I put some
shares of the farm equipment manufacturer Deere into the Dividend Yield Passive
Income Portfolio.
Deere pays
a 2.43 percent dividend yield and is valuated with a P/E of 10.35. The forward
P/E amounts to 9.95. Analysts predict the future 5-Year earnings per share
growth at 9 percent yearly.
I don’t
like the business model because of its capital intensive structure. Deere made
huge investments into its production plants each year to keep the productivity
at a high level. That’s the main reason for the low payout of 23 percent and
the high debt burdens of the company.
 |
| Earnings and Dividends of Deere |
Here is
what the company produces: Deere & Company manufactures and distributes
agriculture and turf equipment, and construction and forestry equipment
worldwide. Its Agriculture and Turf segment provides agriculture and turf
equipment, and related service parts, including large, medium, and utility
tractors; loaders; combines, corn pickers, cotton and sugarcane harvesters, and
related front-end equipment and sugarcane loaders; tillage, seeding, and
application equipment comprising sprayers, nutrient management, and soil
preparation machinery; and hay and forage equipment consisting of
self-propelled forage harvesters and attachments, balers, and mowers.
I love the
cheap valuation. I think that I have a 30 to 50 percent margin of safety before
I lose some money. This could also be my potential gain.
As you
might have heard, UralKali plans to increase its Kali production with the
expected result of lower prices. Farms with high input costs of kali could
increase profits on their agricultural products. With a higher agricultural
return, investments into farm equipments could be made easier. That’s my
speculation and Deere is the biggest fish in the pool of crop picking engines.
The Deere
trade is a definitely more speculative driven investment.
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| Latest Portfolio Transactions (Click to enlarge) |
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| Dividend Yield Portfolio I (Click to enlarge) |
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| Dividend Yield Portfolio II (Click to enlarge) |
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For readers
who are new to the matter and my dividend growth philosophy: I funded a virtual
portfolio with 100k on October 04, 2012 with the aim to build a passive income
stream that doubles each five to ten years. I plan to purchase each week one
stock holding until the money is fully invested. The total number of
constituents is expected at 50 – 70 companies and the dividend income should be
at least at $3,000 per year.
--------------------------------------
I paid $1,266.65
for my stake in Deere which will give me around $30 bucks in additional
dividend income per year.
The
expected full year dividend income is now estimated at $2,157 per year. By the
end of this year the amount of dividend income should rise to over $3,000 per
year and double over the next decade to more than $6,000 per year without work.
With USD
36,023.98 in cash and a yield on cost of 3.32 percent, I’m still confident to
realize my goals.
 |
| Portfolio Performance (Click to enlarge) |
Here is the income perspective of the portfolio
Sym
|
Name
|
P/E Ratio
|
Dividend Yield
|
Buy
|
# Shrs
|
Income
|
Value
|
|
TRI
|
26.51
|
3.7
|
28.90
|
50
|
$64.25
|
$1,740.00
|
||
LMT
|
Lockheed Martin C
|
13.7
|
3.52
|
92.72
|
20
|
$86.00
|
$2,444.00
|
|
INTC
|
Intel Corporation
|
11.9
|
4.09
|
21.27
|
50
|
$45.00
|
$1,095.75
|
|
MCD
|
McDonald's Corpor
|
17.46
|
3.08
|
87.33
|
15
|
$44.10
|
$1,425.45
|
|
WU
|
Western Union Com
|
11.49
|
2.47
|
11.95
|
100
|
$45.00
|
$1,825.00
|
|
PM
|
Philip Morris Int
|
16.93
|
3.85
|
85.42
|
20
|
$67.18
|
$1,715.00
|
|
JNJ
|
Johnson & Johnson
|
19.88
|
2.72
|
69.19
|
20
|
$48.80
|
$1,787.40
|
|
MO
|
Altria Group Inc
|
15.8
|
5
|
33.48
|
40
|
$69.20
|
$1,371.60
|
|
SYY
|
Sysco Corporation
|
18.88
|
3.39
|
31.65
|
40
|
$44.00
|
$1,298.00
|
|
DRI
|
Darden Restaurant
|
15.26
|
4.18
|
46.66
|
30
|
$60.00
|
$1,437.30
|
|
CA
|
CA Inc.
|
13.54
|
2.42
|
21.86
|
50
|
$37.50
|
$1,527.25
|
|
PG
|
Procter & Gamble
|
20.85
|
2.79
|
68.72
|
25
|
$56.20
|
$1,997.50
|
|
KRFT
|
Kraft Foods Group
|
17.51
|
3.79
|
44.41
|
40
|
$80.00
|
$2,110.80
|
|
MAT
|
Mattel Inc.
