John Deere (DE): The New Dividend Payer For My Passive Income Portfolio

I put some shares of the farm equipment manufacturer Deere into the Dividend Yield Passive Income Portfolio.

Deere pays a 2.43 percent dividend yield and is valuated with a P/E of 10.35. The forward P/E amounts to 9.95. Analysts predict the future 5-Year earnings per share growth at 9 percent yearly.

I don’t like the business model because of its capital intensive structure. Deere made huge investments into its production plants each year to keep the productivity at a high level. That’s the main reason for the low payout of 23 percent and the high debt burdens of the company.

Earnings and Dividends of Deere

Here is what the company produces: Deere & Company manufactures and distributes agriculture and turf equipment, and construction and forestry equipment worldwide. Its Agriculture and Turf segment provides agriculture and turf equipment, and related service parts, including large, medium, and utility tractors; loaders; combines, corn pickers, cotton and sugarcane harvesters, and related front-end equipment and sugarcane loaders; tillage, seeding, and application equipment comprising sprayers, nutrient management, and soil preparation machinery; and hay and forage equipment consisting of self-propelled forage harvesters and attachments, balers, and mowers.

I love the cheap valuation. I think that I have a 30 to 50 percent margin of safety before I lose some money. This could also be my potential gain.

As you might have heard, UralKali plans to increase its Kali production with the expected result of lower prices. Farms with high input costs of kali could increase profits on their agricultural products. With a higher agricultural return, investments into farm equipments could be made easier. That’s my speculation and Deere is the biggest fish in the pool of crop picking engines.

The Deere trade is a definitely more speculative driven investment.

Latest Portfolio Transactions (Click to enlarge)

Dividend Yield Portfolio I (Click to enlarge)

Dividend Yield Portfolio II (Click to enlarge)

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For readers who are new to the matter and my dividend growth philosophy: I funded a virtual portfolio with 100k on October 04, 2012 with the aim to build a passive income stream that doubles each five to ten years. I plan to purchase each week one stock holding until the money is fully invested. The total number of constituents is expected at 50 – 70 companies and the dividend income should be at least at $3,000 per year.

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I paid $1,266.65 for my stake in Deere which will give me around $30 bucks in additional dividend income per year.

The expected full year dividend income is now estimated at $2,157 per year. By the end of this year the amount of dividend income should rise to over $3,000 per year and double over the next decade to more than $6,000 per year without work.

With USD 36,023.98 in cash and a yield on cost of 3.32 percent, I’m still confident to realize my goals.

Portfolio Performance (Click to enlarge)

Here is the income perspective of the portfolio

Sym	Name	P/E Ratio	Dividend Yield		Buy	# Shrs	Income	Value
TRI	Thomson Reuters C	26.51	3.7		28.90	50	$64.25	$1,740.00
LMT	Lockheed Martin C	13.7	3.52		92.72	20	$86.00	$2,444.00
INTC	Intel Corporation	11.9	4.09		21.27	50	$45.00	$1,095.75
MCD	McDonald's Corpor	17.46	3.08		87.33	15	$44.10	$1,425.45
WU	Western Union Com	11.49	2.47		11.95	100	$45.00	$1,825.00
PM	Philip Morris Int	16.93	3.85		85.42	20	$67.18	$1,715.00
JNJ	Johnson & Johnson	19.88	2.72		69.19	20	$48.80	$1,787.40
MO	Altria Group Inc	15.8	5		33.48	40	$69.20	$1,371.60
SYY	Sysco Corporation	18.88	3.39		31.65	40	$44.00	$1,298.00
DRI	Darden Restaurant	15.26	4.18		46.66	30	$60.00	$1,437.30
CA	CA Inc.	13.54	2.42		21.86	50	$37.50	$1,527.25
PG	Procter & Gamble	20.85	2.79		68.72	25	$56.20	$1,997.50
KRFT	Kraft Foods Group	17.51	3.79		44.41	40	$80.00	$2,110.80
MAT	Mattel Inc.	18.86	3.19		36.45	40	$53.60	$1,666.00
PEP	Pepsico Inc. Com	19.06	2.66		70.88	20	$43.00	$1,603.60
KMB	Kimberly-Clark Co	20.37	3.16		86.82	15	$45.45	$1,424.10
COP	ConocoPhillips Co	11.28	29.08		61.06	20	$52.80	$1,347.60
GIS	General Mills In	18.12	2.61		42.13	30	$39.60	$1,481.40
UL	Unilever PLC Comm	18.91	3.12		39.65	35	$43.89	$1,405.25
NSRGY	NESTLE SA REG SHR	18.64	3.23		68.69	30	$65.31	$2,007.00
GE	General Electric	17.76	3		23.39	65	$46.80	$1,556.75
ADP	Automatic Data Pr	24.81	2.37		61.65	25	$42.50	$1,797.25
K	Kellogg Company C	24.7	2.71		61.52	25	$43.75	$1,573.75
KO	Coca-Cola Company	20.58	2.67		38.83	40	$41.80	$1,562.00
RTN	Raytheon Company	13.06	2.71		57.04	20	$41.00	$1,534.80
RCI	Rogers Communicat	11.1	3.94		46.5	50	$81.15	$2,025.50
GPC	Genuine Parts Com	17.74	2.57		77.06	20	$40.44	$1,556.60
TSCDY	TESCO PLC SPONS A	230	3.99		17.08	110	$75.68	$1,917.30
APD	Air Products and	21.65	2.59		85.71	15	$39.45	$1,513.35
GSK	GlaxoSmithKline P	19.61	4.55		52.16	30	$70.35	$1,548.90
WMT	Wal-Mart Stores	14.66	2.24		79.25	20	$33.28	$1,482.20
BTI	British American	16.31	3.88		111.13	23	$95.22	$2,448.58
CHL	China Mobile Limi	10.7	4.02		55.32	25	$54.45	$1,352.50
MMM	3M Company Common	18.13	2.08		110.27	15	$36.08	$1,738.50
TUP	Tupperware Brands	18.56	1.97		80.98	15	$25.50	$1,293.00
IBM	International Bus	13.19	1.83		197.09	16	$54.40	$2,965.44
HAS	Hasbro Inc.	18.21	3.37		44.09	30	$45.60	$1,346.85
T	AT&T Inc.	26.3	5.18		34.47	30	$53.40	$1,025.40
WAG	Walgreen Co. Comm	21.45	2.14		44.25	30	$31.50	$1,465.20
AFL	AFLAC Incorporate	8.39	2.25		59.39	20	$27.20	$1,210.80
TGT	Target Corporatio	16.23	2		71.46	20	$27.60	$1,371.60
CSCO	Cisco Systems In	13.6	2.53		26.19	50	$31.00	$1,213.50
DE	Deere & Company C	10.38	2.24		84.11	15	$28.35	$1,261.65
							$2,157.38	$69,471.42
							Average Yield	3.11%
							Yield On Cost	3.32%