Trades – Chevron Corporation (CVX) and Baxter International (BAX) Purchases

As part of my process towards increasing and sharing my passive income, I post my trading activity for my dividend growth portfolios. As such, this past week on November 10th, I purchased 18 shares of Chevron Corporation (CVX) and 30 shares of Baxter International (BAX). These were my first purchases of both CVX and BAX, and the purchases were made in my Roth IRA.

Chevron Corporation (CVX) Trade Detailschevron_human_energy - logo

CVX is a fully integrated energy company that is primarily involved in the exploration, production, refining, and marketing of petroleum and petroleum based products. Often times referred to as one of the ‘Oil Majors’, CVX is tremendously well respected in their industry and by the investment community at large.

Over the past couple of months, the price of oil has plummeted, sending shares of most energy companies sinking. While I wasn’t able to purchase at 52-week lows seen during October, I purchased my shares at what I consider less than fair value. With a current P/E of 10.88 at the time of purchase, and a forward P/E of 12, CVX stands as a strong position for my portfolio, and allows me to continue to diversify my holdings. The chart below reflects the latest drop in price over the past five months for CVX.

Trades - Purchased Chevron Corporation and Baxter International - CVX Chart

As a dividend producing company, CVX has been raising dividends for 27 years, and is known as a Dividend Champion (or Aristocrat depending on your resource). Sporting a respectable 10-year dividend growth rate of 10.9% and a 3-year growth rate of 11.2%, CVX has shown the ability to consistently and steadily increase their dividend. Their most recent dividend increase was back in April where they raised their quarterly dividend 7% from $1.00 to $1.07 per share. With a payout ratio of just 39.4%, CVX has plenty of room to continue increasing this dividend for years to come. A bonus for shareholders, CVX has been consistently reducing their outstanding share count over the last eight years, down almost 14% since 2006. As a shareholder, these buybacks increase my earnings per share, and allow me to become a bigger owner of the company over time.

CVX becomes the third company in my dividend growth portfolios representing the Energy Sector, and one I’m glad to have added. I purchased 18 shares of CVX at a cost basis of $118.18 per share, net of commissions. With a yield on cost of 3.62% at the current dividend rate, my shares add $77.04 to my forward 12-month dividends. Fortunately, this purchase was made prior to the ex-dividend date, so I will be receiving my first dividends next month. CVX has traditionally paid dividends in March, June, September, and Dec ember.

Baxter International (BAX) Trade DetailsBaxter International Logo

Much as my BBL purchase was the first in the Materials Sector, Baxter International is my first Healthcare Sector holding. Like CVX, I was unable to buy on the strong dip back in October, but was able to enter the stock at a price I was comfortable with. While not the “steal” CVX is, I was looking for more exposure in the healthcare field and JNJ was just a bit more expensive than I desired. With what might be a trend for my purchases, BAX is currently planning a spinoff in 2015 of its Biotech business, which strays from the core medical products and services business. This spinoff is very similar to the one that Abbott Laboratories underwent a couple of years ago.

While BAX currently shows trailing P/E in excess of 22, the forward looking P/E is a, more reasonable 14.8. Again, not a bargain basement price, but a solid entry point into a growing company. Over the last five months BAX has falling from its latest highs as evidenced by the chart below.

Trades - Purchased Chevron Corporation and Baxter International - BAX Chart

Baxter International has been raising their dividend for eight years consecutively, with a 5-year growth rate of 16.2%. Their most recent dividend increase was for 6.1%, raising their quarterly dividend payment to $0.52 from $0.49 per share. Like CVX, BAX has been reducing the outstanding shares over the last eight years, buying back over 16.3% of its outstanding shares during that time period.

I purchased 30 shares of BAX at a cost basis of $70.67 per share, net of commissions, giving me a yield on cost of 2.94%. With annual dividends of $2.08 per share, my purchase adds $62.40 to my forward dividends. This purchase was made in time for the ex-dividend date in early December, which will allow me to receive my first dividends from BAX in January. BAX traditionally has paid its dividends in January, April, July, and October.

Trades Summary

Let the good times roll and the dividends pile in! With these two most recent purchases, I am officially over the $2,000 mark in forward 12-month dividends, ringing in at a total of $2,057.15. With a month and a half left of the year, and some more capital available to invest, 2015 is looking like it will be a tremendous increase over 2014. I know I’m looking forward to it!

My Dividend Growth Portfolio and 2014 Dividend Calendar have been updated for these purchases.

What do you think about these purchases? The oil majors have been pretty popular purchase of late given the price of oil falling. Strike while the iron is hot or the commodity markets have cooled!

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  1. roadmap2retire says:

    Love these purchases, W2R. Both solid companies that will do great over the long run. I own CVX and added to my position last month.

    BAX is something that has eluded me for a while now…I was close to buying it last month, but didnt have enough capital and ended up buying more CVX instead.

    Keep on adding that dividend income to your stream! You are well on your way to generate some great passive income.


    • Glad to have you as a fellow shareholder in CVX, and I can relate on the struggle to jump into BAX. Fought that battle for a year and a half before making a move. Sometimes you just have to pull the trigger and see what happens from there.

