I got an email from my discount brokerage.
They gave me a free credit to use their Automatic Investment Plan service
for free! That's $4 savings!
You might ask: "So what?"
I say: "Awesome!"
Here's why, that $4 I would have paid (as commission) to buy stock would
just go into buying more shares of the company I want to buy. And when I'm
about to chase the dividend distribution, every share counts!
Here's what I did:
Mondelez International (MDLZ)'s ex-dividend date is 03/27/2013. I also
looked into Kraft (KFRT) and Xilinx Inc (XLNX) ex-dividend dates, 03/26/2013
& 05/13/2013 respectively. As you can see, I'll miss KFRT's must own date
by a day and XLNX is just too far off. That is why, I'm going with MDLZ.
Granted, MDLZ's dividend is "just" $0.13/share which was down from $0.29 in
September 2012 (which was paid before the Kraft/Mondelez transaction), I am
bullish with MDLZ's future growth. With the economy improving, consumers would
be buying more snack foods and drinks. Also, with Easter, Memorial Day and
summer just around the corner, I expect a jump in sales for Cadbury chocolates,
Nabisco and Oreo cookies and Tang beverages.
Anyways, here's a recap of my purchase:
I transferred $250 into our brokerage account (expected funding on
03/25/2013, Monday).
Along with my $184.50 cash position, I executed an Automatic Savings Plan
transaction to buy $434 worth of MDLZ shares.
MDLZ is at $29.81 as of 03/22/2013 11:58 am ET
I estimate to buy 14.4666 shares of MDLZ at $30/share.
I would then own 26.3008 shares of MDLZ which will pay me $3.4191 in
dividends.
As always, our dividend payments would be reinvested to buy more shares
(0.1139 shares @ $30).
As you would observed, without the $4 discount, the dividend payments would
have been swallowed by the fee. Also, I would only be able to buy $430 worth of
shares which only buy me 14.3333 shares which will bring me to 26.1675 shares =
$3.4017. A net loss of $0.0174. Yeah, it may be a small loss but the greater
loss is in the future growth due to compound growth rate. The more shares I
own, the greater my dividend payments.
In other news, Waste Management just paid me some dividends.
We got paid $4.40 in dividends which we reinvested to buy more
shares (0.1162 shares @ $37.87).
Extra Credit: I have read/heard speculation that Apple (AAPL) is "poised"
to boost it's dividend payments by 56% (from $2.65/share to $4.14/share) for
a 3.7% yield. As you can imagine, shares are up (currently at $459.37) since
news of the hike got out. Although it's a far cry from it's 52-week high of
$705. 07, this recent bump may be what nervous shareholders need. I believe
that AAPL being below $500 is really cheap and that it's recent drop is a result
of both self-inflicted wounds and external stabs to the company. From the
botched Apple Maps launch to the profit taking during the fiscal cliff, Apple's
stock has seen a nose dive to $419 before stabilizing at the $420-$430
range.
In spite of Apple's iPhone 5 and iPad sales being through the roof, Wall
Street's expectations are just too high for the Company to beat. On top of
that, Samsung's victories (court judgements and sales) did not help Apple's
share price. But last week, I saw a small glimmer of hope for Apple. Samsung
just launched their new flagship phone, the Galaxy S4 with hype that matched the
iPhone but execution that fell flat on Samsung's face. The whole presentation
just showed how masterful Apple's product presentations are. Samsung's "show"
was generally panned by tech journalists and even mainstream media. The phone
however, is a different story. It told me what I needed to know about Samsung's
vision of their phone's future: more of the same. Critics blasted Apple for the
iPhone 5's lack of a differentiating features and design that Samsung seemed to
outpace Apple in both fronts. But with the Galaxy S4 looking and functioning
almost the same as the Galaxy S3, I believe Samsung is now experiencing a lag in
their "wow" factor.
In my opinion, it would be tough for Samsung to be "innovative" without
Apple to "copy" from.
That's just my opinion so take it as it is.
That's just my opinion so take it as it is.
So why is this good news for Apple? Well first, current Galaxy S3 owners
have not much of a reason to buy the new S4 which could be the opening for Apple
to snatch some of the market share back from Samsung. Currently iPhone 5s or
iPhone 6 rumors have been leading towards a new phone design and with iOS 7
around the corner (WWDC is usually held in June), Apple fans will have a reason
to hope. News of the iWatch and iTV also help fuel speculation that Apple may
be launching a new product market that would bring back the Apple cool factor
that Steve Jobs used to bring.
So will 2013 bring Apple back on top? Only time will tell.
