October monthly stock purchase – Pennon (PNN) Whitbread (WTB) Centrica (CNA) Barr (BAG) plus more

October has so far seen stock markets reach new highs. The FTSE100 has skyrocketed whilst the FTSE250 has recovered from its Brexit blip. And although I own a portfolio of stocks, I am not happy to see stock markets rise. Higher stock markets mean that I am now buying a lower ownership stake in the businesses I like and that is never a good thing. Higher stock prices also mean that I am able to collect a lower dividend yield on the shares that I buy. I never like it when my favourite bar of chocolate increases in price and when stock prices rise, it has the same effect on me. If you are still in the wealth accumulation phase of your life and if you think about stocks this way, chances are that you will do really well over the different market cycles.

But even though the stock market is high right now, I have no idea whether it will drop or go even higher. Market timing is impossible and that is why it is best for an investor like myself to buy little chunks of stocks on a regular monthly basis. This way, I stand to benefit if the stock market moves higher or goes sideways. And if the stock market drops, I have kept enough dry powder on the sidelines to make large purchases should this opportunity arise. Investing on a regular basis seems like a win win.

My regular investment into the market this month saw me sink £1401.86 into 8 different stocks. 5 of these purchases were made in companies I already own whilst three were new positions. The three new companies I bought shares in are as follows:

  • Pennon (PNN) – I bought 17 shares at £8.26 a piece and expect to get a dividend of at least £5.70 per annum.
    Pennon is a utilities company specialising in water and waste management. It has an excellent track record and a great strategy, Many utilities are historically overvalued right now due to their safe chunky yields. This is the reason I have not bought more of Pennon. But should the price drop and reach a level where I feel I am able to warrant I a large enough purchase, I certainly will pull the trigger.
  • Whitbread (WTB) – I bought Whitbread mainly to get exposure to costa coffee. Although Premier Inn is a great run business and has its own merits, I believe Costa is one of those exceptional businesses that have high returns on equity. The stock price right now is on the high end of fair value and thus I bought 4 shares at £37.8 a piece.
  • Centrica (CNA) – This utilities giant has seen its stock price crash by close to 50% over the past 3 years. There are a combination of reasons for this such as customers leaving and exposure to oil at the wrong time in the cycle. Having said this, I believe that Centrica could be a great turnaround story. Its selling its oil assets outside Europe and moving to a more consumer centric businesses with products such s Hive. Add in a chunky yield of over 5% and the stock does look interesting. I bought 73 shares at a price of £2.14 and expect to receive a dividend of £8.78 over the coming year.

Apart from these three purchases, I added to my existing positions in the following stocks.

  • A.G Barr – Bought 60 shares at £4.87 each. I know have 114 shares in Barr which pay me a dividend of £15.
  • Britvic – Bought 28 shares at £5.88 each. I know have 236 shares in Britvic which pay me a dividend of £55.
  • BT – Bought 42 shares at £3.68 each. I know have 588 shares in BT which pay me a dividend of £47.
  • Hikma – Bought 10 shares at £20.26 each. I know have 24 shares in Britvic which pay me a dividend of £5.
  • Next – Bought 3 shares at £45.3 each. I know have 6 shares in Next which pay me a dividend of £16.

In total my additional new shares bought this month will bring in additional £47.97. If I look across my whole ISA portfolio, I now can expect to receive over £1,000 in dividend income over the coming year. This is absolutely amazing considering I had a grand total of £0 in dividends this time last year. I will be writing a post on my journey to £1000 in dividend income so keep an eye out.

So if you are looking to start investing, my advice is to start now. Time is a more important factor than the rate of return when building wealth. A 10% annual return over a 20 year period generates more wealth than a 20% return over 10 years. You can’t control what kind of returns your investments will make, but you do have control over when you invest. So the earlier you start the better.

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