Eastman Chemical couples growing dividend with potential price appreciation
Eastman Chemical (EMN) is a company I can honestly say I know almost nothing about. I do know a thing or two about its stock, though … and I like most of what I know.
For starters, it has everything a dividend-growth investor looks for. The yield is a solid 3.15% and it has five straight years of dividend increases at an average rate of 12.40%. On top of that, the payout (35.38%) and debt-capital (under 50%) ratios are low, meaning the company shouldn’t have any trouble increasing that dividend for the foreseeable future.
Oh, it’s undervalued, too. With a P/E ratio of 11.22, it’s way closer to its 52-week low ($64.84) than its 52-week high ($103.92). I mean, Morningstar has Eastman Chemical’s fair value price at $95. That’s some serious upside, right?
Throw all those things together and, well, I couldn’t help but add it to my portfolio.
This week’s purchases: Eastman Chemical, Fifth Third Bank
I picked up three shares of Eastman Chemical at an average cost of $77.71. Despite the numbers I just threw at you, which are all steady, I’m sure you’re wondering why I added a company I know nothing about to my portfolio. Well, let me tell ya.
Eastman Chemical is in the Materials Sector – a sector I didn’t have represented in my portfolio previously – and it pays a quarterly dividend starting in January. Couple those two things with the solid fundamentals I mentioned and, well, that’s all I needed to pull the trigger. My march to a $1,000,000 portfolio is as much about creating a passive income stream as it is about getting to $1,000,000. I want my family and I to live off dividends one day, and my goal right now is to create the most consistent passive income stream from the most diversified basket of stocks as I possibly can. Eastman Chemical helps me get closer to that goal.
This week’s dividend
I earned my first dividend (my first this time around at least): $2.88 via the 12 shares of FITB I owned at the time it went ex-dividend. It’s not much, I know, but it’s a start.
Now that I have that start, let’s check in with how I’m doing in terms of increasing my dividend haul month over month (something that shouldn’t be too hard as long as I do the math right). Next month, I’ll be getting $5.10 from T for the 10 shares I own. The month after that, my 20 shares of GM should earn me $7.60.
That said, I need to earn more than $7.60 in October. My 15 shares of FITB will get me $3.60 and, with the $1.86 my three shares of EMN will earn, I’m currently looking at $5.46. Translation: I still have some work to do. The good news is I have plenty of time to add to my FITB and/or EMN positions, or initiate another position, before ex-div dates start creeping into play.
March with me
Looking to get started? Start with Robinhood: http://share.robinhood.com/benjams352
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