My Investing Journey with Passive Income and Stock Market investing

Month: October 2019

Six Flags-Spontaneous Buy

I just picked up a small number of shares of SIX FLAGS. I hadn’t planned on buying Six Flags; however, after watching it fall over 12%, I couldn’t resist the 7.4-7.6% dividend yield. My first lot yields 7.4% and the second 7.6%.

This thing is basically at five-year lows.

I normally don’t buy such a small portion but I didn’t want to be too risky here. I do believe SIX is a bit riskier than most of my portfolio. If nothing else, I’m going to let SIX pump some dividends into my IRA account and reinvest it wherever I can that’s undervalued. Perhaps I’ll reinvest in SIX over time, we will see.

If you look at Six Flag’s books you’ll see there is some concern about the payout ratio and free cash flow payout. At the moment, it’s paying out most of its cash when it’s paying out the dividends. It can’t sustain this long-term, so we need a turnaround here. I believe within the next couple of quarters we will see SIX solve this cash flow problem.

Here is why you need to keep an eye on SIX as far as the dividend goes:

TTM FREE CASH FLOW is 264,942 vs. DIVIDENDS of 277,539

This is the red flag, whereby the Dividend is more than the Free Cash Flow. On the other hand, you’ll see that SIX was not in this position in 2018, 2017, etc.

Attendance at the parks is up, SIX just needs to figure out how to make more money, improve margins. It’s soon to get a new CEO from PEPSI, so this could bring improved results as well.

New Moves for October

My first move of the month was I bought Westrock #WRK, my price was $34.82. This gave a dividend yield of over 5%.

I then bought 12 shares of Sterling Construction, this was one of the smallest lots of stock I’ve ever purchased but with no commission fees and having a little over $100 in my cash holdings this made sense. STRL has had a dramatic rise in price target due to a recent acquisition.

I bought some more shares of Eaton Vance. It has a earnings report here in a few days, I look forward to seeing how the report goes. However, either way, I’m yielding over a 3.4% dividend from these purchases.

I sold ALL of my TLT shares. I seldom sell things. However, I just kept thinking about how low-interest rates have dropped, how much I’ve already made from bond funds. I don’t see them running up another say 10%, so I took my profits. I used these profits to buy the Westrock and Eaton Vance shares.

I had very little cash left in my brokerage account (around $600 I believe). So I split this up buying shares of Darden Restaurants at $108, Quest Diagnostics at $100 and lastly General Mills around the $51 mark.

These were not my ideal prices but rather than just leave the money laying in the cash account I wanted to immediately put it to use. I fully accept I will buy at both low and high prices over decades of investing. Really the only one I wished would have went lower is Quest.

Quest recently had a pretty good earnings report, much better than their last one. I think it has a long way to run. It’s also been quite stable and less volatile during all the trade war turmoil. So that gives me confidence in my purchase, even though it does only pay slightly over a 2% dividend.

Westrock-My latest Dividend Stock

My latest stock purchase is the paper product, container company named Westrock.

Let’s take a look at it’s statistics:

P/E = 11.27

P/Book = 0.79

P/Sales = 0.52

Ev/Ebitda = 6.77

Price/Cash Flow = 4.19

So from a metric perspective, you could say it’s undervalued; it’s trading under book value currently.

What about the Dividend?

It’s currently paying a dividend of around 5%

Its 1-year dividend growth rate is 5%

Payout Ratio is 55.75%

TTM Free Cash Flow is 1,373,300 while Dividends paid are 461,900; therefore, the dividend is quite safe. Westrock is only paying out 33.63% of it’s Free Cash Flow as dividend. I fully expect that we will see Westrock continue to increase it’s dividend in the future.

Unfortunately Westrock has only been paying a dividend since 2015 so we don’t have a lot of history here. I usually like to see decades of continuous dividends and growth.

Considering Earnings:

-5.80 Quarter to Quarter Earnings growth. This is one of the reasons the stock is trading at lower valuations. At the same time, the latest quarter did see a little bit of growth.

Some Negatives

Profit margin is only 4.65%

However, it is a large industrial company with lots of equipment/purchases, so I don’t expect the profit margins to be incredible. This number IS lower than I would like. Hopefully that changes.

Beta is 1.63, so this stock is a bit more volatile than the average stock. Of course, this could be a positive as it allows you to capture a cheaper price when it dips further.

Long-term Debt to Equity is over 74%, Total Debt to Equity is 82%. These higher debt numbers means the company is quite leveraged. If we were to see rates increase again, this could mean bad news. I will watch the debt levels like a hawk to make sure these debt numbers continue to decrease as they have in the short-term.

September Dividends-Final Report

So, September represented a smaller portion of my dividend income for the year. I simply don’t have as many stocks that report in September, not yet anyways! I also sold off a good portion of TLT so those distributions are no longer there either.

Here is my DIVIDEND BREAKDOWN for September after all dividends are in:

BROKERAGE ACCOUNT

Putnam Municipal Bond Closed End Fund #PMM $7.36

Hooker Furniture Company $HOFT $8.70

TLT $1.82

Cummins $3.93

Cash Reserve Interest $1.20

BROKERAGE ACCOUNT TOTAL: $23.01

CMI or Cummins is a new position for me and an extremely small one at that. I am looking to add more Cummins around the $150 mark. Unfortunately HOFT is one of my worst performing stocks. I won’t be buying any more of it until I see a noticeable trend back up.

Putnam Closed-end fund is a great little monthly dividend payer that I like a lot. Since it holds Municipal Bonds it is not subject to as much taxes, which is also a major plus.

IRA ACCOUNT

Kroger $12.00

Fidelity Long-term Bond Fund $1.67

Cash Reserve Interest $1.40

Kind of boring here other than Krogers. However, I did just buy some 3M which will begin reporting this same quarter along with Krogers.

Krogers has been on a nice trend back up here lately; I look forward to seeing how it will finish off the year here in the stock market.

IRA ACCOUNT TOTAL $15.07

As always, here is the corresponding YOUTUBE Video about my reports with even more details and comments:

I am not a professional financial advisor. Before making any investment please seek out a professional and do your own research. This website is for entertainment purposes only and to archive my own passive income journey.

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