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