Drip Portfolio Report
Monday, December 15, 1997
by Jeff Fischer (TMFJeff@aol.com)

ALEXANDRIA, VA (Dec. 15, 1997) -- As Intel DRP holders know, when you send your optional cash investment to buy more Intel you soon receive from Harris Trust and Savings Bank a confirmation that they received your check. In our case, we sent $100 to Harris Trust on November 24 in order to buy more Intel on December 1, the purchase date. The cut-off date for each month is about the 25th of the prior month, though Harris Trust has been known to give a few days leeway -- meaning, if your check gets to them by the 28th or 29th, they'll often invest it for you anyway on the first day of the next month. But we received confirmation that our check had been received on December 1, so I didn't think that they could possibly invest our money on the same day that they received the check.

Well, I was wrong.

Harris Trust received our check on December 1, at least a few days after the deadline, and they were still able to invest it on that day. To my surprise, I received the statement on Saturday, instantly making our Friday column on this topic completely null, void, and wrong. We bought 1.2458 shares more of Intel at $80.2697 per share on December 1. We also received -- ding, ding, ding, ding! -- our very first dividend reinvestment in the young Drip Portfolio's life. Intel paid its dividend on December 1 of $0.03 per share, giving us 0.0004 shares of Intel basically "for free." We only received dividends on one share of stock because at the dividend date, we still only owned one share. (In the future, by the way, we'll keep everyone alerted of our companies' dividend payment dates before they happen.)

Anyway, some of us are laughing at the 0.0004 shares that we "bought" with our three-cent dividend. This is just the first step of many, though, on our twenty-year journey. By the time that we roll back the curtain and showcase this portfolio in the year 2017, many Fools will be glad that they decided to dividend reinvest beginning way back in the old millennium, as well.

After adding our new purchase and the fractional dividend share, we now own 6.0817 shares of Intel, which seems to be plenty having begun with only one share a few months ago. Reachable from this Drip Port page is a new transaction page -- a "one sheet" -- that shows all of our transactions to date, including reinvested dividends. This is always available on the top right of this page, and right now through this link, too. Also, the daily Today's Numbers section below shows our new average cost bases and the portfolio's daily performance. Our average cost per share on Intel is now $81.34. Also, because today is the 15th of the month, we added $100.00 to the portfolio, bringing our investment base to $1,000. We've already been at this for five months, now, having begun with $500 on July 28.

If you're running DRPs at home, be certain to keep good records, and especially look forward to the year-end statement that you'll receive each year. In the end, we might consider using a menial amount of the portfolio's value to hire a tax accountant to do our taxes if and when we ever sell. An accountant is a fine reward following years of investing, rather than having to shuffle through the process ourselves. But Brian Bauer (TMF Hoops), who edits this column, says that we're being wimps if we hire an accountant. He said that it isn't all that difficult to figure the taxes -- at all -- as long as you keep good records. It's almost all long-term capital gains taxes in the end. Anyway, we have plenty of time to consider options. Selling is the very last thing on anyone's mind right now.

We're happy with the two stocks that we have to invest in right now, with Intel (Nasdaq: INTC) trading at 17 times fiscal '98 earnings estimates, and Johnson & Johnson (NYSE: JNJ) trading at 23 times estimates for that same year. Intel continues to lower prices on its main products, while advertising like crazy on television, making its mind share and market share both more dominant. Johnson & Johnson has scored respectable sales growth this year, especially when currency differences are excluded. Johnson & Johnson is flirting with a new 52-week high, and was $1 shy of it today at one point. Intel, meanwhile, is $30 (and 30%) below its high of $102.

We're now fully enrolled in Johnson & Johnson's DRP plan, as Randy reported Friday. The investment date for that company is the tenth of each month. They accept as little as $25 dollar per investment. We'll soon decide where we'll be sending this month's $100, and we'll be sure to send it early. I'd personally like to send more money to Intel one more time to close out the year (and begin the next year), with the stock down to $72 now -- and then we'll see how things go at the company and perhaps begin to send some money to Johnson & Johnson in the meantime. It'd be ideal to throw money at Johnson & Johnson whenever any bad news hits healthcare companies, though we can't wait for that alone, of course. Intel has had plenty of "negative" news the past few months, and it has been nice to be able to invest at deflated prices. The trend may continue, especially with Asia in the shape that it's in.

All the while, of course, we're looking for new and excellent places to begin allocating money. With our food companies, I have two remaining to initially look at: Quaker Oats (NYSE: OAT) and Ralcorp (NYSE: RAH). Randy has four remaining: Nabisco (NYSE: NA), PepsiCo (NYSE: PEP), Philip Morris (NYSE: MO), and Sara Lee (NYSE: SLE).

Have a Foolish evening, be comfortable with what you currently own and invest in, hit the message boards if you have questions, and we'll be moving on again tomorrow, of course.

Fool on!


Do your Foolish gift shopping now, in time for the Holidays. And consider the Fool's Industry Focus '98 book -- to learn not only about industry-leading stocks, but about the industries in which they operate as a whole -- and see which one company in each industry that our news and analysis team favors most.

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Stock   Close    Change
INTC  $70 1/2   -1 5/16
JNJ   $64       -1 3/16
            Day      Month    Year      History
Drip      (5.15%)   (3.56%)  (13.82%)   (13.82%)
S&P 500    1.05%     0.84%    30.06%      1.27% 
Nasdaq     0.00%    (4.00%)   19.02%     (3.59%)

Last Rec'd  Total #  Security   In At    Current
11/03/97    6.082      INTC     $81.346   $72.125
11/14/97    1.000      JNJ      $62.125   $65.000

Last Rec'd   Total #  Security  In At    Value   Change
11/03/97     6.082      INTC    $494.72  $438.64  ($56.08)
11/14/97     1.000      JNJ      $62.13   $65.00    $2.88 

Base:   $900.00
Cash:   $389.75**
Total:  $894.65

GOAL: The portfolio began with $500 on July 28, 1997, 
adds $100 on the 15th of every month, and the goal 
is to grow the port to $150,000 by August of the year 2017. 

**Transactions in progress:
11/24/97: $100 sent to purchase more Intel.

The Drip Portfolio has been divided into 
37.063 shares with an average purchase
price of $24.283 per share.