Bert’s October Dividend Stock Watch List

The end of 2018 is rapidly approaching.  With only three months to-go, I am working hard to identify different investment opportunities.  With some extra cash, I am ready to put my capital to work and increase my dividend income as much as possible before the end of the year.  In this month’s edition of my dividend stock watch list, I identified four stocks that I will keep an eye on.  Ironically, I actually own all four stocks on this watch list.  And on top of it, each have a dividend yield greater than 3%.  So a potential purchase may add quite the punch.   With that in mind, let’s see which four companies made the cut for my October Dividend Stock Watch List!

Dividend Stock #1:  WestRock Company (WRK) – This company first appeared on Lanny’s radar in the summertime.  Naturally after his write-up and some discussions, I followed his lead and initiated a position of 25 shares in the company.  The company fit our metrics at the time, so why not start a position?  On top of it, it represented a new sector in my portfolio, which allowed me to further diversify my holdings in my traditional account.  I was always hoping to add to my position on day, and that day may come sooner than I expected.

Since I purchased WRK, their stock price has decreased slightly.  In fact, I am down about 3% at the time I was writing this article.   After quickly running WRK through the stock screener once again, the metrics continued to pass.  Assuming a price of $50.56, EPS of $4.07/share.  (average analyst estimates per Yahoo! Finance.  This is the source for all EPS figures used in this article for each respective company), and an annual dividend of $1.72/share.  Their P/E Ratio is 12.4X, payout ratio is 42%, and their dividend yield is over 3.2%.   Further, WRK is expected to announce a dividend increase this month.  Even a few months after my initial purchase, WRK still passes our screener with flying colors.

Dividend Stock #2:  National Grid plc (NGG) –  Recently I started a position in the utility giant.   National Grid didn’t just jump out to me because of their high dividend yield.   Their diversification in the utility industry (gas and electric), along with their international exposure, provides some diversification to my portfolio and current utility holdings.   The company is one of the largest utilities with a market cap that is one of the Top 10 largest in the utility sector (per www.fiviz.com).

The company’s stock price is down nearly 13% today and has continued to hang around the low $50/share price range for a while now.  At this price range, the company’s P/E ratio is below 8X (using earnings converted from pence to dollars), a dividend payout ratio is less than 45%, and the company continues to grow their dividend.  Although, calculating a dividend growth rate is not the easiest task based on the conversion factor.   All in all, I’d say the company has passed our Dividend Stock Screener and rightfully earned a spot on the watch list.

Dividend Stock #3: Consolidated Edison (ED) – Another utility company here?  What the heck is going on over here?   Well, there is a Top 5 Foundation Dividend Stock  that is down 10% during the year.  On top of it, Consolidated Edison has been around since the 1800s, paying a dividend since 1883.  The company’s long-term history is difficult to match, which is why I am always looking to add shares when the company’s share price falls and the metrics are just right.

Currently, using a share price of $77.66/share and a forward EPS of $4.26/share, the company’s P/E ratio is 18.2X, their payout ratio is 67%, and they have increased their dividend for 43 consecutive years.  For a utility company, these metrics look excellent in our stock screener.  I’ve added to my ED position once this year and would love to purchase shares additional shares before 2018 is over.  Let’s see what the market gives us.

Dividend Stock #4:  Iron Mountain Incorporated (IRM) – Before diving into the metrics, here is why I am excited about IRM.  Naturally, it started based on a conversation with Lanny where he disclosed his interest in the company with me.  The company is a leader in data storage, optimization, and protection of information around the world.  I was sold on the first day of my new job at a large corporation.  I walked into our department and saw Iron mountain boxes everywhere.  Each was neatly labelled and ready to be shipped to Iron Mountain for storage.  I always know their presence was large, but I was sold at that moment in time.  In fact, I’m pretty sure that was when I initiated a position in the company.

The metrics are a little more difficult to measure in our traditional stock screener given the fact that IRM is a REIT.  As we explained in our article exploring what a REIT is and how REITS’ dividends are taxed earlier in the year, FFO is a better metric to use for evaluating REITs compared to EPS.  Using a price of $33.29/share and an FFO/share of $3.15/share, the company’s Price to FFO metric is 10.56X.  Their payout ratio is  74%, which is pretty low for a REIT.   The company is expected to announce a dividend increase here at the end of October.  So adding before the dividend announcement would be clutch!

What are your thoughts about my October Dividend Stock Watch List?  Are you watching any of the four companies?  Or are you watching other stocks?  Are you excited for WRK and IRM’s dividend increases that are set to occur at the end of the month?

-Bert

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18 thoughts on “Bert’s October Dividend Stock Watch List

  1. Hi Bert,
    Thanks for the list! Some interesting names here, I don’t own any of your mentioned companies. I will need to have a deeper look at them. I don’t own any utility companies yet so NGG or ED are especially attractive.
    BI

  2. Great group of companies at fairly appealing valuations that I don’t yet own. I’d like to eventually add a few of these names as the portfolio grows over the coming years, but contributions will primarily be limited to my retirement account’s mutual funds until next summer. The real fun will begin after that though, coming out of undergrad with no debt and presumably much more disposable income to invest.

  3. Bert,
    I am a fan of all of those, though ED the least. If you like the materials sector I would also recommend looking at EMN and WLK (though it has a low yield). Both are extremely undervalued like WRK. WRK has a much more generous payout, but WLK and EMN have huge runways. Also they are chemicals instead of packaging, though both have use all over. Similar to WRK’s space, I have SON – but SON is a bit overvalued right now…
    Let’s crush October.
    – Gremlin

    • Gremlin,

      Very interesting. I’ve never heard of WLK before this comment, so I’ll have to do some digging and see. But based off of first glance, low P/E, low yield, and the stock has taken a beating this year. That was also a solid dividend increase in August. I’ll have to take a deeper dive!

      Let’s freaking do this my friend and make October awesome.

      Bert

  4. Very nice watch list, although I only own one of the four—IRM. I’m looking to add to my position if possible but have to shuffle a few things around first at the account level. Look forward to seeing what you end up adding to the portfolio!

  5. Thanks for the update Bert. I picked up a few shares of IRM last week so I have to agree with you on their attractiveness at these levels. And that starting yield is solid too. Brad Thomas had a great write up about IRM and why he thinks the market is way undervaluing IRM right now. I’ll probably be on the sidelines for now for any purchases as we work on getting rid of our debt, but if IRM is still hanging out around these levels when I get back to investing then I’ll definitely be adding some more shares to my portfolio.

  6. Bert,
    Nice list, I have NGG on my shortlist of potential buys as I too have a relatively small position in stock. Looking forward to seeing where you deploy your capital this month. I’ve noticed that IRM is getting more and more attention lately and based on what you’ve presented above, valuation looks pretty compelling.
    PIV

  7. A good-looking group, Bert. I don’t currently own any of these (although, how can I not own ED?!).
    I could see looking at ED and IRM for my portfolio. As for WRK, I see it stumbled today, but didn’t see any related news when I took a quick look. What do you know with respect to WRK?. I see from a comment above that you took advantage of the dip.

  8. I already own ED and IRM and willing to expand on both so this watchlist is music to my ears. I’ll still have a look at WRK though, seems interesting.

    Thanks for sharing!

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