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Two New Dividend Positions I'm Adding This Week to My Family Portfolio
Hello everyone,
A little while ago, I shared a note mentioning that I was planning a few small changes in my main family portfolio and explained what started the whole process.
As of today, I’ve made my decisions and finalized the companies I’ll be adding. I wanted to walk you through my thinking and show you where I’ll be putting money to work over the next couple of days.
But first, let’s start with some simple numbers.
Originally, I invested around $35,000 in Sato Shoji.
Over time, the position appreciated nicely, and I eventually sold it for approximately $80,000.
Now I’m planning to divide that $80,000 equally between two companies that currently yield around 4% annually at my expected purchase prices.
$80,000 × 4% = approximately $3,200 in annual dividend income.
Now here’s the part I like:
$3,200 divided by my original $35,000 investment equals roughly a 9% annual yield on the money I initially put to work.
That’s exactly the type of investing logic I enjoy.
Because of the quality of the businesses I’m moving into, this feels like a very attractive opportunity. Locking in what is effectively around a 9% starting income stream on the original investment with strong dividend companies is something I’m happy to take advantage of.
So let's talk about the companies. I’m splitting this into two positions.
#1 7466 SPK Corp | Japan
Planned allocation: approximately $40,000
SPK is a Japanese company involved in automotive aftermarket parts, industrial components, and related equipment businesses. They manufacture, distribute, and supply parts used in vehicle repair and maintenance, heavy equipment, factory machinery, and industrial applications.
The business itself is pretty easy to understand. Nothing flashy. Nothing complicated. They make parts. They sell parts. They distribute parts. Simple businesses can sometimes be very good businesses.
The company has more than 25 years of uninterrupted dividend payments and a long history of raising those dividends. Over the last decade, dividend growth has consistently been in double digits.
The payout ratio remains below 50%, and I believe management follows a disciplined approach where they steadily increase dividends while keeping payouts within a comfortable range instead of stretching the balance sheet. That's a common approach among many Japanese companies.
SPK passes all of the quality metrics from the 5-Step Secret Formula checklist and is also part of the International Dividend Eagles list. Financial quality scores remain above 90.
Why now?
The stock appears undervalued compared to peers and is trading near historically low valuation levels relative to its own history. The market value is currently below book value.
Simply put, I like almost everything I see here. The customer base includes large industrial names and major automotive channels in Japan, including companies like Komatsu and Hitachi.
The company also has meaningful international exposure, with more than 30% of revenue coming from outside Japan. Asia is a major focus, including a large Singapore hub, while the company also maintains partnerships and operations in Europe.
Now let's move to the second company.
#2 TSCO — Tractor Supply | USA
Planned allocation: approximately $40,000
Anyone who has followed me for a while already knows that I’ve always liked this company and its wonderfully boring business. Very similar to SPK in that sense.
Tractor Supply sells farming equipment, animal feed, fertilizer, tools, seeds, and products tied to agriculture and rural lifestyles. Simple. Boring. Easy to understand. Tractors, not servers.
The company operates more than 2,000 stores across the United States and remains heavily focused on the U.S. market.
Why now?
The stock is trading near valuation levels that I find very attractive, while I’m not seeing any major financial drama in the business itself.
The company continues moving forward steadily. The challenges are understandable, the environment is understandable, and the financial picture remains clear. But despite that, the stock price has pulled back significantly and now trades well below historical valuation ranges.
Tractor Supply is also a member of the Dividend Eagles list with a MaxRatio above 10 and offers a solid dividend yield above 3%. The company has also been buying back its own shares consistently for more than a decade and passes all of the quality requirements from the 5-Step Formula.
Again, I really like what I see here. So I’m happy to add it to the portfolio.
I plan to make both purchases over the next few days as time allows.
For selecting companies, I used the BUY/HOLD/SELL list and Dividend Eagles (U.S. + International).
I was mainly looking for undervalued companies with a strong dividend safety margin, a solid track record of increasing dividend payouts over the past 10 years, and a reasonably attractive starting dividend yield at the time of purchase (around 4%+ on average).
Hopefully this was useful.
Take care,
Max
Founder of MaxDividends