It has been over 3 months since I made any big energy related purchase. The last ones were in November and December when I purchased ConocoPhillips. Since then the energy sector has been range bound and continues to be weak and hasn’t come out of the woods yet. These COP purchases are still in negative territory. But the energy sector still provides one of the most attractive valuations in these market conditions. So I ended up coming back to energy sector with this purchase.
I purchased 30 shares of NOV at $49.00 on 3/24/2015. With commission, the total cost comes to $1,477.00. With a quarterly dividend of $0.46/share, the yield on cost comes to 3.73% and this purchase adds $55.20 to my forward annual dividends.
The stock has a 52 week low of $46.08 and 52 week high of $86.55. The stock could continue to go down based on oil price and there is no way to time it. But given the stock performance in the last few years, the stock has more upside potential than downside potential. Of course, everything is based on investments from other oil companies. One of the reasons I was hesitant on more oil/energy/commodity related purchases due to the fact that I already hold positions in COP, CVX, KMI, BP, PSX and BBL. These stocks made up little over 12% of my portfolio and wasn’t sure if I wanted to add more. But I couldn’t pass up this low price with nice upside potential and this purchase increases my oil/energy/commodity related exposure to about 14+% in my portfolio.
JC at Passive Income Pursuit recently purchased this stock and has additional information about the company. Similarly, Jason at Dividend Mantra purchased this stock last month and has a write up on more information about the company.
Morningstar has a fair value of $66.00 for the stock and it is rated 4 stars.
This is my second big purchase this month in addition to the weekly purchases. I had purchased Phillip Morris (PM) earlier this month.
The portfolio page will be updated soon to reflect this purchase.
Disclosure: Long on all stocks mentioned above
Dividend Growth Journey 
DGJ,
Nice. You got in at a great price/value, in my view. Wish I would have waited a bit to pick up my first tranche, but I still feel good about the overall position and cost basis in terms of long-term value.
It’s one of the best companies in this sector from a financial perspective, which seems to indicate the dividend is safe and should continue to grow. We’ll see how it goes!
Thanks for the mention. 🙂
Best regards.
Thanks DM. The entry point is looking good, but it might decline much further. That’s what happened with my COP purchase in November and December as the stock has dropped close to 10% since then. Maybe if NOV declines a bit more, I will think about adding more and averaging down.
Cheers,
DGJ
Great buy at a great price DGJ! We also own NOV and also took the opportunity to average down our cost basis earlier this month. Also, way to add another $55.00 in annual dividends!
Keep up the great work. Best wishes on your personal finance journey! AFFJ
Thanks AFFJ. NOV looks to be a great buy at this price. If the price drops further by over 10%, then I might also consider averaging down. I am also looking to average down my CVX position as well.
Thanks for stopping by
DGJ
I had to average down with the really big drop in share price. It might sit around these levels for a while because I have no idea where oil prices will go from here. I’ve seen predictions for $20 and $90 so who really knows. But NOV is at a great long term value. My only concern right now is whether a dividend growth “culture” is ingrained in the BoD. It’ll be interesting to see what they decide to do but I expect a small increase this year. Luckily we should find out soon. Like the purchase here and thanks for the mention.
Yeah. There is no saying where the oil price will end up, but I am hoping that this is a great buy for long-term. We will have to wait and see how the dividend growth pans out, but I believe that the current payout ratio allows for growth even without growth in EPS.
Cheers,
DGJ
DGJ,
Great purchase and what a month you are having over there. I suspect you will invest again Tuesday meaning 5 weekly investments along with the NOV purchase. The raise HPQ gave you is just icing on the cake so to speak. Keep up the great work and writing. Looking forward to the next 100 blog posts.
FD
Thanks Forward Dividends. This month has been a nice one with respect to purchases. I didn’t have much in purchases in January and Feb. But I made up some ground in March with my PM and NOV purchases as well as the weekly purchases for 5 weeks.
Your March has been great as well. You have made huge Roth IRA purchases in addition to your Loyal3 and Motif. Looking forward to reading about your next purchase.
Cheers,
DGJ
Nice purchase DGJ! While it may seem like your allocation to oil is high now, that will reduce over time as you make new purchases in different industries. Plus, your allocation level isn’t too high for a dividend portfolio. Check any dividend centered mutual fund and you will find that your allocation is lower! I agree, in the short-term, there really isn’t a good way to time a purchase in this industry because everything changes so rapidly. But the big benefits will be in the long term when oil prices increase and the industry finds its groove. Way to add a strong company from the industry to your portfolio!
Bert, One of the Dividend Diplomats
Thanks Bert. Yeah… I first thought that I was over allocated in Oil/Energy sector, but decided that it isn’t to stat that way forever with investments in other sectors. So hence decided to make the purchase. Also looking to add more CVX if the price drops a bit closer to $100 levels.
Thanks for stopping by
DGJ
I don’t plan on adding in this sector, but it does look like a strong companies. I’m still a believer that energy will come back sooner than later!
Yup. I am thinking that the prices should rebound (at least a bit) by the end of the year and should help the oil/energy related stocks to bounce back.
DGJ