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Feb 01 2017

My Latest Buy: WDR

stock_buy
Thanks to my selling off of DHT, I had sufficient cash to add another stock to my portfolio. I’ve had my eye on Waddell & Reed Financial, Inc. (NYSE:WDR) for some time, and when an unexpected drop in WDR’s stock price happened last week, it was an opportune time to buy up some WDR. I ordered 120 shares at $17.95 per share. Not quite at its 52-week low, but certainly in the ballpark.
As per my usual format, I’ll discuss the pros and cons of WDR.
PROs:
Dividend history. Ever since going public in 1998, WDR has slowly but steadily raised their quarterly dividend, even during the Great Recession. Obviously, past performance is no indicator of future performance but this is certainly a good sign. Another perk is that WDR’s dividends are qualified, which means they are taxed at 15% and not 25% like normal income is in my tax bracket.
Age. Waddel & Reed is perhaps the oldest position in my dividend investing portfolio. Founded in the Great Depression in 1937 and going public in 1998, the company has weathered the Great Depression, Great Recession, and all the other recessions and economic boom/bust cycles in-between. Clearly, WDR has competent management.
Institutional ownership. With 89% of its stocks owned by institutional investors, that is certainly a good indicator of investor confidence in WDR.

CONs:
Quarterly. This isn’t much of a negative, but when I buy a dividend stock I like to see it begin paying out as soon as possible, so I prefer monthly payouts. I don’t like having to wait 3 months for a dividend, but sometimes the dividend yield and other factors are more important than payout frequency.
Sector. Because this is a business and not a diversified fund, WDR operates within a particular sector, specifically, the financial services industry. By being based on a particular sector, a company is vulnerable to trends and other external factors that can affect that sector.

Overall, WDR almost looks like an ideal dividend stock to buy into. The only thing that would make it better would be if the dividends were monthly and tax-free. Well, you can’t get everything you want, but WDR certainly ticks the major check boxes of my dividend stock buying criteria. Only time will tell how wise of a choice I made by buying into WDR.

Image Credits: PublicDomainPictures (shopper, money), (pixabay.com); NYSE logo © New York Stock Exchange

6 comments

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  1. Buy, Hold Long

    Nice buy there. I hope it increases your overall income. Well done.

    1. Dividend Quest

      Thanks for visiting BHL! Yep, I hope it increases my income too. Passive dividend income is something I can’t get enough of. 🙂

  2. Doug

    None of us can get enough of passive income.

    1. Dividend Quest

      That’s the truth! Unlike other addictions, this is one that *improves* one’s financial condition. Making money without trading my time for it has become my crack habit and I just can’t enough of it!!

  3. Dividends 4 Future

    10% Yield on this stock. Looks sustainable to at 57% payout for the near short term. Going to add to my watch list to monitor it. Good find 🙂

    1. Dividend Quest

      Thanks for visiting! Yep, WDR looks like a good dividend stock to consider for one’s portfolio. If you can get WDR for under $18.40 per share, you’ll have a very respectable yield of 10%.

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