Bert’s June Stock Watch List

Life is finally starting to settle down again now that my wedding festivities are over.  I feel like I finally have the time to needed to properly analyze the stock market and find the perfect stock to buy.  A few days ago, Lanny purchased more shares in Target and I must say, I’m a little jealous of the make he is making moves while I am still sitting on the sideline.   That jealousy, coupled with the excitement I have following our review of other bloggers’ May dividend income figures, leaves me feeling as motivated as ever to find a great stock and invest.   What stocks am I consider?  Time to take a look at my June stock watch list!

Watch List

Stock #1: Target Corporation (TGT).  Is anyone really surprised that Target is the first stock on my watch list?  It is one of the darlings of the dividend growth investing community of late and I can easily understand why.  Lanny’s purchase article gave a great summary of the metrics and these metrics alone make a very strong case for buying the stock, so I won’t spend too much time covering the details.  However, there are a few additional reasons why I want to purchase the stock that he obviously didn’t highlight in his article.  First, it is a Dividend Aristocrat.  If you all recall, one of my 2016 goals is to add 5 new Dividend Aristocrats to my portfolio to improve the quality of the income stream I am receiving.  To date, the only Dividend Aristocrat I have purchased is T.Rowe Price; so I have a lot of work to do.  Second,  initiating a position in Target would represent a new industry in my portfolio and improve my sector allocation a bit.   Lastly, it would really make my wife happy considering she is Target’s #1 fan.  We do most of our shopping there and love nothing more than scanning every single item we are considering buying in the cartwheel app to see if we can score an extra discount.  Nothing like the thrill of saving money after all!

Stock #2:  Starbucks Corp (SBUX). SBUX is a holdover from my last watch list, which focused exclusively on low dividend yield stocks.  The price has actually fallen a few dollars a share from when I published the watch list over a month ago, so I would be crazy to not include SBUX on this listing, right?  One of my favorite aspects of the company is the culture it has created and how the stores have a way of connecting with its consumers.  Lanny wrote a great piece about this last year and all I could think about was how valuable of an intangible asset that is to the company.  It is definitely unique in my opinion and the SBUX brand is one of the key contributors to their moat.   Further, which some of the pricing multiples are high (which is expected in a lower yielding, growth focused stock), some of the dividend metrics are looking pretty nice.  SBUX’s sports a dividend yield of ~1.5% at the moment, a payout ratio of 50% (see why the payout ratio is such a critical metric), a three-year dividend growth rate of 23.7%.  Metrics I am digging.  So yeah, this company may be on my watch list for a while until the price begins to appreciate.

Stock #3: Eaton Corp. (ETN). I’m going to stay local here for the final stock on my watch list.  Nearly every time I drive on the east side of Cleveland I am reminded about how large of a company.  A few years ago, ETN opened a new headquarters on right off the highway and lets just say it is massive!  Anyway, that’s no reason to invest in a stock, so let’s a take a look at the metrics.  ETN does well against through the majority of the Dividend Diplomats Stock Screener since their P/E ratio of just under 15X is below the S&P 500, their payout ratio of ~54% is below our threshold of 60%, and they have increased their dividend over the last six years.  I know that streak isn’t that long and we typically look for longer streaks of increases, but the fact that ETN continues to increase their dividend while others are slowing down their dividend growth rate or slashing theirs allows me to look the other way when considering the longevity of their increase streak.  Further, ETN’s 5 year dividend growth rate is 17% and their current yield is above their five year average dividend yield of 3.3%.   The one thing that has me cautious is that the industry has been on a tear this year and ETN is up ~18% YTD.  But, if their metrics still pass our stock screener, I guess I should ignore their recent performance.

What are your thoughts on my June Stock Watch list?  Are you following any of these companies?  If not, which companies are on your stock watch list?  Do you own ETN or another machinery company that has taken off during the year?  Would you stay away from that industry if you were me?

-Bert

DISCLOSURE: I DO NOT RECOMMEND ANY DECISION TO THE READER or ANY USER, PLEASE CONSULT YOUR OWN RESEARCH. THIS IS ACTUAL DATA, ANALYSIS, HOWEVER I BASE NO INVESTOR RECOMMENDATION.  THANK YOU FOR YOUR UNDERSTANDING.

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10 thoughts on “Bert’s June Stock Watch List

  1. You inspired me. I pulled the trigger this AM on an SBX put: July 15 $52.5 strike. $0.69/share premium received. 16% yield with 3.7% downside protection.

    Probably won’t write it up till the weekend though. Have to watch the dubs go back to back in game 6’s in Cleveland 😛

    Speaking of Ohio…I went a little further south to Mansfield to find another “industrial” Aristocrat: GRC. I like ETN though too.

    TGT remains closely watched as well.

    • I was loving the comment until the second last paragraph. As soon as I read it, I thought it was Spam from some Warriors fan and almost hit the “Spam” comment button. Kidding! Glad you were able to make a move and take advantage of the current market environment. I’m still waiting to see where to strike, but I want to do something soon!

      Thanks for the comment. and one more thing…GO CAVS TONIGHT!

      Bert

  2. I like TGT. I’ve picked up shares twice over the last 30 days. SBUX is one that I haven’t decided on yet. I know a lot of DG investors have bought this stock the past 6 months. Honestly, I’m one of the few who doesn’t like their product. It’s probably one of my least favorite coffee chains. For this reason, I’ve avoided the stock. But, I’m in the minority, so don’t use my taste buds as part of your buying strategies 🙂

    • IH,

      I feel you on the taste of Starbucks coffee. Not the worlds biggest fan either. You have to burn and roast the beans so many times to produce a uniform taste that is recognized nationwide. I don’t mind drinking it, but I’m not running to the coffee shop and waiting in a 20 minute line to get a cup of black coffee. But, none of that matters when you are buying Americanos, LAttees, Chai Tea, and all of the expensive drinks that people are hooked on. That’s where they get you hahaha

      Hopefully I’ll be joining you soon as a fellow TGT stockholder! Thanks for stopping by and the comment.

      Bert

  3. It’s great to see TGT being at the top of your watch list. It is a company I have been following for a while and I am currently in the process of reading the annual report. From a valuation point of view, it is a screaming buy with a P/E of just 13. The dividend yield it currently offers is great considering the low payout ratio.

    • Yeah, their metrics are insane right now. It is incredible to me that their price has appreciated so much over the last few years and their P/E ratio remains low. Plus, a 3.5%+ dividend yield is just crazy to me. Are you planning on buying any shares any time soon? Have you found anything worth sharing in their annual report that prompted the sharp decrease in price??

      Bert

  4. I like all three of these companies and own all but ETN. I think TGT might represent the best value right now although ETN is probably close behind. It’s been awhile since I’ve taken a close look at ETN but I really liked what I saw when I did. Looking forward to seeing what makes the cut.

    • That’s the direction I am starting to lean as well. I like ETN too a lot and the more I dig the more I like. Same is said for Target though, so it is a tough call here. Honestly, I think it is all going to come down to what Mr. Market gives us over the next week or so.

      Thanks for stopping by JC!

      Bert

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