Why I opened a position in Coach


Having a newborn around means a bunch of different things. Less sleep is an obvious one, along with plenty of strange smells and an ever-growing pile of laundry.

It means other things, too, like an influx of visitors swinging by the casa to deliver gifts, well-wishes and, my personal favorite, dinner.

A good chunk of the visitors have been my wife’s friends, which means I’m usually entertaining my older two boys while she shows off the new arrival. Not the other day, though. The boys were scewing around somewhere that wasn’t right under my feet, which was nothing short of a minor miracle, and my wife and one of her friends were googling over the baby so, well, I took it upon myself to plop in front of the tube and throw the Indians game on. The girls were in the room, talking about whatever nonsense they talk about, but I’m a pro at tuning them out … just ask my wife.

I did hear part of a convo about Coach, though. My wife commented on her friend’s bag. It was new, the friend said … got it from Coach for $400 or so.

I almost fell out of my chair. I had to chime in.

“$400 for that!?!? … it’s a damn fine bag, but, four hundo,” I said.

“Yeah,” she said. “I like it. I liked another one better, but it was too expensive.”

“So … you settled for a $400 bag?,” I said.

“I wouldn’t say settled,” she said. “I love the bag … I love all … the … bags. I might have a slight obsession.”

That’s all I needed to hear. I didn’t even know if Coach was a publicly-traded company at that point, but I sure was hoping so.

I went on to ask her how much the bag she liked more was. She said it was almost twice as expensive. The fact someone would pay $800 for a handbag is insane to me, but, different strokes for different folks. It’s her money … she can do whatever the hell she wants with it. I have a feeling she’s not the only one buying super-expensive Coach bags, either.

In fact, I know she’s not. I went to the website to see what it’s all about (as I always do before I pull the trigger on a stock). It was a smooth looking site, I’ll give it that. Just for fun, I did a search for all bags and filtered it by price, highest to lowest. I shit you not, the most expensive bag listed, a black bag for $2,500, was sold out. SOLD OUT!

I had to know more.

I quickly found out, as most of you probably already know, coach is public and, as an added bonus, is quite the dividend stock. The yield is nearing 3% and, while it’s not particularly cheap right now – just a couple percentage points off its 52-week high and trading at a P/E ratio in the mid 20s – I liked it enough to open a position. I’m really not all that concerned with price when I open a position anyway, mainly because I usually buy just one share at a time. I just wanted it in my portfolio. I bought the one share for $45.94.

Coach became the 40th company in my portfolio that pays dividends in Jan/April/July/Oct. I also have 40 that pay in Feb/May/Aug/Nov and 40 that pay in March/June/Sept/Dec. Basically, I’ll be paid 40 dividends a month moving forward, more than one a day. Now it’s probably about time I add to my positions so the small payments can grow into bigger ones.

That’s pretty much all I have to say at the moment, but I wanted to share the story. Since I’ve started investing, I’ve looked at my environment in a totally different way. Everything I see or hear, I treat as an investment opportunity. They don’t all turn into purchases, but I’m always on the lookout. In years past, The whole Coach conversation I had would have been a throw-away convo. Now, though, it turned into an investment.