Hold on tight everyone on this ride — the week has brought a tremendous downturn, which really, the week has brought us tremendous new opportunities! The S&P 500 is down 2.43% since Monday’s close and even more so on a few stocks I’m going to talk about…As our friend Jason or Dividend Mantra stated in his recent watch list post, where he talked about three stocks that he currently owns and his debate/monitoring on which “lucky” company to, what I like to call,”Re-Up” on his position. This makes sense, such as one asks themselves – if I bought my stock at X and it drops 2-5%, why not buy it again if you have the capital, as long as your view points haven’t changed from the company AND nothing fundamentally has changed at the company. This is a great way to dollar cost average down on your position and to add more dividend income this purchase than your last. Also – the best situation is that you bought it at $X when the dividend was $2/share/year when now it’s trading 5% below that amount and now pays $2.50/share/year – even a bigger bang for your new capital infusion. I have added to positions such as: McDonalds (MCD), Intel (INTC), Total (TOT), FirstEnergy (FE), Aflac (AFL), Shell (RDS.A), Philip Morris (PM), and AT&T (T). However, as one can tell, this last may grow or there could be similar names…
1.) Proctor & Gamble (PG): As of 7/31 close date – $77.75. Down YTD: 5.02%. Current Yield: 3.33%. 5 Year historic Yield: 3.14%. Those are quick metrics. This is one of the ultimate dividend aristocrats and I own 19(ish) shares of this company and bought them recently in the mid-$79 range. Why wouldn’t I buy again? I bought before their last dividend increase, so the yield was actually lower than now and the price dropped with a bigger dividend to boot? This is one of the best dividend paying stocks one can have in their portfolio and always look at it as one of those “foundation” stocks to begin your investing journey. Given the level it is at now with an EPS of $4.19, the PE is approx. 18.50 with a forward EPS of $4.50, thus reducing the P/E ratio. The payout is approaching a higher level, but I do agree with the analysts and see earnings growing going forward. They recently sat on over $8B in cash, I feel this company will continue to pay and increase dividends in the future. Closely monitoring this one… $1.5K more would add $49.50 to my income (also yield is higher than the 5 year… perfect).
2.) Pfizer (PFE): As of 7/31 close date – $28.70. Down YTD: 6.30%. Current Yield: 3.62%. 5 Year historic Yield: 3.84%. This is a story stock for me, as this was the first big stock I purchased back in 2010 I believe with $750 at $14.28 per share. Also Known as HALF of the stock price right now. If only I had more money then… DANG! I have gone through multiple dividend increases and more than doubling of the stock price, lucky timing, right? However, PFE has been trying to buy AstraZeneca to monopolize more of the playing field, and this buyout has been going on for quite some time. Obviously PFE has some big names, which we can all probably joke around about a certain brand. Bert – how has the blue pill been? Joking, joking. Projected earnings are $2.26 for this year, giving this stock an astounding 12.70 P/E ratio.. very undervalued at the moment I would say. Projected earnings for FY 15 is only $2.25, however. The payout ratio appears to be below 50%, giving it ample room to continue to grow the dividend (Cough, December by $0.02, Cough). Given that I haven’t increased my position in over 4 years, I would absolutely love to own more of this little blue pill producing pharmaceutical. $1.5K more would add $54.30, slightly more than PG. However, current yield, is slightly below the 5 year average.
3.) McDonalds (MCD): As of 7/31 close date – $94.56. Down YTD: 2.55%. Current Yield: 3.43%. 5 Year historic Yield: 3.20%. The big arch has been paying an increased dividend for 37+ years, one can say “I’m Loving It” and it’s not because I’m throwing back a Big Mac and America’s favorite french fry. What’s great is with the downturn, the yield is now above it’s 5 year mark, with an expected dividend increasing coming, I am going to throw out a guess of September 22nd (Lets take a look back to see if this hits) at approximately 8-12%. The analysts are projecting earnings of $5.64, giving this a 16.76 P/E ratio with forward earnings of $6.11 lowering the Forward P/E to 15.47, not too shabby, slightly undervalued. I have bought MCD on 3 occasions, with one of those being over the $100 mark. Needless to say – I am going to continue to monitor this. What I Like is the historic yield is below the current yield, and this moat should get further due to upcoming dividend increase. $1.5K more would add $51.45 to my annual dividend income amount.
4.) Aflac (AFL): As of 7/31 close date – $59.74. Down YTD: 10.57%. Current Yield: 2.43%. 5 Year historic Yield: 2.58%. Earlier this month I analyzed Aflac and they were trading at $62.72 aka it is now $3 below 4 weeks ago. The historical 5 year yield was 2.58% at the time, so I won’t update that, however, the margin could be closer as the 28 days that fell off that calculation could have held higher dividend yields. I’ve always liked the duck and think it’ll keep quacking out earnings and increasing those dividends, even if the sound from the TV commercial gives you shrills sometimes! With projected earnings of $6.25 to finish the year, the P/E now is at 9.56 aka very undervalued. Projected EPS is $6.55 for 2015 as well, even lowering this down showing the value it has now. Given the name, branding and strong earnings – I do believe this company will continue it’s aristocratic streak, continue to raise dividends and pay at a very low payout ratio. $1.5K more would add $36.45 to my annual income amount.
I know that is a lot right there, but I have been excited to post these stocks since Dividend Mantra’s post earlier last week. However, the market kept sliding just a little bit more, and then just a little bit further down it went – giving me more time to build the article and to be honest – I only had 3 at the time when I was thinking this one over, as Pfizer took sharper declines lately. Given how large these companies are, the branding, the strong cash and earnings position and adequate pay out ratios – I do not feel that owning more of these would be a bad decision, heck I own them already and why not scoop some more up during this down turn. However, I may not invest a heft $2.5 – $3.5K amount, as prices may continue to tumble, but I feel that a $1.5K infusion into 1, 2, 3 or… 4 of these wouldn’t be a bad idea, to which you could always add more later on. Also, if I do make a move, I may spread the risk/love around and buy 1 or all 4 of them at once, we all, including myself, shall find out what I end up doing! And…
That’s the joy of it all – it’s in my control to make this decision, no one else’s. Which is why this is so great – WE control our destiny to reach financial freedom – it’s not up to anyone else but ourselves. That is why we are here as a community, pushing each other to reach the destination. Excited to see what the market does on Friday, hope to “Re-Up” on something soon. Thanks for stopping by – anyone else “Re-Up”ing into anything? What opportunities is everyone seeing in the Market? Have a great Friday! I wonder how Bert’s watch list is coming along..
-Lanny