Bert’s December Dividend Stock Watch List

I cannot believe I am about to say this, but here it goes.  For the FINAL time in 2017, I am going to take a deep dive and prepare a watch list full of dividend stocks that are on my radar because they are potentially undervalued.  This market is as expensive as ever and the S&P 500 continues to soar to new highs.  So finding great dividend stocks that are currently trading at a discount was definitely a challenge.   However, I was able to find three stocks that have caught my attention.  Let’s dive in and take a look at the final 2017 edition of my dividend stock watch list!

Stock #1 – Cardinal Health (CAH) – Doesn’t it seem like CAH has been on all of our dividend stock watch lists since August?  Well, it sure has felt like that for me.  Despite the fact that CAH has had a strong month of December (up 11% this month at the time I am writing the article), the company STILL continues to pass all the metrics of our stock screener.  Their current and forward P/E ratios are below the broader market, their payout ratio is below our 60% threshold, and well, you don’t earn the title of “Dividend Aristocrat” if you aren’t willing to increase your dividend.   My position is large compared to others in my portfolio, but adding to my stake will still lower than my cost basis.

Stock #2 – Archer-Daniels Midland (ADM) – This is a holdover from my November dividend stock watch list.  A Dividend Aristocrat that is a relatively small position in my portfolio that is currently trading at a discount.  HECK YES it is on my watch list.   Their P/E ratio is around 19X, payout ratio below 60%, and the company has increased their dividend for over 40 year. Plus, they are set to increase their dividend once again in February.  I still have plenty of time to consider making a move given the fact that their ex-dividend date has passed and will now roll around again until February.

Stock #3 – HCP, Inc (HCP) –  WOAH.  Finally, it has been a long time since HCP has appeared on my watch list.  I have been in “wait and see” mode ever since the company’s QCP spin-off.  While I have experienced a roller coaster ride with HCP, I have felt more confident about investing again in HCP.  After thinking about it, my positive thoughts are probably centered around the fact that HCP spun-off their problem-child division/tenant when QCP was formed.  In the company’s third quarter earnings release, we read some positive news: positive FFO, debt paydown, small acquisitions, and a few other pieces of great news.  I’m still looking to see if the company is going to increase their dividend soon.  Their adjusted FFO was $.48/share, so the company’s payout ratio is below 100% when using the adjusted FFO figure.  But if their price remains in the mid-$20s/share, I may just have to add to my position.

Notice one company that is not on my dividend stock watch list for December: CVS.  It is a company I am monitoring closely now that the companies have agreed to the terms of their merger agreement.  However, now that management has halted their dividend, I am going to look elsewhere for the time being.  If the price falls drastically, I’ll quickly consider adding to my stake. But it isn’t on my watch list right now because that price point is much lower than their current price.

Outside of excluding CVS, I’m pretty happy with my watch list.  Three Dividend Aristocrats (depending on how you classify HCP after their spin-off).    What’s funny is that I actually own all three companies on this watch list.  So I have the opportunity to take advantage of the current market prices and lower my cost basis.  Can’t complain about that, right?  Hopefully I’ll be able do some last-minute “Christmas shopping” here!

What are your thoughts about my watch list?  What companies are on your dividend stock watch list in December?  Or are you letting the market cool of a little bit before investing in individual stocks again?


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

  1. Solid list, Bert.

    I’ve been following ADM for about 10 years now (a bit funny, I came across the company initially after dating a girl in college who ended up working there right out of school – not that this is a reason to follow or consider owning the stock :/ ). We don’t have an individual position in this stock.

    CAH is also on a lot of lists right now., but we also don’t have an individual position in this stock.

    For HCP, I haven’t followed primarily because our REIT exposure (which is ~25% of our current net worth) is currently in an index fund – related: – but HCP is a current holding though.

    – Mike

    • Mike,

      Is the reason you don’t own the stock because of your ex?? kidding kidding. Is there something that is holding you back from initiating a position in ADM? Similar with CAH? Understandable with HCP of you don’t want your exposure too large in a sector!


      • That made me laugh, Bert.

        On your other question, we do not currently hold any individual holdings except one name – all our equity exposure is via index or other funds.

        We just did purchase our first individual dividend holding (more to likely come on this in the future). Nothing holding back from ADM or CAH – they’re good considerations for some of the reasons you highlighted.

        Thanks again for the post.

        • Mike,

          Glad I could make you laugh/smile a little bit! Congrats on dipping your toes into individual stock investing. I like the plan of building a solid base of index funds before jumping in with individual companies.


  2. Bert,
    I like ADM and CAH. Never held HCP, but I do have HCN and OHI and have been pleased with the cash they send my way. Another thought, have you looked at NGG? It is high on my radar right now, but to get the full story you need to look up the UK’s CCC list.
    – Gremlin

  3. I hold all three of your considerations and continue to like CAH as well as HCP at these levels. In fact, many health REITs are in the dumps these days from LTC to HCN to OHI and even VTR all down from their summertime highs. I’m still watching GE in December as it sits in the teens. With another week and a half to go I still have to make my final 2017 buy(s). Thanks for sharing your picks.

