Bert’s November Dividend Stock Watch List

Black Friday and Cyber Monday are looming folks.  While others will spend hours upon hours waiting in line to capture those “Doorbusters,”  I’ll be engaging in a different form of shopping.  Shopping for dividend growth stocks!   Each month, Lanny and I will put together a short list of stocks that have caught our attention and are strong contenders to be purchased when the timing is right.   I’m hungry to add some forward dividend income to my portfolio this week, so let’s dive right in and see which stocks are on my November dividend stock watch list.

Dividend Stock #1 – Cardinal Health (CAH) –  The Dividend Aristocrat that just cannot seam to catch a break.  CAH made an appearance on my October watch list and was also on Lanny’s November watch list.  What’s crazy is that CAH’s stock price was around $62/share at the time Lanny published his article.  Now, the company is trading near $58/share.  Year-to-date the company is down 20%!   The company is now yielding over 3.2%.  CAH has been in the news a lot lately, whether the company faces articles about the opioid crisis, daily rumors about Amazon entering the pharmaceutical industry, or even to selling a portion of their business (as CAH recently sold their China business for $1.2b).   This certainly has not helped their stock price.  But with that being said, I am still interested in adding to my current position at the current levels before the company’s ex-dividend date on December 29, 107.

Dividend Stock #2- Archer-Daniels Midland (ADM) –  It has been a while since I initiated a position in ADM (2015) and the stock has quietly appeared on my radar once again.  The company is now trading below $40/share and is down over 13% year-to-date.  With that being said, ADM currently passes all the metrics of our dividend stock screener as the company’s P/E ratio is below the broader market ( 17X using current year average EPS estimates, payout ratio is below 60%, and their have a long history of increasing their dividend (they are a Dividend Aristocrat after all).  Currently, I own ~41.5 shares of the company and would love to add to my position.  If I have a small amount of capital available for my next purchase, I may be looking here and it would be nice to add another 25-30 share to my position.  The one bummer is that I JUST missed the company’s ex-dividend date for their fourth quarter dividend (11/15/17).  But I can live with that if the metrics continue to look great.

Dividend Stock #3 – Altria Group (MO) –  Last but definitely not least, Altria Group.  I have a fairly large position in Philip Morris (PM), so wouldn’t it be nice to add the other half of the spin-off of the former consolidated tobacco giant.  The company doesn’t have the lowest multiple out there (~18X using forward earnings), but this mark is below both the broader market and rival PM (19.3X).   The company has increased dividends each year since the spin-off and announced a very solid 8% dividend increase in August.   And even though MO’s payout ratio (~73%) is above our typical 60% threshold, I’m willing to overlook this due to the fact that all companies in the tobacco industry maintain a relatively high payout ratio.   The company had a very solid earnings release in October, citing strong growth in their core tobacco operations and the fact that the company continues to reward shareholders via dividend payments and share re-purchases!  I’ve thought about making some adjustments in my Roth IRA and this would be a leading contender for a purchase if I do decide to make a few moves!

All in all, two Dividend Aristocrats and one tobacco company that LOVES to reward its shareholders make up by November Dividend Stock Watch list.  Regardless of which stock I select, the thing I am focused on right now is making sure that I am adding some forward dividend income to my portfolio like I was able to last month when I added shares of AT&T.  After receiving some side hustle income last month and selling a few items on Ebay this month, I am ready to continue to deploy all the extra capital that I can into my portfolio!  Here is my quick take on the stocks above: I’m intrigued by the decline in ADM though and am very excited about the stock after performing my research. Metrics look great and my current position of $1,600 could use a nice jolt.   I’m still trying to make sense of the CAH downturn, but am looking forward tom monitoring and possibly adding to my position there as well.

What do you think about the three companies on my watch list?  Are you considering them?  If not, what stocks are on your watch list? Have you added shares of AT&T over the last month?

