I know I haven’t been very active on the blog as of late, as I’ve been super busy dealing with housing projects, a career transition, and pouring hours upon hours into Blizzard’s awesome new game, Overwatch. Seriously, I haven’t been so addicted to a game since my early days of World of Warcraft (another Blizzard franchise) some 8+ years ago.
And speaking of Blizzard, this brings me to the first stock purchase I placed in June…
Activision Blizzard (ATVI)
I am a HUGE Blizzard fan. Most of my teenage and adult lives have been spent playing their games, ranging from World of Warcraft to Hearthstone, to Heroes of the Storm and now Overwatch. Everything this company makes pretty much turns to gold; they are truly creative geniuses!
On the Activision side of things, the big name is of course the Call of Duty franchise which, while I have never personally played it, is undoubtedly awesome, at least from a financial point of view. Seriously, it is a money-making machine. Yeah, there have been some complaints recently about a decline in quality since the Modern Warfare arcs, but that hasn’t stopped the franchise from continuing to be a commercial success overall.
The stock only yields 0.68%, but it has been increasing the dividend annually since it started paying one in 2010, which is a young but solid track record. The payout ratio is also quite low at 15.4%, giving that dividend plenty of room to grow in the future.
In any case, I am not primarily investing in Activision Blizzard for its dividend, but rather for its growth potential. Between Blizzard’s many successful intellectual properties, Activision’s cash-cow franchise in Call of Duty, and the company’s recent acquisitions of King and Major League Gaming, I think that the sky is the limit for them.
On 6/7/2016 I initiated a position in ATVI by purchasing 25 shares at $38.42/share, for a total investment of $960.42.
This purchase was done in my 401(k). As a reminder, I follow more of a growth/capital-gains-oriented strategy in my retirement account, compared to the purely dividend-focused philosophy that I embrace with my taxable account. I do this because I won’t have access to those funds until I’m like a gazillion years old, which gives me more time to experiment with “riskier” stocks, whereas I plan on tapping into my taxable account’s dividends relatively early on in life to sustain myself entirely.
Also, while I love dividend investing, it is fun to try out some other things every now and then. Variety is the spice of life!
Wells Fargo (WFC)
Not much needs to be said about Wells Fargo. This Buffet favorite is a classic, boring, blue-chip bank stock. It prudently cut its dividend during the Great Recession in 2009-2010, but has been aggressively increasing it again ever since.
The stock currently yields a solid 3.20% while only boasting a modest payout ratio in the vicinity of 35%, which gives the company plenty of room to grow the dividend moving forward. Furthermore, it currently trades around $47-$48 with a P/E ratio of about 11, which is quite low. WFC looks undervalued to me at this time. Morningstar also shares that point of view, valuing Wells Fargo at $61. Going by that number, that would mean the bank is currently trading at a 23% discount.
Since I already held a small position in Wells Fargo with a cost basis of $55, I figured now was a great time to average down.
On 6/20/2016 I added to my position in WFC by purchasing 7 shares at $47.21/share, for a total investment of $330.47.
The last couple of weeks have been great. Life is good, I’ve invested a solid amount of capital, and I’m very happy about the dividends I’ve received so far. Actually, June looks like it might be on track to become a record month for me earnings-wise, but I guess we’ll just have to wait another week until my dividend log comes out to find out! 😉
Disclosure: long ATVI, WFC