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Recent Buys

Recent Buy – Cardinal Health (CAH)

Cardinal Health

 

    The market seems to be calming down lately which is good for investors. That means more opportunities to buy. As the quarter ends and companies release their earnings, some may have missed earnings slightly causing a decrease in their share price. This is the time investors wait for and buy on those dips. I am pleased to announce my first purchase of April.  I picked up 11 shares of Cardinal Health (CAH) at $71.67. Below, more info is listed for CAH.

 

CAH Stats

Annual Dividend: $1.80

Yield: 2.48%

Years Paying/ Increasing: 12 years

Dividend increase from prior year 13.8%

Payout Ratio: 33.2%

P/E Ratio: 17.35

EPS: $4.17

 

    It’s amazing how one day can change a company from trading at a high, to being on your watch list, to “I have to buy this!” Why did CAH have an 11% dip in stock price in one day? And why does it make me want to buy it so much? The decrease was caused by an earnings revision, and news that CAH announced an acquisition of Medtronic (MDT). This will cause some volatility in stock price for the short term but should help earnings and growth for the long term. Cardinal will increase their medical equipment lines with Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses from the Medtronic acquisition.

 

    Cardinal Health has a good track record of increasing dividends. With a high dividend growth rate and a low payout ratio it has been on my watch list for some time. While the yield is low now, similar to my last buy HRL, the growth rate will increase this over time. This dip in price seemed like the perfect entry point to open a new position with CAH. While it is a relatively small position, it is also the first healthcare stock I have in my portfolio which will open up a new sector and give me more diversification between sectors.

 

    With a dividend yield of 2.48% or $1.80 annually, $19.80 will be added to my yearly dividend income. Do you like CAH? Did you pick any up on the dip? Have you purchased any other stocks recently? What other companies are you watching closely right now?

 

11 Comments

  1. What can I say… nice pick up. We are just a couple that took advantage of that big price swoon the other day. Many have jumped aboard the CAH train recently. The market this month is still stuck in that sideways pattern. Dow up a couple hundred, Dow down a couple hundred but in the meantime some pretty good relative values can be found. Happy to see the buying continue.

    1. The dip definitely worked out in our favor for this one. Can’t pass up that opportunity. I have been looking closely at both CAH and JNJ for a while. Both seemed to have dropped at the same time to provide better value so I’m thankful I was able to pick up one. Thanks for your comment.

  2. I don’t invest in individual stocks, but if I did I would probably choose the energy sector. A lot of energy stocks are paying high dividends, and oil prices will probably go up in the next few years so they’ll do just fine.

    1. Yeah I like the energy sector which is why I have allocated so much of my portfolio to it. Trying to branch out and diversify a little with my recent purchases. Utilities are also good for high, safe dividends. Thanks for your input.

    1. I couldn’t agree more. Makes for the perfect entry point to start a new position with them. Thanks for stopping by!

    1. Thank you. I’m happy about it. First healthcare stock I own and couldn’t have asked for better circumstances and price to make an entry. Thanks for your comment.

  3. I don’t own any CAH but I did something similar. When Goldman Sachs missed their earnings estimates a couple of days ago, their stock tanked a little. I then check out their earnings report and found that their earnings was increasing quite a bit but just not as much as Wallstreet’s expectations.

    What I did was took the opportunity of this fear and sold two naked put contracts with a strike price of $185 and an expiry date of Jan 2018. The current stock price is at $215. If they dropped to $185, I am more than happy to buy the stock, if not I make about $1350 in free money.

    1. Thanks for the comment Bert. I like CAH too and have been watching it for some time. Glad I could finally find an opportunity to open a new position. This price and yield do make for a more attractive buy. Any price point in particular you are waiting for before buying more?

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