Feb 28, 2016

2 Recent Buys - MDT, KO

According to my strategy this year I intend to increase weight in consumer and healthcare sectors. And now I have followed that strategy by two recent purchases. I have started a new position in Medtronic PLC (MDT). I have also made a tiny additional purchase in The Coca-Cola Company (KO).

Buy in USD - Medtronic PLC (MDT)
Trade Price: 74.75
Shares: 2
Commission: 0.35
Total: 149.85
Sector: Healthcare -
Medical Appliances & Equipment

Yield: 2,0%
Payout Ratio: 79%
Dividend Increase Streak Years: 38
Annualized Dividend Growth 3-yr: 10,7%
P/E (ttm): 39,3
S&P Credit Rating: A


Medtronic has a broad portfolio of medical devices. The company is divided into four groups. They are from biggest to smallest by revenue: Cardiac & Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group and Diabetes Group. P/E and payout ratios seem to be a bit high here. But, if we think about their guidance for this year: Non-GAAP EPS of $4.36 - 4.40 (includes negative currency movement of $0.45 - 0.50) then we get P/E around 17,6 and payout ratio around 35%. Looks much more comfortable.

MDT is based in Ireland nowadays, which has caused taxation headache to many investors. To tell the truth I'm holding my breath waiting what my dividend withhold % will be. It should be 0%, but I can't really know for sure until that dividend actually arrives on my brokerage account. I really hope that taxation goes smoothly, because I like the business and want to make this one of my cornerstone positions. But until the mid-April, when the dividend should be paid, I will consider MDT a supporting position.

Buy in USD - The Coca-Cola Company (KO)
Trade Price: 43.45
Shares: 1
Commission: 0.35
Total: 43.80
Sector: Consumer Staples - Beverages Non-Alcoholic

Yield: 3,2%
Payout Ratio: 84%
Dividend Increase Streak Years: 53
Annualized Dividend Growth 3-yr: 9,0%
P/E (ttm): 26,5
S&P Credit Rating: AA-


Well, this company doesn't need much introduction does it? I have almost always a bottle of Coke Zero in fridge. It's kind of funny, that wasn't the case before I became a shareholder. Of course I bought Coke, but it was just one of the drinks to buy in store. Now, it has become my main soft drink and others I buy just to get some variation:) I would like to load more shares, but that sky-high valuation is holding me back a little bit.

Thanks for reading. My Portfolio page has been updated to reflect these trades.

Disclosure: Long MDT, KO. 

2 comments:

  1. Nice purchases again, DL.

    I used to own MDT and wouldve still owned it if my broker was more competent. Even though it was in a tax deferred account, and we are not supposed to pay Irish dividend withholding taxes - my broker was charging me the taxes - so I decided to sell out and exit the position. A well very run company - nice purchase indeed.

    cheers
    R2R

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    1. Hi R2R and thanks. Yeah, I remember reading about your MDT sale. It's very unfortunate when you have to sell for those kind of reasons. I very much hope that my withhold % is zero as it should be. In that case I will buy a lot more of this stock.
      Thanks for dropping by!

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