    • Divhut,

      Thanks for the comment! The REIT industry has been rough the last few weeks and I’m now also watching O after their continued slide. Interesting take with GE post dividend cut. I’m not as high on the company, but I’m looking forward to reading your post about why you are!


  4. Bert, Did you own HCP through their dividend cut in 2016? I did and sold after. It’s hard for me to forgive a company for a dividend reduction. I have had better luck with HCN and VTR in that space as a long term holder. I have also been a long term holder of ADM. As for my watch list, I’m letting it simmer on the back burner. With valuations feeling a bit stretched and yields a bit low, I have been more comfortable recently dollar cost averaging into the Vanguard High Dividend Yield ETF (VYM). I know it’s not exactly rationale to think its holding are not over valued, but I get some comfort in the diversification it provides with each purchase. Tom

    • Tom,

      I did own HCP prior to the spin-off. I’m still not considering it a cut at the moment now that I own shares in QCP. But I’m closely monitoring what HCP is doing post spin-off to see if this was a blip or if management is just no longer increasing their dividend. I understand your sentiment with valuations, especially as the market continues to rise. There are still a few picks out there; however, finding value in this market is not easy and takes a lot of research and time. But I’m always in to roll up my sleeves and find some gems out there 🙂


  5. Great list Bert. CAH has really come around to me. That and ADM are on top of my watchlist. We will see how it goes by early January. T is also still floating around on top for me. I might add more to T, but we will see. Thanks for sharing. 🙂

    • MDD< Thank you very much. Glad to see we have a similar watch list right about now. T has appreciated a little too much for me recently, but trust me, I will be grabbing and adding shares to my position as soon as their price falls! Bert

    • TDK,

      Thanks! I had not researched PPL. The company has taken quite the tumble recently though and I’ll have to dive in and see what is causing this decrease. Tanger outlets has made a comeback. It is crazy how many new outlet malls are popping up outside of cities. It seems like Tanger has a new place everywhere. Happy shopping to you as well.


  6. Nice list as always. I think HCP can be a great buy on the long run, although they are having some temporary headwinds.

    I’m still a fan of EAT. Not many people seem to talk about it, maybe that’s why 🙂 I’m also looking forward next year whether the big dividend hike of KMI will happen…

    • Roadrunner,

      I’m pretty happy that HCP continues to slide for the moment. Greater DRIP and the potential to really lower my cost basis in the holding. EAT is an interesting company. I don’t hold a chain restaurant company, but I have supported the stock in the past plenty of times. I am so pumped for the KMI dividend hike to become a reality here in 2018. Let’s hope that management follows through with the plan!


  7. I purchased CAH for the first time on Monday so I like that one. I don’t own ADM or HCP, but I will keep my eye on them. I will have one more purchase next week and then I will be done for 2017.

    • Do you have a price point in mind for ADM? I’m interested to see how the DIS/Fox acquisition is going to play out. I like their move into regional sports to help support their ESPN viewership/subscription concerns. They also picked up some key media/production facilities.


  8. Nice list. The REIT and Utility sector seems to be under a bit of pressure. CAH seemed to be headed toward $50 before it suddenly shot up. There might be a better entry point in the near future (hopefully :))

    – DesiGuy

    • DesiGuy,

      Than you. REITS are definitely decreasing, which is also making companies like O attractive and suddenly pop on our radar too. I hope there is a better entry point for CAH and all of these stocks. If so, I am going to be ALL over it!


  9. I am still undecided on my watch list for the up coming year. Seems like for months, I have been looking at HRL, GIS, and CAH. All three of them have rebounded a lot. Two out of the three up now higher than I originally paid and CAH still needs a little ways to go so I could still average down on it a little bit. Not sure if my next buy will be increasing an existing position or opening up a new one? We will see I guess. Thanks for sharing the list.

    • Daze,

      All three definitely came back and I am kicking myself because I did not initiate a position in HRL while it was low. Luckily Lanny did, so I’m excited for him that he has been able to enjoy this appreciation. I always debate that question. Some days I want a new position and others I want shiny new positions. If it is a great company, I don’t think you can go wrong with either option 🙂


  10. Man, I hadn’t heard about CVS halting their dividend. That’s disappointing, although I assume it’ll be resumed in earnest if/when the merger goes through. I like ADM at these levels and JNJ seems like a decent buy too. JNJ seems right around fair value which is about all you can really ask for in this market. I also like LOW at these levels although in the low $80’s it was a much better buy. I think MKC is a solid pick in the consumer staples space too, although like JNJ it’s about fair value. All the best looking for your next purchase.

    • JC,

      I know, the news about CVS sucked. But at least they didn’t slash their dividend. I’m just frustrated because I was watching and looking forward to adding to my position. JNJ..interesting. I haven’t thought about them in a while, especially considering their stock price has surged. But heck, it is still possible they are undervalued even after all of this appreciation, right? LOW is another interesting name. I looked at them earlier in the month and their metrics aren’t in too bad of shape! Happy shopping to you as well.


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