It has been a few months since I have purchased my last stock and man oh man am I starting to get an itch. Times have been interesting for me recently. I am arms deep in working through project after project in our new house and have been hoarding my cash lately in the event we stumble on an unexpected “surprise.” But I am extremely motivated to purchase some stock after seeing my cash balance increase, Lanny make some moves by purchasing Cisco, and reading through so many great dividend income summaries in our monthly dividend income summary from the blogging community. It is getting harder and harder to resist. So now, I thought I would put together a watch list to prepare for when the right moment strikes.
My August Watch List
So yes, I’m getting the itch to invest. But I’m not expecting my next investment purchase to be significant. I’m thinking it will fall somewhere between $500 and $1,000 based on the timing of the purchase. Since this purchase won’t make too large of a splash, I am thinking I am going to focus on adding to a position in my portfolio rather than start a new position and use this capital to continue building the foundation I have laid down in a few different stocks. Cisco is a great company with awesome metrics, but this would knock them out of the equation for now. But watch out at a later time! Here are the three companies that I am watching closely.
Stock #1 – Cardinal Health (CAH) – After their last earnings release, this one is jumping off of the table at me. CAH’s stock price has fallen ~13% in the last month and their dividend yield is now over 2.75%. Much higher than the initial dividend yield when I purchased the stocks. Further, their current and forward P/E ratios are around 16X and 13X, respectively, depending on the source for analyst estimates that you use. Their ex-dividend date is not until the end of September though, so I’m not exactly in a hurry to make a move here. I think this is a great opportunity to add to one of the largest healthcare companies out there despite some of the noise in the broader industry.
Stock #2 – CVS Healthcare (CVS) – I first purchased CVS back in April when the company was trading at $77.83. Why? It was simple. The company passed our stock screener with flying colors by trading at a multiple well below the market, having a low payout ratio, and a strong dividend growth rate. As I write this article, CVS is trading at $79.41 at $79.41 and there has not been a change in the company’s forward outlook. Aka, nothing significant has changed since I started a position. Right now, I only own ~14 shares of the company and received my first quarterly dividend check of $7.54 from the company. I would LOVE to increase my position and the dividend check that I am receiving from them on a regular basis.
Stock #3 – Realty Income (O) – Ah ha. This company has not been on my watch list for a long, long time. But let me tell you, I have loved receiving the monthly dividend checks from Realty income, that’s for sure. Similar to CVS, I purchased 40 shares of Realty Income at the end of 2016 when the company was trading at $57.61. While my position is showing a net gain based on the dividend re-investment that occurs each month, the current price of $56.48 is actually lower than my initial purchase price. At the time of my purchase, Realty Income’s Price/FFO was ~20X. Using the most recent 10-Q, their Price/FFO is ~18.5X, indicating the valuation has decreased slightly since my initial purchase The company and environment for the organization has not changed significantly since my initial purchase and I still love the company, their increasing dividends, and the diversity of tenants compared to others in the industry. They are also the highest yielding company on this watch list, so this would get me the largest bang for my buck in terms of dividend income.
There it is, a short and sweet dividend stock watch list here for the coming month. Hopefully the market will present a nice opportunity over the next few weeks to continue building a position in my portfolio. Soon, when the dust settles for my move, I cannot wait to dive back into investing full-blown and really jolt my portfolio going forward. Each small investment adds a small amount to my income, which as we all know, helps further increase my future income stream and brings me that much closer to FIRE and early retirement. We all know that EVERY DOLLAR COUNTS, so it is time to make a move or two and keep the ball moving forward!
What do you think of my watch list? What companies do you have your eye on over the next few weeks? Any on this list? If not, why are you excluding them? What investment moves have you made over the last few weeks?
-Bert