-Bert

DISCLAIMER: I DO NOT RECOMMEND ANY DECISION TO THE READER or ANY USER, PLEASE CONSULT YOUR OWN RESEARCH PRIOR TO MAKING AN INVESTMENT DECISION.   THANK YOU FOR YOUR UNDERSTANDING.
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31 thoughts on “Bert’s November Dividend Stock Watch List

  1. Hey Bert, great picks there. I have also been looking at ADM lately. The 3.2% yield looks really enticing. I haven’t added to AT&T just yet. That company is still on my watch list as well. Looking forward to your decision on what to buy.
    – SD

    • Glad to see ADM popping up on some other radars. I won’t let the passing of the ex-dividend date get me down too much haha I am not watching the companies at the moment; however, KMB is right up my wheel house and would fit the mold for a company that I would typically invest in. Gotta love the consumer stocks!

      Bert

  2. I ended up throwing a couple sheckles at T and VZ this month in my taxable account.

    Also, I diverted all interest from HYS, CD’s, budget savings, and lending club to my taxable account. Should be around an additional $1200 a year to invest.

  3. I still have not made my Nov. buy but it looks like CAH is my top pick for the month though GE is looking tempting now that it’s in the teens. While never a guarantee, the dividend champs, aristocrats, kings, etc. seem to bounce back from their lows given enough time. VFC was in the dumps not long ago. Look at MCD riding high after report after report said the company was dead. While still early, GIS and HRL appear to be bouncing off their lows. Look at what DOV did in less than two years not mention CAT. Eash of these names were written off for dead at some point in recent history. As I said, it’s no guarantee but more often than not the dividend champs, aristocrats, kings, etc. put into action a playbook that returns them to better days which is why CAH and others on the “operating table” look good to me.

    • Divhut,

      I love the MCD story. Do you remember when the company was outdated, boring, and Chipotle was “running circles” around the management team. They found a way to adjust and make the changes needed to snap out of their funk. You’re right nothing is guaranteed. But part of the reason I love Dividend Aristocrats is due to the fact that the company has shown that it can continue to increase their dividend throughout various economic cycles. There will be some great years and there will be some bad years. But eventually (at least in most cases) they will snap out of it. By the way, CAT is on a tear right now! Great points and thanks for the nice comment.

      Bert

  4. Have been looking at expanding my CAH position a lot. I would easily be able to lower my cost basis. And their dividend growth seems to be pretty high compared to some others. A lot of questions about them long term though with Amazon stepping into new industries every day and taking out other players. Still like them though and will hold long until I see anything change. Thanks for sharing the list.

    • Daze,

      CAH is definitely a tough one right now. I’ll be interested to see another quarterly earnings report and more information bout Amazon’s next potential venture. It is hard to see if there are legs to these Amazon rumors or if it is just speculation based on their purchase of Whole Foods. I guess only time will tell right now. What other companies are on your watch list!

      Bert

  5. I’ve also been looking at MO lately as I don’t have any exposure to the tobacco industry with individual stocks. I’ll have to review the numbers again but I remember thinking that they don’t have much for debt either. That is attractive to me!

    • Great point with the low debt totals. That is a great thing to consider for a company that operates with a high payout ratio. You won’t run into a situation where you have to choose between the bondholders and shareholders because let me tell you, the shareholders won’t win that battle. Let me know what you think after your moves!

      Bert

  6. Bert,
    I am a big fan of MO even though I am not a smoker. It has been my largest holding for a long time. I plan to continue holding, but I do wonder at times how long they can keep up the performance in a declining market. I have a much smaller position in ADM. Quality company and will also continue to hold. It can be bit volatile to my taste due to it’s exposure to commodity prices. I do not own CAH and have not considered it in a while for no particular reason. All in all a quality watch list. This is my kind of online shopping! Tom

    • Tom,

      One of the interesting pieces I have heard/read about MO is that they are looking to expand into non-tobacco markets aggressively. That gives me some hope/optimism about their future in the declining smoking market that you mentioned. Hopefully you will do some Black Friday stock shopping here as well 🙂 Thanks for stopping by and the comment.