      As for the passive income, the next couple years should see some strong growth due to some increased capital available for these portfolios. It will be nice to be investing once or twice per month going forward.

      Thanks for reading, R2R!

  2. Fantastic buys! I would love to eventually own both. I’ve really been eyeing BAX, and like R2R, I wish I would have scooped it up during the big dip. It’s still on my watchlist. I recently added a small position in BP and have been adding COP and XOM, so I’ll have to wait a bit on CVX until I get more diversified. Again, solid buys!

    • Thank you SAD, I’m a fan as well! :)

      All the oil majors are priced pretty well right now, so certainly building existing positions isn’t a bad thing. Keep on grinding and building that snowball sir!

  3. I have been accumulating CVX and BAX lately for my energy and healthcare sector. Those are great companies worth holding for a long time and I believe shareholders of BAX will be rewarded next year with the spinoff. Great job on achieving another milestone on your forward dividend!

    • Good to be a fellow shareholder of both CVX and BAX! I’m looking forward to a really long holding period and will be monitoring the spinoff as it happens.

      Milestones are meant to be passed, and I’m glad I’ve nailed another! Thanks for your comments FFF!

  4. CVX is good value, but BAX is pricy. I think BP, E, CEO, LUKOY, and, to a lesser extent, XOM, offer better value than CVX, while PFE and AZN offer better value than BAX. But I don’t think you can go wrong with either CVX or BAX at the current prices if you are in for the long haul. Good luck.

    • Difu Wu, thank you for the suggestions. While I appreciate your recommendations, I don’t share all the same opinions of your suggested positions. I haven’t researched all of them in depth, but at first blush, here are my opinions.

      BP – Good value, risk appears to be priced in, on my watchlist
      XOM – Very close value to CVX, on my watchlist
      E – Payout ratio over 131%, Trailing and Forward P/E at 20 and over
      CEO – Forward P/E of 800+ according to Morningstar (not sure what to say about that), light trading volume
      LUKOY – Inconsistent payment history, huge government risk, very low trading volume
      PFE – Former dividend champion but cut dividends a five years ago, revenue is running quickly in the wrong direction
      AZN – Well overvalued (45+ P/E), 173% payout ratio

      As you can see, only BP and XOM look to be a viable options for me at this point. None of the rest would be positions I’m would consider at this time. Thanks for stopping by and thankful for the opportunity to look into some companies I hadn’t heard about before today!

      • W2R, thanks for your reply. Trailing P/Es can be misleading, as 1-y E can be abnormally low or high, while forward P/Es are unreliable, as analysts are often wrong in their predictions. A better indicator of value is cyclical adjusted P/E (CAPE, or Shiller PE), averaging E over past 10 years. Graham also recommends the approach of averaging earnings over past 5-10 years to calculate P/E.

        Also, book value is another important value indicator for oil and gas stocks, and LUKOY, BP, E, CEO all have lower P/B than CVX. XOM is only slightly more expensive than CVX in terms of P/E and P/B, but it is higher quality.

        • I agree, using just P/Es aren’t the be all end all in determining the value of a company. What I am looking for are companies with defensible moats at a reasonable price that will continue to grow their dividends over the long haul. Should any of those companies pop up on the watchlist, PZE is the most likely, I’ll evaluate them at that time and give some consideration for a purchase.

          Again, thank you for the suggestions and dialogue. Part of why I love blogging is the interaction with the readers, and I’m thankful to be able to share that with you. It challenges and encourages me to continue learning and growing as an investor and writer.

  5. Nice buys W2R! I own both so im on board with both of these purchases. Healthcare and energy are 2 great long term industries that wont be going away anytime soon.

  6. Both solid buys. Energy is the theme of the day for sure along with long term healthcare holdings. Both aren’t in my portfolio but I have owned CVX in the past. Waaay back when it was CHV before it merged with Texaco. Thanks for sharing your recent buys. I still have not pulled the trigger on anything in November. We’ll see what the rest of the month brings.

    • Hopefully you will find something that you like this month. Personally I’m glad to have added the diversification and gain exposure to some area’s where I currently didn’t have much or any.

      Thanks for stopping by and commenting, DivHut!

  7. Solid purchases. I recently bought CVX and was very happy to see their projects moving forward. Just yesterday, production began on Tubular Bells.

    • Alex, glad to be a fellow shareholder with you. Thanks for the update on their production. Should be fun to continue building my position over time and reaping the rewards of a well-run organization.

      Appreciate your sharing and stopping by!

  8. W2R,

    I like both purchases and having been adding to my these positions during the past month. Hopefully BAX will drift back into the 60’s so I can complete my position.


    • The way you’ve been adding capital this year, I’d be surprised if we didn’t share some positions! I wish I pulled the trigger the end of October/first week of November on BAX, but held on just a bit too long hoping for a slow down in the gains. One more timing the market lesson for me.

      Thanks for stopping by and for sharing your story on your site today!

  9. Nice buys, here, W2R! I own both BAX and CVX in DivGro and have been happy with their performance. Glad to have you as a fellow shareholder!


