Stocking up on Alaris Royalty (AD) for the 4th Time
After selling my position in SNC to claim my first ever stock profit, I reinvested the proceeds into one of my favourite income generating assets, Alaris Royalty Corp., which already makes up a big chunk of The Dividend Beginner portfolio.
On October 3rd, I bought 55 more shares of Alaris Royalty for $22.59, with a trading cost of $6.95 for a total investment of $1,249.40. My position is now 225 shares of Alaris, which holds a market value of $4,968.00.
This is the fourth time I’m purchasing shares in AD, below is a summary of my purchase history of Alaris shares.
|Oct 3 2016||55||$22.59||$1,249.40|
|April 7 2016||50||$29.20||$1,467.95|
|Jan 15 2016||60||$22.00||$1,326.95|
|Nov 9 2015||60||$24.80||$1,494.95|
At a dividend of $1.62 per share, Alaris currently yields 7.17%! The new investment in AD adds $89.10 to my annual dividend income, or $7.425 monthly.
My income from Alaris has been raised from $275.40 annually ($22.95 monthly) to $364.50 ($30.375 monthly). This accounts for 15.57% of my annual dividend income. The position is definitely beginning to stretch itself but I couldn’t resist at the low cost this time around. I’m hoping to bring this down to below 10% over time.
My dividend income has risen from $2,187.34 annually ($182.275 monthly) to $2,276.44 annually ($189.70 monthly).
|Annual Dividend Income||$2,187.34||$89.10||$2,276.44|
|Monthly Dividend Income||$182.28||$7.425||$189.70|
Average Cost Basis Decreased
Based off my previous three purchases in AD, my cost average before this buy was $22.59 (taking transaction costs into account). My new purchase price of $22.59 is 10.46% lower than my previous average.
I did have a lot of hesitation in making this decision as my position in Alaris Royalty has always been very large. Knowing this, I still chose to invest in this company. My greatest fear is that they cut their dividend but the company is accustomed to a high payout ratio and good margins, however they have been seeing trouble for a while now and have not made enough progress on the issue. I believe once that problem is over that the price will rise again as it did greatly in the beginning of the year before it took a dive after Q2 results.
Taking into account all four of my purchases in AD, my new average cost basis has been reduced from $25.23 to $24.62.
Yield on Cost Increased
Alaris Royalty has one of, if not the, highest yield on cost in my portfolio. The company yields very generously and I enjoy their monthly payouts, which now adds $30+ monthly to my account.
$1.62 dividend / $25.11 share = 6.58% dividend
By adding to my position while the company currently yields 7.17%, I am obviously increasing my yield on cost from it’s previous 6.45%. With my new average cost basis per share, and with Alaris distributing $1.62 annually in dividends, my new yield on cost is 6.58%.