Tuesday, July 2, 2013

First purchases in my DGI-portfolio

Today I made my first two purchases: ExxonMobil (XOM) and Wal-Mart Stores (WMT).


Exxon Mobil Corporation, or ExxonMobil, is an American multinational oil and gas corporation. ExxonMobil is one of the largest companies in the world in terms of revenue and market capitalization.

Why do I want to own this company?
  • Forward yield of 2.8% is decent and higher than the 5-year average historic yield (2.3%)
  • Dividend has grown on average 10% per year in the last 10 years
  • Payout-ratio is hovering around 20-30%. This is quite low and dividend payments can thus be considered relatively safe, even in times when earnings might fall short.
  • Current Price/Earnings-ratio of 9.2 is lower than the 5-year average PE-ratio of 11.0 so the stockprice seems to be on the lower side.
  • Diversification in geographical terms as well as operations. It is a relatively stable company with a low beta.
Of course there are concerns: geopolitical stability, protectionist policies or more long-term issues about future energy scenarios and what the role of companies like Exxon, Chevron or Royal Dutch Shell will be. These are however long term issues and may provide chances as well. These companies don't sit idle, but are actively preparing for the future.

Wall-Mart Stores

Wal-Mart Stores is a multinational retail corporation that runs chains of large discount department stores and warehouse stores. The company is one of the world's largest public corporations and the biggest private employer in the world with over two million employees.

Why do I want to own this company?
  • Forward yield of 2.5% which is slightly higher than the 5-year average historic yield (2.2%)
  • Dividend has grown on average 18% per year in the last 10 years!
  • WMT has increased the payout ratio over the last 10 years from 18% in 2004 to 32% in 2013. This still leaves ample room for growth.
  • Current Price/Earnings-ratio of 14.7 is around this years average PE-ratio and slightly higher than the 5-year average PE-ratio of 14.2. Seems like the current price is fair value; but not a bargain.
  • Earning growth for the next 5 years is forecasted to be almost 10% per year.
I think both companies are great investments. Not neccesarily cheap but fair value! These purchases will bring my 12-month forward yield to $105. It's not much but it's the first step!


  1. Great work! Love your blog! I just started mine also and it really is motivating. I've been investing for years but never really blogged about it.

    Keep it up:)

    1. Hi Dividend Guy!

      Thanks for stopping by! I agree that blogging definately helps my energy level. Good luck in the future.


  2. Congrats on getting starting with DGI! XOM and WMT are two of the great ones. I added both to my portfolio in June as well.

    1. Hi PassiveIncomePursuit! Nice of you to leave a comment, thanks. Let's hope XOM and WMT will perform as great as we both expect ;)