Summary
- Newborn Portfolio update; increase in cash position, as well as a new position added in the portfolio.
- After a lot of homework and research, Bristol-Myers Squibb was added to the Newborn Portfolio.
- BMY: good dividend, currently underpriced, with a strong pipeline that should support future growth for years to come.
To say it has been a busy few months is an understatement. Our daughter has just passed the 4-month mark and is keeping my husband and I on our toes. We also just planned and held her Christening and reception, which consumed any remaining free time I had. With the Christening behind us and things getting back into a regular routine, I figured it was a good time for a Seeking Alpha Article post to update the readers and followers on our newest addition to the portfolio.
In my last article, Q3 Results Are In, I had 5 stocks on my watchlist, which included Mastercard (MA), Bristol-Myers Squibb (BMY), CVS Health (CVS), Google (NASDAQ:GOOG) (GOOGL) and Disney (DIS). My husband and I spent some time researching the above and sharing our thoughts with each other on what we thought made the most sense for the portfolio. In addition to scanning the prior year annual reports, reading press releases and listening to the most recent quarterly earnings calls, we also monitored each stock's price movement throughout the time we researched the positions.
Based on our research and the price activity of our watchlist stocks, we determined that BMY represented the best investment for the Newborn Portfolio out of the 5 stocks we were researching.
Portfolio Goals
Rather than rehash the content in my last article, I am including the Newborn Portfolio goals below for reference.
- Have 70% of the portfolio in fairly valued or undervalued, high quality dividend paying stocks with the remaining 30% allocated to growth stocks
- Achieve an overall portfolio yield of 3% or greater
- Hold between 10 to 15 positions throughout the life of the portfolio
- Contribute $250 on a monthly basis as well as ad hoc contributions from gifts, holiday's etc.
- Last but not least, generate returns in excess of our benchmark which we set as the S&P 500.
Portfolio Update
A dose of BMY for the Newborn Portfolio
As stated above, after researching the aforementioned stocks, we decided to start to build a position in Bristol-Meyers Squibb. We will provide additional color on that decision below, but at a high level we liked the dividend rate the stock offered, the future growth prospects considering the acquisition of Celgene (NASDAQ:CELG) and the strong product pipeline the company has. Taking those facts into consideration, we started to build a position in BMY on November 19th with a purchase of 50 shares at $56.50. That was then followed with a subsequent purchase of 25 shares on November 20th at $55.50. With free trades, it's now easier and more cost effective to average into a full position, which is what we will continue to do if the stock drops below our cost basis. After the two purchases above, we now have a partial position on with an average price per share of $56.17 at a total cost basis of $4,212.50, with the plan to add another 25 shares before year-end. Currently we have an open buy order with a limit price of $55.00, so if the stock drops below $55.00 before year-end, we will top off our position to a full 100 shares with an average cost basis right around $56.00 per share. Consistent with dividend paying investments in the portfolio, the dividends paid will be reinvested in BMY stock.