  10. W2R,
    As you know I’ve been a long time CVX shareholder. Approaching 20 years now. I’ve thought about adding some more here, but I think it’s time to find another energy company to add to the income stream. CVX is about $10,000 with a cost basis around $47. Every dollar I put in was a good investment. Crazy to have owned it for so long. Welcome to the family!

    • Yes, you’ve been the model owner of CVX, no doubt about it. Goes without saying, but I will, that I’d love to have your position all day, every day! A prime example of what consistent, long-term investing will do.

      What are you thinking as a complementary position? XOM, BP, others?

      RBD, thanks for stopping by and sharing!

  11. W2R,

    Glad to have you as a fellow shareholder in both businesses!

    Congrats on crossing over $2k in forward dividends. It looks like things are starting to really move along for you with all this new capital you’re putting to work. Keep it up!

    Best regards.

    • Certainly glad to have joined you! Things are really picking up steam as the capital has been more available. I would anticipate $2-4,000 per month *hopefully* over the next couple of years, which should launch the passive income rapidly upwards.

      DM, I appreciate your support, and thank you for stopping by.

  12. Snagged some CVX of my own earlier this month! And in a few years, ehh, you’re not going to remember that you didn’t catch CVX at its low in October/November. :)

    Congratulations on $2k in forward dividends! That’s a fantastic amount of passive income.

    • Nice! And I’m not too worried about missing out on the low, as time and compounding will erase that memory. And thank you, the milestone is pretty remarkable, and I’ve got my sights on bigger things for the next couple of years.

      Appreciate your support and comments Seraph!

  13. Congrats on breaking $2000 in forward dividends! Excellent picks for both companies! For oil companies I own both BP and CVX. I recently purchased more of BP, but it could very well have been more of CVX as well. They are both very well-valued. I guess I bought BP because I had a slight loss in the stock and could dollar-cost average down. (I’m slightly down in CVX as well but just not quite as much.)

    Great pick with BAX. I had forgotten about its biotech spinoff. That might be something fun to keep and hold onto for future growth and/or dividends!

    • Thank you Scott! I’ve been keeping an eye on BP, but wanted to start my oil major investment journey off with a more conservative pick and CVX fit the bill. Given that BP is priced so low because of the continuing risk of cost associated with the spill, I’d imagine I’ll have some further opportunities to invest with them in the coming months.

      I’m absolutely looking forward to the spin-off as it has the potential to be a nice boost, much like the AbbVie and Abbott Labs. Thank you for the comments, and keep on grinding. You’ve put some awesome capital to work this month.

  14. Great buys, both very solid companies. Would love to own BAX in the near future.

  15. Well my challenge for you to reach $2,000 in forward dividends didn’t take long at all! Excellent work!!! I’m an owner of both companies you’ve initiated a position in here and think they’re both amazing long term purchases. Cheer’s to growing with them together!

    Best Wishes,

    • Haha why wait for tomorrow when you can accomplish it today! Good to be a fellow shareholder in both companies, and I agree, cheer’s to growing with them together!

      Appreciate your support and comments, Ryan.

  16. Hi Adam,

    Both SOLID purchases for sure and congrats on crossing that 2k line!

    Your momentum is really moving forward for you!


    Best regards,


  17. I would be a CVX buyer here as well if I already didn’t own so much already. Nice buy.

  18. First off , congrats on crossing 2k! That’s awesome that you are now past that major milestone. Second, nice purchase with CVX. It was the top stock on my watch list. I still haven’t bought it yet as I am torn between CVX and IBM, so only time will tell if we will be fellow shareholders!

    Congrats again, keep up the great work!
    Bert, one of the Dividend Diplomats

    • Pretty awesome to crack that threshold, that’s for sure. Plenty more planned as well. Sneak preview, I ended up buying both companies you’ve mentioned, so when in doubt… just buy both!

      Thanks for your comment, Bert!

  19. Hi, W2R.
    Congrats on the purchases. I really like the CVX purchase. BAX hasn’t crossed my radar, but I definitely like the Healthcare sector in general. Nice job blowing by $2K. That’s huge. Best wishes for continued success. Happy Investing!

    Goosemann Jones
    Flight to Dividends Blog

  20. Bought my first lot of CVX earlier this year. I have since bought 3 other $500 – $750 lots of it. The metrics look fantastic – it flies through my screening (P/E below industry average, OP margin higher than industry average, P/B under 4 and Payout ratio below 60%). To boot its near the 52 week low, so even to get back up to the high would be a nice gain in it of itself.

    Nice pick up!

    • Glad to have you as a fellow shareholder! The weakness in oil has provided some tremendous opportunity, and while I missed the Black Friday sale, I’m happy to have bought at the price I did.

      Thanks for the comments!

  21. I’m really wanting some oil exposure in my portfolio but am waiting. Oil is free falling in price and I think we can forget about any capex happening in 2015. I’ll give it another month or so. If I recall correctly BAX has a lot of tight oil formation in the Bakken region which raises their cost of production a lot higher than others… I am surprised they haven’t fallen in price like the others but I think its only a matter of time.

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