Automatic Investment Blunder or Benefit

Usually this post is about recent purchases.  I had more than I expected thanks to a blunder on my part.  With ShareBuilder they have these automatic investment plans.  Depending on what schedule you have selected it will purchase your plan that Tuesday.  Unfortunately I had it set to When funds are available.  So my plan kept an eye on my balance and kept on purchasing until I caught it.  Nothing like an email while you're at work that you just purchased more stocks you never intended to buy at an unknown price.  I had to wait until I was out of a meeting then raced back to my desk and secretly logged into my account to see what was going on.  Needless to say it is now turned off.  What did I get (twice)?  Well let's take a look.

Date
Company
Shares
Price
Entry Yield
9/23
NUS
11.8624
42.15
3.3%
9/23
HMN
17.2117
29.05
3.17%
9/30
NUS
11.1023
44.68
3.1%
9/30
HMN
17.2473
28.99
3.17%

Nu Skin Enterprises Inc. (NUS)
Nu Skin, founded in 1984,  is a direct selling company of personal care products and falls in the Consumer Defensive sector of the market.  They are branding themselves as an anti-aging company and are based out of Utah.  Companies like this develop products to help reduce the effects of age on skin and  pharmaceuticals to promote prolonging your life.  My wife doesn't use any of these products yet but I know allot of women who do.  Surprisingly allot of their revenue comes from China.  They are in 53 markets worldwide and recently declared a dividend of $.345 per share.  I just missed the Ex-Div date of September 12.

Key Statistics
I must have used my August ranking to find this gem as I didn't do one at all for September.  Wow did that month fly by.  They were ranked 4 out of the triple C companies (Champions, Contenders and Challengers).  My focus is on purchasing companies that have consistently increased dividends.  The U.S Dividend Champions spreadsheet is my starting point in my ranking system.  They are a dividend Contender having increased dividends for 14 years.

Value Rank
Growth Rank
Quality Rank
Yield Rank
Overall Score
TTM Payout Ratio
9
17
179
30
235
25.6

A low P/E ratio (currently at 9.03) was the key driver for the Value Rank.  The yield at both times of purchase was 3% or above.   Growth has been very good at 42% over the past 5 years.  This and growing EPS each year helped it get up to #17 in the growth category.  EPS may dip this year compared to last year unless there is a big surprise.  Prior to this year though EPS climbed each year since 2006.  This dip is one of the reasons for the today's price.  I was able to get this company at yields above 3%.  It has been trending upward the past few weeks so the yield is again below 3%.  It has been one of the few stocks gaining in the past few weeks.  The growth rate of the dividend over the past 5 years has been excellent.  With a low payout ratio I see growth continuing (but maybe not at 22% like the past). 


Nu Skin Wrap-up
The drop in the stock price this year is due to a lawsuit that very well may kick them out of China.  Like I said above China is a pretty big chunk of their revenue thus why I did not want to invest too much.  This double purchase has me slightly worried so I will have to keep an eye on their free cash flow and the outcome of this lawsuit.  Prior to this year they had quite a bit of cash but over the past twelve it is negative.

Horace Mann Educators Corp.
Back in August HMN was reviewed.  They ranked 1 above on my ranking system.  Entry yield was above 3% and the other key ratios still looked good at the time of purchase.  Looking at it today P/E is at 11.4 which is way below the 20 for  me to consider.  Neither Morningstar or ShareBuilder had enough information for me to figure out the free cash flow.  Yahoo shows $120M TTM leveraged free cash flow.  They are still doing well so I am OK with the double purchase here.

Value Rank
Growth Rank
Quality Rank
Yield Rank
Overall Score
TTM Payout Ratio
35
92
20
45
192
33.6

Conclusion
Overall I am happy with the investments into these companies.  Caught HMN slightly lower on the second buy.  Both of the purchases were both above my entry yield of 3%.  My only worry is the lawsuit that may affect dealings in China for Nu Skin.  But without that lawsuit NUS may never have gotten onto my radar.  I must admit researching companies is allot more time consuming that I originally thought.  I can see why most people go for funds.  I enjoy the research but wish I had more time to dig deeper and gain a better understanding of the qualitative factors.


Good purchase on NUS?  What do you all think?

Full Disclosure: Long on NUS and HMN

Comments

  1. I'd be careful with NUS. I believe their business model is unethical, or just multi-level marketing period. HLF is a good example where they're really profitable, but most of their revenue comes from recruiting rather than the sale of the actual product to consumers.

    ReplyDelete
    Replies
    1. Thanks Henry. Yeah that double dip put a little to much of my assets in NUS. I am keeping a close watch on it.
      -DFG

      Delete
  2. Hi DFG,

    I imagine that email was quite a surprise! I set my automatic Sharebuilder schedule option to "One-Time only". It means that I have to manually enable it each week but I have to modify the automatic settings anyway since I change the investments that I purchase each week.

    Best wishes,
    -DL

    ReplyDelete
    Replies
    1. Hi DL,
      I did see that option after the fact and will be using it going forward. Good times!

      Delete

Post a Comment

Popular posts from this blog

December 2016 Dividends and Year End Totals

March 2017 Dividends

November 2016 Dividend Growth Watchlist

Investment Disclaimer

This webpage is provided for general information only and nothing contained in the material constitutes a recommendation for the purchase or sale of any security. If you have any questions please feel free to contact me at dividendfamilyguy at gmail dot com.