Bert’s December Dividend Stock Watch List

The holiday spirit is in the air and we are closing in on the end of 2018.  With Lanny serving a healthy dose of inspiration by sharing with all of us that he crushed a major dividend investing milestone ($12,000 in annual dividend income, aka $1,000/month), I’m as motivated as ever to continue investing as much capital as possible into income producing assets.  So today, I sat down and put together my initial December dividend stock watch list.  There are a handful of companies on this listing, so lets dive right in!

For each of the companies on my dividend stock watch list, I will run their current metrics through the Dividend Diplomats’ Dividend Stock Screener.  Our simple, three-step screener evaluates if a company’s P/E ratio is below the market, their payout ratio is below 60%, and if the company has a history of increasing their dividend.  For each company, I will use the closing price as of 12/14/18, average analyst EPS per Yahoo!  Finance, and the companies’ annual dividend.

Dividend Stock #1:  United Parcel Services (UPS) – UPS.  My last purchase.  I recently published an article discussing how I added 10 shares of the delivery/logistics giant.  In my purchase article, which used a share price of $105/share, the company passed all three metrics of our screener.  The company had a P/E ratio of 13.4X, 46% payout ratio, and I discussed the company’s history of paying an increasing annual dividend since 1999 (with one year where the company maintained their dividend during the financial crisis.  At the time of this article, UPS’s share price was $98.66/share.  The updated P/E ratio is lower as a result of the price change, and thus, UPS still passes our stock screener.   It only makes sense to keep UPS on this list and continue adding if the price is right and I can lower my cost basis.

Dividend Stock #2:  The J.M. Smucker Company (SJM) – Smuckers is the one consumer-staple company that I am always coveting, but have never actually purchased shares in the company over the years.  They are a local company and have some of the best consumer brands (Jif, Smuckers, Folgers, Crisco, Pillsbury, Milkbone, etc.) that can be found nearly every household.   When the company’s stock price gets close to or falls under the $100/share mark, I instantly add the company to my watch list.

Based on the results of our stock screener, SJM is considered undervalued.  Using the 12/14/18 share close price of $101.91/share, the company’s P/E Ratio is around 12.69X,  the company’s dividend payout ratio is 42.3% ($3.40/$8.03), and SJM has increased their dividend annually since 2002.

Despite the fact the company is undervalued, the reason I haven’t ran and purchased SJM yet is because I already have a nice weighting of consumer staple companies in my portfolio already (Kraft and Pepsi, for example).   UPS, my last purchase, represented a new industry in my portfolio and the others on my watch list will add to a sector that is underweight in my traditional portfolio.   But these metrics were looking great at the moment and I couldn’t ignore SJM at the current valuation.  Hence, they are on my dividend stock watch list.

Dividend Stock #3: AbbVie, Inc. (ABBV) – Back to the well once again, eh?  In November, I initiated a position in ABBV.  I only own 7 shares of the large pharmaceutical company.  I am far from a full position and would own at least 25 shares one day.   My initial purchase price was $85.62/share.  At the time of my purchase, the company’s P/E ratio was below 11X, their dividend payout ratio was 53.8%, and I discussed the company’s ridiculous recent dividend growth rate.  Ultimately, I was comfortable with the company’s dividend history since their spin-off in 2013.   At the time of this article, the company’s share price was $85.61/share and there were no changes to their average EPS or dividend.  The results of the stock screener are essentially the same.  Thus,  ABBV still passes our stock screener and I’d love to continue building my position if the price continues to fall and even drops below my initial purchase price.

Dividend Stock #4:  Major Integrated Oil (XOM, CVX, RDS.A) – There isn’t one specific company on this listing, so this may be considered a “cop-out” dividend stock to add on my watch list.  But armed with free-trades for a few more months, I have the luxury of making small purchases without incurring a $3.95/share trading fee.  In my traditional portfolio, I own 25.3 shares of Royal Dutch Shell, 11.1 shares of Chevron, and 15 shares of Exxon Mobil.  Surprisingly, my weighting is pretty light for major integrated oil.

Each of the companies listed above meet the metrics of our stock screener.  Of the group, XOM has the higher multiple while Royal Dutch Shell has the highest dividend yield.  Although, RDS has not increased their dividend for several years.  After performing some research, the company has worked to clean up their balance sheet.  The current oil market has been crazy, to say the least.  We have experienced wild swings in the price of crude oil and as a result, the major integrated oil companies have experienced wild swings in their stock price.  If one of these companies experience a major decrease, I will add to my position with a small purchase or two.

What are your thoughts about the companies on my watch list?  Do you agree or disagree with any of the names included?   If you are not watching any of these companies, please let me know why and what companies are watching instead. Also, which oil company would select from the bunch?

Bert

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16 thoughts on “Bert’s December Dividend Stock Watch List

    • Thanks MDD! I guess this was a great day to release a watch list, considering the decrease in the market place haha Hopefully the market can hang tight at these levels while you rebuild your cash position.

