Tuesday, January 26, 2016

RECENT BUY - INTERNATIONAL PAPER CO (NYSE: IP)

WE RECENTLY PURCHASED THE FOLLOWING:


INTERNATIONAL PAPER CO (IP)
Purchased 10 shares of UNP on 1/25/2016 at $33.00
Total Spent: $333.00; added $12.30 in forward dividends.

Another winter deal in the books! International Paper Co (IP) set a new 52-week low during the mid-day session. In fact, IP dipped as low as $32.50 during the afternoon session. Although we didn't pick up shares at the lowest point of the day, we did manage to pick up a few shares close to the bottom at $33.00

We have been watching IP paper for awhile and saw the dip as an opportunity to add another great dividend paying company our family's dividend stocks portfolio

Although we understand the price concerns, we believe that International Paper Co (IP) management has laid down the necessary foundations for the company to have a successful 2016 and beyond. We believe the high 4.7% yield provides a reasonable entry point. We have no problems sitting back and collecting the juicy 4.7% yield as we wait for a turnaround.

Below are a few pros and cons we compiled from a few recent articles found:

Pros:
  • IP is a large cap company with a capitalization of $13.5Bil.
  • Nearest competitor Avery Dennison (NYSE:AVY) has a much smaller capitalization of $5.6Bil.
  • IP is the world's leading producer of containerboards used to make corrugated brown boxes for shipping goods.  With E-commerce expected to grow steadily, sales in this category should continue to see steady growth.
  • 3rd-quarter earnings of .97 cents for 2015 beat estimates of .92 cents.
  • IP has a dividend yield of 4.7% and has been increased for the past 5 yrs.
  • Next Ex-dividend is 2/11/2016, which means we will get our first dividend payment on March 15th.
  • IP has a nice cash pile at $1.97Bil which allows it to continue to pay its high dividend and still have cash left over for stock buyouts and company investment.
  • IP has a 3-year CAGR of 13%.
  • S&P Capital IQ has a 4-star  (or buy) rating on IP with a price target of $52.00.

Cons:
  • Sales down in Industrial packaging, printer paper, and consumer packaging.
  • Concerns over pricing are running up and down the paper and packaging sector.
  • Recent Downgrade from Citi.


Company Description
From Google Finance:
International Paper Company is a paper and packaging company with primary markets and manufacturing operations in North America, Europe, Latin America, Russia, Asia, Africa and the Middle East. The Company operates in three segments: Industrial Packaging, Printing Papers and Consumer Packaging. Industrial Packaging segment’s products include linerboard, medium, whitetop, recycled linerboard, recycled medium and saturating kraft. Printing Papers segment products include uncoated papers, which engage in the business of producing papers for use in copiers, desktop and laser printers and pulp, which manufactures printing, writing and specialty papers, tissue products and filtration products. Consumer Packaging’s coated paperboard business produces coated paperboard for packaging and commercial printing end uses. Its foodservice business produces cups, lids, food containers and plates. Its brands include Hammermill, Springhill, Accent, Ballet, Rey, Pol, Everest, Fortress and Carolina

With today's purchase of International Paper Co (IP), the estimated forward dividends for our family's dividend stocks portfolio grew another $12.30, putting our yearly dividends at approximately $3,612/year (excluding our Edwards Jones account) and $3,970/year (including our Edward Jones account).  

Since we did not previously own IP in our family's dividend stocks portfolios (WF and EJ Accounts), today's purchase now brings our portfolio to a total of 52 different dividend paying stocks/ETFs and also 4 companies that either don't pay a dividend our has currently suspended their dividends.



Our family's dividend stocks portfolio may be found
by clicking on the link below:

We also maintain an extensive list of stock analysis
that can be access through the link below:

We also just started a list of Recent Buys by other bloggers
that can be access through the link below:



HERE IS A QUICK FACT SHEET FOR THE STOCK I JUST PURCHASED:




International Paper Co (IP)
P/E: 15.29
Payout Ratio: 74.98%
Dividend Yield: 4.83%
Dividend Growth rate (5yr AVG): 39.87%
consecutive years of dividend increases
Last Ex-dividend date: 11/12/2015
Next Ex-dividend date: approx. 2/11/2016
Have paid a dividend since: 1946 (69 years)
Pays a dividend 4 times a year.
Market Cap: 13.5 Billion
52-week high: $57.90
52-week low: $34.03

Purchased Price: $33.00


What are your thoughts on of recent purchase?


What are you buying?





6 comments:

  1. AFFJ,

    I was considering pulling the trigger yesterday as well. This ex-Dow component has always been a stock of interest to me. I wish you well with this purchase and may soon be joining you.

    MDP

    ReplyDelete
    Replies
    1. Thank you MDP. Hope you join us as a fellow shareholder soon. The more the merrier! :) AFFJ

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  2. Thanks for sharing! I didn't have this stock in my portfolio but now will definitely add to my watch list.

    ReplyDelete
    Replies
    1. Your welcome HHWG. We found this stock/company through a stock focus list from our financial advisor. Although it comes with some risk, we feel confident in IP's ability to continue to pay their dividend. AFFJ

      Delete
  3. Good job. It seems to be a good purchase based on your analysis. Good fundamentals and recent downturn of the industry gave a good entry point. Thanks for sharing!

    Cheers!

    BeSmartRich

    ReplyDelete
    Replies
    1. At current price and yield, we think that IP offers a nice value for patient investors who are looking for a higher than average yield while they wait for a turnaround.

      Thanks for stopping by BSR. Regards, AFFJ

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