|
18.86
|
3.19
|
36.45
|
40
|
$53.60
|
$1,666.00
|
|
PEP
|
Pepsico Inc. Com
|
19.06
|
2.66
|
70.88
|
20
|
$43.00
|
$1,603.60
|
|
KMB
|
Kimberly-Clark Co
|
20.37
|
3.16
|
86.82
|
15
|
$45.45
|
$1,424.10
|
|
COP
|
ConocoPhillips Co
|
11.28
|
29.08
|
61.06
|
20
|
$52.80
|
$1,347.60
|
|
GIS
|
General Mills In
|
18.12
|
2.61
|
42.13
|
30
|
$39.60
|
$1,481.40
|
|
UL
|
Unilever PLC Comm
|
18.91
|
3.12
|
39.65
|
35
|
$43.89
|
$1,405.25
|
|
NSRGY
|
NESTLE SA REG SHR
|
18.64
|
3.23
|
68.69
|
30
|
$65.31
|
$2,007.00
|
|
GE
|
General Electric
|
17.76
|
3
|
23.39
|
65
|
$46.80
|
$1,556.75
|
|
ADP
|
Automatic Data Pr
|
24.81
|
2.37
|
61.65
|
25
|
$42.50
|
$1,797.25
|
|
K
|
Kellogg Company C
|
24.7
|
2.71
|
61.52
|
25
|
$43.75
|
$1,573.75
|
|
KO
|
Coca-Cola Company
|
20.58
|
2.67
|
38.83
|
40
|
$41.80
|
$1,562.00
|
|
RTN
|
Raytheon Company
|
13.06
|
2.71
|
57.04
|
20
|
$41.00
|
$1,534.80
|
|
RCI
|
Rogers Communicat
|
11.1
|
3.94
|
46.5
|
50
|
$81.15
|
$2,025.50
|
|
GPC
|
Genuine Parts Com
|
17.74
|
2.57
|
77.06
|
20
|
$40.44
|
$1,556.60
|
|
TSCDY
|
TESCO PLC SPONS A
|
230
|
3.99
|
17.08
|
110
|
$75.68
|
$1,917.30
|
|
APD
|
Air Products and
|
21.65
|
2.59
|
85.71
|
15
|
$39.45
|
$1,513.35
|
|
GSK
|
GlaxoSmithKline P
|
19.61
|
4.55
|
52.16
|
30
|
$70.35
|
$1,548.90
|
|
WMT
|
Wal-Mart Stores
|
14.66
|
2.24
|
79.25
|
20
|
$33.28
|
$1,482.20
|
|
BTI
|
British American
|
16.31
|
3.88
|
111.13
|
23
|
$95.22
|
$2,448.58
|
|
CHL
|
China Mobile Limi
|
10.7
|
4.02
|
55.32
|
25
|
$54.45
|
$1,352.50
|
|
MMM
|
3M Company Common
|
18.13
|
2.08
|
110.27
|
15
|
$36.08
|
$1,738.50
|
|
TUP
|
Tupperware Brands
|
18.56
|
1.97
|
80.98
|
15
|
$25.50
|
$1,293.00
|
|
IBM
|
International Bus
|
13.19
|
1.83
|
197.09
|
16
|
$54.40
|
$2,965.44
|
|
HAS
|
Hasbro Inc.
|
18.21
|
3.37
|
44.09
|
30
|
$45.60
|
$1,346.85
|
|
T
|
AT&T Inc.
|
26.3
|
5.18
|
34.47
|
30
|
$53.40
|
$1,025.40
|
|
WAG
|
Walgreen Co. Comm
|
21.45
|
2.14
|
44.25
|
30
|
$31.50
|
$1,465.20
|
|
AFL
|
AFLAC Incorporate
|
8.39
|
2.25
|
59.39
|
20
|
$27.20
|
$1,210.80
|
|
TGT
|
Target Corporatio
|
16.23
|
2
|
71.46
|
20
|
$27.60
|
$1,371.60
|
|
CSCO
|
Cisco Systems In
|
13.6
|
2.53
|
26.19
|
50
|
$31.00
|
$1,213.50
|
|
DE
|
Deere & Company C
|
10.38
|
2.24
|
84.11
|
15
|
$28.35
|
$1,261.65
|
|
$2,157.38
|
$69,471.42
|
|||||||
Average Yield
|
3.11%
|
|||||||
Yield On Cost
|
3.32%
|