On Friday, July 17th I dove into the NYSE for the very first time by initiating a position in W. W. Grainger (NYSE: GWW). I purchased 5 shares at the price of $233.00 USD, with a trading cost of $6.95 USD from CIBC Investor’s Edge…
CAD drops to lowest level since 2004
Considering I am a Canadian Investor, this ended up costing a total of $1, 539.36 CAD, with shares averaging roughly $306.48 CAD. With the CAD dropping to lowest levels since 2004, I am losing confidence in our currency under the conservative government, and with a recession looming here, I’d like to purchase some assets in our neighbor country, the USA. The Fed will only be increasing rates when things have stabilized and are growing in the US, and to me that shows that things will be good and that corporations which are not highly indebted are in a good position to continue growing.
About W. W. Grainger
A company overview of W. W. Grainger by CIBC Investor’s Edge reads as such:
“W.W. Grainger, Inc. is a distributor of maintenance, repair and operating (MRO) supplies and other related products and services. The Company offers its products and services to businesses and institutions in the United States and Canada, with presence also in Europe, Asia and Latin America. It operates in two segments: the United States and Canada. The United States business offers a selection of maintenance, repair and operating supplies and other related products and services. Acklands – Grainger is a distributor of industrial and safety supplies that distributes tools, fasteners, safety supplies, instruments, welding and shop equipment, among others. Other businesses include Zoro, the single channel online business in the United States, and operations in Europe, Asia and Latin America. The Company provides customers with a range of options for finding and purchasing products, utilizing sales representatives, contact centers, direct marketing materials, catalogs and e-commerce.”
At the time of this writing (July 21), GWW trades at $235.10 USD. The 52-week range lies between a low of $221.67 and a high of $261.57. The company is nearer it’s 52-week low.
GWW has a trailing P/E of 20.5, which is roughly a 5% discount to it’s 5-yr average P/E of 21.6, and a 20% discount to the relative P/E of the S&P 500 of 25.8. Thomson Reuters has a 12-month mean price target of $255.00 per share, which would result in a share price increase of 8.5%. Thomson Reuters also has an analyst recommendation of HOLD on the stock, broken down into: 4 Strong Buys, 3 Buys, 11 Holds and 2 Reduce.
With my purchase of GWW, I’ve bought another company with a relatively low dividend yield, but some really good yield growth. At the moment, the majority of my stocks are high-yield with slower growth or decent growth, but I’ve wanted to mix it up a bit. GWW could even be considered somewhat of a growth stock, considering it has an annualized return of 15.05% over the past 10 years. According to longrundata, GWW has a 5-year yield growth of 18.56% and a 10-year yield growth of 18.18%. Imagine getting an 18% raise every year for the past 10 years at your corporate job. This is what GWW does with its dividend payments.
GWW currently yields 2.08%, however it’s 5-year yield average is a measly 1.48%! Talk about getting more for less! They also boast a beautifully minuscule payout ratio of 37.73%, meaning they have a ton of space to increase the dividend, even at it’s current growth rate.
Given GWW’s current yield of 2.08% and it’s 10-year yield growth of 18.18%, the 10 Year YOC for GWW is 11.05%! This means that by investing today at GWW’s 2.08% yield, on your 10th year of holding shares you’ll be receiving 11.05% of your initial investment in dividends. And it just goes up and up from there. This is what dividend growth investing is all about.