Today’s purchase: a company practically printing money


Ever heard of Avery Dennison? I know I sure as hell hadn’t … until I stumbled upon it on my search for a solid dividend player with quarterly payouts in March/June/Sept/Dec.

That was Monday. Just a day later, I’m happy to say it’s in my portfolio. I bought a share Tuesday morning for $80.32.

So what’s the company do? Here’s what the website has to say:

At Avery Dennison, our businesses are unified by the shared vision of making brands more inspiring and the world more intelligent. Throughout the world, we focus on making products more engaging, brands more compelling, inventories more productive, information more valuable and our surroundings more understandable. From apparel branding to consumer goods packaging,vinyl graphics and the latest in label industry trends, we play a powerful part in everyday life.

That’s just a fancy way of saying they make the labels plastered all over the products you use and see every single day. They’re not literally printing money as the title to this post suggests, but the stuff they print turns into some serious profit. It’s a business that certainly isn’t going anywhere anytime soon. Retail may be struggling mightily, but that’s not because people aren’t buying things; they’re buying them other places.

AVY pays a quarterly dividend of $0.41 – a yield of 2.04% – and has a relatively low payout ratio of 46.33%. It’s has an EPS sitting at 3.54, a profit margin of 4%, consistently beats earnings estimates and has grown its earnings per share by 13.11% over the past year. It’s grown its dividend, too, increasing payments for each of the last six years. Avery Dennison most recently upped its payment from $0.37 a share per quarter last February, so a new raise could be in the cards.

It’s not the best stock in my portfolio from a value standpoint. It’s currently trading at just a couple bucks shy of its 52-week high, and has a P/E ratio hovering around 22, but I think it’s going to be a good company for a long, long time. That and, well, I only bought one share, as I usually do when I make any purchase, so it’s really not a big deal in my case. If you have $100,000 to spend, you might want to look elsewhere in terms of value, but if you have a small stash of cash from recent divided payments or deposits, give it a look.

I’m sure glad I did.

You see, I wasn’t in the market for a quarterly payer with a schedule starting in March until recently. I really felt good about my 100-company portfolio a few weeks ago, but GameStop has been a real bummer lately. I wanted so badly to give the company the benefit of the doubt. Video games are awesome, and the industry as a whole is making money hand over fist, but GameStop just has too much going against it. The Nintendo Switch might give the company a boost in the short term, but you can buy systems anywhere (Best Buy, Target, Wal-Mart). GameStop doesn’t have any real advantage in that respect, and the fact Xbox announced Game Pass – a Netflix style subscription service – isn’t helping the company any, either. Reselling used games was nice for awhile, but there aren’t going to be any used games to sell before long.

GameSpot may be around for several years to come, it may even have some decent quarters, but I don’t like its prospects for the long term. It pays awesome dividends, but those might not be around much longer, either.

It was time to say goodbye. I sold my three shares for $72.51 (a loss of about $4).

I used the money from the sale to buy the share of AVY, which was my second in as many days. I bought a share of TUP Monday.

This week’s two purchases increased my projected annual dividend income by $4.36 – a number currently parked at $246.18

Disclaimer: I’m the furthest thing from a pro investor you’ll ever find, so don’t confuse my blog posts with sound investment advice. I love to invest and am a big fan of blogging … so that’s what I do. I share my success and failures because I enjoy documenting the journey.

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