      Cheers

      Bert

  1. Bert,
    Solid list. I am leaning towards the Canadian Banks myself, specifically to complete the set by adding TD – the only one I am missing. Right now there are so many nice deals out there, thank the market, panic sellers, computers, and people who only see short term profit.
    – Gremlin

    • Gremlin,

      Ah, the Canadian Banks. I own CM, but was having a conversation with Lanny recently about expanding my Canadian Bank holdings. So many great dividend paying companies to choose from that offer a nice yield and high dividend growth.

      Bert

  2. Bert,
    I like the list. Of the those listed I am least familiar with ABBV despite it being a fairly popular stock among the DGI as of late. I own SJM and I am willing to add to my position when the stock falls to low $100s or below. With respect to the oil majors, XOM is the only one I hold however, the other two mentioned are relatively attractive as well. Outside of the majors listed, PSX is another name in the energy sector that I hold and nearly added to my position last week, however, my limit order was not executed; management appears to be doing a great job running the company and returning a nice chunk of returns to shareholders through dividend growth and share repurchases. I may renew it and add a few more shares this week. I am loving the valuations and corresponding opportunities that are presenting themselves as of late. Looking forward to seeing which names you pick up in the near terms – best of luck.
    PIV

    • PIV,

      Thank you very much. I wasn’t too familiar with ABBV until a few months ago. Once I started peeling back the layers, I liked the stock/company a lot. PSX is one of the few names in the oil industry that I am not familiar with. Based on your comment though, it sounds like it will definitely be worth a look and even a potential addition to our portfolio. The oil industry is presenting us with some great opportunities. It is just taking the time to do the research and find the right ones to invest in, right?

      Bert

  3. Hi Bert,
    I really like your watch list for December, we actually have two companies in common, which are also at my current watch list, SJM and XOM. I am wondering why you have no insurance companies on your list, PRU and PFG are quite tempting at the moment.

    Cheers

    • Thanks DCF! That is fair and the insurance industry is getting hammered right now. I am in wait-in-see mode with any insurance company that may offer health insurance, because the recent court rulings have the potential to shake the industry completely. Not to say it will be bad in the long-run; however, I just want to make sure before investing my capital in the industry. The property and casualty insurance sector has some nice discounts though.

      Bert

  4. Bert,

    I’ve been avoiding the stock market recently due to some real life events that took my cash elsewhere but hoping to put a little towards the market while it’s down. I’m high on smuckers, though have no position. ABBV has been good to me but volatile in the past few months, and avoid anything oil because I see little future there. Planes? sure. For a while longer. Cars and other areas of consumption? No. I want something I can invest in and hold for the next 50 years at least as I probably have 60 left in me if war or some accident doesn’t take me.

    My platform, Robinhood, unfortunately, does not offer a DRIP so I’ve been lazily routing my monthly dividends the past few months into SPHD (a S&P 500 dividend ETF) though I am very curious about some research into BUD at under 70 (68.23 at time of writing).

    Thanks for the articles!
    -Alex

    • I don’t think that’s too lazy. I like the approach of adding some of the extra cash into an ETF and increasing your exposure. That’s an interesting take with oil and while I agree to an extent, I also know the major companies have the resources to expand their product offerings and acquire a leading edge company in the new sector.

      Bert

  5. This market hiccup is sure unlocking a lot better valuations. SJM, MO, UPS, BDX and several others. UNP might warrant a look as well since they’re down around 15% since peaking in October. Looking forward to seeing what you pick up.

  6. Bert,
    All of these companies are at least buys to strong buys at this time, in my opinion. Though if I had to choose just one company that I’m most enticed by currently, it would have to be MO. Using the midpoint of the company’s earnings guidance for this year of $3.99/share, the company is currently trading at under 13 times earnings, compared to the 5 year avg PE of 17.1, per Morningstar.

    • Thanks Kody. I ended up adding to XOM and CAH, one not on my list, this week. Both of which I already own. I can’t believe the market continued to tank after I published this listing. Incredible and crazy times. What are your thoughts about MO after the JUUL investment? I’ve seen a few downgrades and less optimism from analysts after the announcement.

      Bert

  7. All solid choices, and I just nibbled a little more on XOM myself. I’m a fan of ABBV but have a full position right now so not looking to add more. SJM is an interesting one as I’ve looked at it a few times but haven’t been compelled to pull the trigger and add it to my portfolio.

    The market sure is providing some nice buying opportunities though!

    • DivvyDad,

      Thank you. I’ll be adding more to XOM now that the price is below $70/share. I can’t believe it continues to fall. I understand that crude oil is tumbling, but man, it has been a long time since I’ve seen XOM below $70/share.

      I couldn’t agree with your last sentence any more. There are a TON of great opportunities out there right now.

      Bert

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