My strategy when investing is to constantly make new purchases whenever I have the funds, either from my day-job, whatever side-hustles I have going on or, in the future, from dividends from other investments.
Today, as it was payday, and I follow the principle of paying myself first, I set aside money for investments and made a new purchase. I also put some money into broad-market index funds each month, but I can cover that in a later post.
There are several reasons why I chose Caterpillar (Ticker: CAT) as my new purchase. I had no exposure to the industrial sector (you can see my sector diversification in My portfolio), so CAT was one of the companies on my watch-list. They are not particularly cheap now relative to their 52 week high. They have a dividend yield of about 2.8%. At the moment they pay out $4.12 annually. That will pull my average a bit down in the short term, but that’s ok. They are one of the most recent inductees among the Dividend aristocrats with 26 consecutive years of raising their dividends. They have a low payout ratio, which is reassuring and a 7.77% growth rate over the past five years. One last reason for this purchase is that they pay out in February, May, August and November which are the months where I get the least number of payouts.