Recent Buy – KMB

Yesterday I added to my Kimberly-Clark position.  Now I have to admit to the possibility (probability?) that it’s overvalued.  Passive Income Pursuit made a good case to this effect in his recent article on Seeking Alpha.  Besides our differences – his being growth oriented whereas I don’t mind the “bond like quality” – there are (I feel) a couple of gaps in his analysis.

First, KMB has demographics on its’ side.  Not only diapers, as mentioned, but elder care products as well.  Second it’s not clear that the article fully accounted for the HYH spin other than to note an increase in goodwill.  Granted, KMB has some headwinds but in a normal economic cycle my guess is they would be out in front of them already.  KMB is Exhibit A for the so called ‘Earnings Recession’ the TV talking heads like to banter about.

Therefore I added to my existing position at $130.15 per share.  This will increase KMB’s share of my dividends from 3.43% to 4.09% (with a target maximum of 6%) and provide an initial yield of about 2.8%.  At least I’m leaving a little room to add in the event of a dip.  🙂

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6 Degree Investing

Six degrees of separation is the theory that everything is six or fewer steps …
“Invest in what you know (coupled with serious fundamental stock research)” attributed to Peter Lynch
“Own What You Love” Loyal3 slogan
These are common themes used widely among investors. Presuming due diligence has been performed and ones minimum requirements are attained it makes perfect sense. One example is my granddaughter’s portfolio. Each Christmas she receives a stock that she can relate to and one with a company sponsored DRIP. Her first was General Mills as she liked Lucky Charms. When she studied US history it was Washington Gas Light (WGL) as they keep the Capitol lit. Over the years her portfolio has grown to also include Hershey, Walmart, Procter & Gamble, Union Pacific, Disney and Kraft-Heinz. This year’s addition was Texas Instruments since she applied – and was accepted – to a high school sponsored in part by them. It is a moderately diverse portfolio, but more important is the fact that she can identify with it.  Although none are owned through Loyal3, it is a kind of Own What You Love portfolio.

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