As it stands, Woolworths Limited (ASX: WOW) makes up 9.5% of my portfolio…
I think you'll agree, that's a pretty big chuck of a portfolio for just one stock.
However, despite already holding such a large amount of shares, I'm still tempted to add more!
Here are three reasons why I bought Woolworths shares, and why I could be tempted again:
- Relative safety. With the share market currently sitting at a valuation above its long-term average and the economy expected to enter a rough patch, I want a reliable business like Woolworths to make up a large part of my portfolio. Whilst not immune to a stock market crash by any means, I'd be comfortable holding Woolies shares throughout the market cycle.
- Dividend yield. Woolies is a reliable income stock, given its large market share and status as Australia's most profitable supermarket. Although its dividend may not grow as fast as it has in prior years, its 4.9% fully franked yield is appealing in this low interest rate environment.
- As Motley Fool analyst Mike King wrote here, from a price to earnings perspective Woolworths shares are the cheapest they've ever been! Indeed, currently trading at just 14 times last year's profits and expected to remain stable over the next three years, Woolies shares look cheap.
Should you buy, hold, or sell Woolworths shares?
It might be a contentious or contrarian investment but at today's prices the market is offering investors a great opportunity to buy Woolworths for a decent price.
As the saying goes, I'm not looking this gift horse in the mouth… are you?
