Weekly roundup: The earnings miss that created an opportunity
The stock price almost always tumbles, even if the miss is minuscule, and I found that out a time or two this past week. UPS, for example, reported earnings per share of $1.63 – a good $0.06 under the expected EPS. It definitely wasn’t a near miss, but I don’t think it warranted the sudden $12 drop in share price, either.
Either way, a part of me is glad it sank like it did. I bought my first share of UPS late last year while it was pretty expensive ($118.76). When I saw it fall shortly after the market opened Tuesday morning, I knew I had to buy another … so I did. The share I scooped up for $109.12 brought my cost-basis down by nearly $5. I now have two shares worth $213.98. They make up 4.55% of my portfolio and, thanks to the nearly 3% dividend yield, will earn me a projected 6.26 in passive income this year.
Getting into investing when I did (summer of 2016), most of the now 45 positions I’ve opened were overpriced at purchase. I realize that now that I’m starting to learn more. I kinda had a feeling back when I started, but was OK with it. I wanted to buy a bunch of high-quality companies with histories of paying consistently increasing dividends … not companies that were cheap. I only bought a share or two at most, so I was hardly concerned because, well, I knew there’d be a chance I’d be able to lower my cost-basis down the road. Last week was a perfect example of that and, going forward, I’ll obviously plan on lowering my cost-basis whenever possible.
UPS created the most headlines, but it wasn’t the only purchase I made this week. I also bought a share of General Motors on Monday. I couldn’t resist when I heard the news GM and Honda are getting together to work on hydrogen-powered cars. Yeah … hydrogen-powered cars. I paid $36.39 for a share. I now own four shares – making up 3.09% of my portfolio – worth a combined $145.56.
My last purchase of the week was a share of Valero Energy, which I bought for a lot of the same reasons as UPS. I grabbed a share for $65.64, which is almost $3 less than what I paid for my other share back in December. I now have two shares worth $131.0.
Combined, the three shares of three very different companies will earn me a projected $7.44 of passive income this year and, hopefully, more than that in the years to come.
I’m pretty pumped about the purchases – I feel it’s important to make continual progress and small, weekly purchases help me do just that – but I’m also excited about the dividends I received. I was paid a combined $5.71 from seven different companies ($1.38 from DOW, $0.48 from JPM, $1.16 from VZ, $0.98 from T, $0.48 from GIS, $0.50 from CVS and $0.73 from RTN). Getting paid from seven different companies in one week is pretty damn cool. The payments came over the course of four consecutive days, too. It wasn’t much, but that’ll change as the snowball starts to pick up steam.