      Bert

  7. I have MO on my watchlist along with T. Since I own a few shares of each, I decided to add shares from an Aristocrat in a different industry for diversification. But I’m with you, I was looking more at buying shares in the market instead of trying to deal with the holiday shopping crowds 🙂

  8. I grabbed a single share of ADM a few months ago just as a place holder. Now might be the time to pounce. Though I wouldn’t mind seeing them fall a little lower. It seems every time I make a buy at a 52 week low lately the stock takes another dip.

    • Seedling,

      There is nothing wrong with the price falling. IF you liked the price at the initial 52 week low, then I’m sure you LOVE the price at the second low. If you do your research and know it is a quality stock, then the second dip is a great opportunity to reduce your cost basis.

      Bert

  9. Bert,
    I’m watching CAH, and would like to see the price stabilize. However, I could see myself adding some in small share amounts. Another stock I’ve started watching is Williams Sonoma (WSM). Seems to be plenty of interesting names in the retail ./ consumer discretionary space these days. Good shopping!… and Happy Thanksgiving.

    • Engineering Dividends.

      Thanks for the comment and Happy Thanksgiving as well. This is my favorite holiday of the bunch. What are you liking about WSM at the moment? Just curious because I’ve stayed away from that industry.

      Bert

      • I like that the yield is the highest it’s been in several years, roughly 3.4%, and that the payout ratio is in the 40% range. I like that debt is very low. The ROE has been good, too. The sales growth and earnings growth has been predictable, but it’s slowing. Cash flow per share is holding steady. WSM has had some struggles the past couple of years, which has depressed the price. That could prove to be an opportunity should better growth return. Not ready to buy, but worth watching.

  10. I think you’re turning into a contrarian investor – with one pick in a declining industry and two embroiled in issues they have little control over. I think ADM’s major issue is the tax plan and the biofuel tax break/credit and CAH (like my stake in OMI) is indeed an AMZN issue. Not directly Whole Foods related though. AMZN has applied for and/or received pharmacy licenses in two states (I think IN and TN) with the initial ability to focus on medical device and supplies (restricted by the initial license terms). Initially, I would expect OMI, ABC and MCK to be hit with CAH having a little less exposure.

    • Charlie,

      I just checked. Apparently http://www.contrariandiplomats.com and http://www.dividendcontrarians.com are available for purchase. WE may be on to something here. But can you blame me for keeping close tabs on Dividend Aristocrats that are undervalued and have hit a rough stretch? The industries will have to sort out the Amazon issue for sure, but I’m still unsure of the magnitude of the impact or just how badly the industries will be impacted. I read the piece about the pharmacy licenses as well and I am very curious to see what that company has up their sleeves.

      Thanks for the great comment!

      Bert

  11. Interesting list.
    CAH is on my watchlist as well, i hope the market is just over reacting. MO seemed to be heading toward $60 a few days ago, and now has shot up about 10%, oh well.

    -DG

  12. It is curious that while our screeners differ, we are looking at two of the same stocks.
    However, I need ADM to come down to $30-35 before I pull the trigger, I’m just not comfortable around $40.
    Altria I think is interesting that they can manage to increase margins (even after adjusting for the AB Inbev/SAB miller deal). I might be initiating soon on Mo.
    I use uuptick, a stock analysis platform which I co-developed to screen and analyze stocks. I appreciate what you guys are doing at DividendDiplomats, so take a look, if you like the idea, maybe we can figure out a way of working together?
    Look forward to being in touch,

    Sam

  13. My most recent additions have been MO, LEG and ADM. Out of the three I would choose ADM however. CAH has a lot of room to run downward still. It’s most recent sale is never a good sign for continued dividend growth. I wouldn’t say they are in trouble but It could hurt profits in the long run

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