow: $45.3m

Profit after tax: $16m

Why we bought more: The share price had declined by around 10% since our last buy. We are happy to buy more shares of companies with long-term growth potential, particularly those that are run as well as the Wilson LICs.

We probably won’t be buying any more WAM Research shares for at least 6 months now, unless the share price were to drop another 10%.

Risks: The main risks to WAM Research are if they underperform the market, there’s a market crash or some of their high-performing investment team leave.

Another May buy

What we bought: Healthscope (ASX:HSO). We bought 242 Healthscope shares at $2.12 each, with a dividend yield of 3.49%.

What Healthscope does: It’s the second biggest private hospital operator in Australia, behind Ramsay (ASX:RHC).

A few numbers:

Market Capitalisation: $3.6 billion

Dividend increase streak: 2 years

In its latest results for 6 months to 31st December 2016 it announced:

Latest dividend increased by: 0%

Latest (continuing) earnings per share (EPS) decrease: 7%

Operating cashflow: $179.4m

Profit after tax: $97.4m

Why we bought more Healthscope: We like the healthcare industry for its consistent and defensive earnings. Hospitals seem like the best healthcare options within the whole industry. Healthscope has an impressive amount of projects it’s building which should grow profit in the long term. We want to take advantage of falls in share prices for our favourite ideas.

Risks: Private hospitals really rely on the government, patients and private health insurers all being willing to pay for the hospitals charging more each year. There will be some variability of the patients admitted, but in the long run it should (hopefully, for us) turn out okay.

Another May buy

What we bought: Bapcor (ASX:BAP). We bought 104 Bapcor shares at $5.28 each, with a dividend yield of 3.28%.

What Bapcor does: It’s the biggest retailer of spare automotive parts in Australia & New Zealand, its main business is called Burson.

A few numbers:

Market Capitalisation: $1.4 billion

Dividend increase streak: 2 years

In its latest results for 6 months to 31st December 2016 it announced:

Latest dividend increased by: 10%

Latest earnings per share (EPS) increase: 21%

Operating cashflow: $45.7m

Profit after tax: $25.3m

Why we bought Bapcor: We are quite heavily invested in financials, LICs, healthcare and technology but not much else.

Auto spare parts is a pretty defensive industry and the business is growing a lot through organic growth and acquisitions. With a good payout ratio and good medium term opportunities, we thought this would be a good way to diversify.

Risks: We may not hold this one for decades. The change of the car industry to electric and automated vehicles may be bad for Bapcor’s business. It’s hard to say exactly, but with less parts needed there could be less parts sold in the future for the amount of cars on the road. We will have to keep an eye on it.

Final thoughts

So, there are our 3 April buys, we invested a total of $1,609, comfortably beating our goal of $1,000 a month. We’re happy with all 3, particularly buying WAM Research and Healthscope at a cheaper price. We’re pleased with how our portfolio is growing in size and the holdings we own.

The market seems to be presenting a lot of opportunities, so we will have to think carefully about what we want to buy next.

As always, this is just sharing our own decisions and isn’t a suggestion in any way about what you should invest in. In-fact, what do we know? You would be much better off researching your own ideas.

What investments did you make in May?

Thanks for reading this article about our investing journey Down Under.

Onwards and upwards!

16 thoughts on “Share purchases: May 2017

  1. wealth from thirty

    Nice work continuing to invest Mrs & Mr DDU – HSO seems in a good position to do well over the long term.

    Hope the week is treating you both well.

    Reply
  2. Dividend Daze

    Nice buys. I see WAX getting bought up a lot down under recently. You own a lot of it too which will pay you nice dividends accordingly. I would just be cautious about having too much of your portfolio allocated to it, but I know you already have that in the back of your mind since you are holding off on buying more. Keep those quality purchases coming. Cheers!

    Reply
    1. Dividends Down Under Post author

      Thanks DD, we are aware that we don’t want to buy too much of anything, but WAX itself owns a bunch of investments, so it’s a diverse option.

      Mr DDU

      Reply
  3. Dividend Diplomats

    Making moves, making moves! Loving that you are adding some companies to your portfolio and taking care of business here in May. I’m sorry, but I can’t think of a company called WAM without thinking about George Michael haha

    Congrast on making moves!

    Bert

    Reply
  4. DividendSolutions

    Hey DDU,

    i like your strategy of putting 1000$ of fresh money to work each month. It will get your snowball bigger fast. And your savings rate of about 40% is very good too. I’m not familiar with Australian stocks (besides ANZ bank) yet, but buying into the healthcare sector (with a aging population) seems a good idea. – Keep it up!! If you have the time you can check out my blog?

    Greetings from Germany,
    DividendSolutions

    Reply
    1. Dividends Down Under Post author

      Thanks DS! We really like our strategy and it’s working well so far. We really love the healthcare sector and will keep adding shares when the price is right.

      Mr DDU

      Reply
  5. Strong Money Australia

    Nice purchases! I bought some more WAM Research myself this month. Also bought BKI.
    Definitely be interesting to see how Bapcor holds up as electric cars become more widespread.

    Reply
    1. Dividends Down Under Post author

      Nice to see we are thinking along the same lines SMA on WAM Research. Perhaps Bapcor can keep going well, we’ll have to see 🙂

      Mr DDU

      Reply
  6. J @ Hey, It's Just Money!

    I lost the opportunity to buy some WAX shares when the price dropped. Gutted. Nice purchases! I’m always waiting for your purchase updates! Your folio is definitely growing!

    Reply
    1. Dividends Down Under Post author

      Oh well, maybe you will be able to get some in 5 or 11 months time. We’re glad you like reading them 🙂 Not too long until the next one. It is growing very nicely now.

      Mr DDU

      Reply
  7. pistolpete

    Great job! Just wondering if you have thought of just into lic’s such as bki milton and argo for example which pay around a 4 to 4.5 % fully franked dividend instead of getting individual stocks?!

    Reply
    1. Dividends Down Under Post author

      Thanks for the comment Pete, sorry we haven’t replied until now!

      Those LICs you mentioned would be pretty good for most investors but we are aiming for more growth over our lives, particularly as we’re so young. We do see the WAM LICs playing a big part in our portfolio because they offer growth and growing dividends.

      Mr DDU

      Reply

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