Bert’s October Dividend Stock Watch List

I’m sitting at my dining room table with a freshly brewed cup of coffee and the fall breeze blowing in.  What a beautiful fall day here in Northeast Ohio.   With a lot of the expenses associated with moving in and updating our house in the rear-view mirror, I’m finally starting to flip on the investing switch again and aggressively look for great opportunities to add to or establish new positions.  I’m inspired by Lanny’s recent dividend income month where he covered over 100% of his monthly housing expenses with his dividend income.   If I want F.I.R.E, I need to go get it.  So today, I sat down and found four dividend stocks that I would like to watch over the next month.  Let’s take a look at my October dividend stock watch list.

Stock #1: AT&T (T) – This is the stock that has been on Lanny and my minds a lot recently.  We had a nice long conversation about the company on this Friday as the price continued to fall.  Unfortunately, as the conversation came to a close, the price began to rebound and no investing decision was made.  So this has earned a firm spot on my watch list and one of the top contenders.   We all know that AT&T is a Dividend Aristocrat and we are accustomed to receiving our annual $.01/share increase in our quarterly dividend, so it checks out box for investing in a company that has a history of our increasing dividends.   At their current price, the company is nearly yielding 5.5%.  Sure their payout ratio is higher that our 60% threshold, but the company typically maintains a high payout ratio and I understand that as a part of my investment in AT&T.

One of the topics of our phone conversation was AT&T’s recent earnings release.   There was some negative news about how the recent earnings release may impact earnings.  But the one thing that did jump out were the positive increases in DirectTV Now subscribers to help offset the impact of cord cutters (which I hope to be soon once I battle my cable company as discussed in my fourth quarter goals article).    Sure I have a large position in AT&T at the moment, but I have no problem adding and continuing to receive a boatload of re-invested shares from them on a quarterly basis.  Currently, my wife and I combined receive over two shares each quarter from the telecom giant.

Stock #2: Cardinal Health (CAH) –  I continue to focus on companies that have not been performing well in 2017.  Much like AT&T above, CAH also fits this bill.  In fact, back in August, I purchased 15.87 shares of CAH at $65.20/share.    This purchase increase my cost basis to over $5,000 and CAH is definitely one of the larger positions in my portfolio.   After my purchase, CAH’s stock price rose to above $70/share; however, with recent events, the company’s price has fallen once again and is trading around the levels that I purchased the company at last time.  Once again, just like in the linked article above, CAH is crushing our Dividend Stock Screener.

After performing some research and reviewing some SEC filings, the recent drop in price appears to have begun after the company filed a press release at the beginning of October stating they were incurring $130 in exit or disposal activities related to “the transition of distribution of its Medical segment’s surgeon gloves in certain countries outside the United States from a third-party distribution model to a direct distribution model.”   The second filing was a “notice of exempt solicitation” filed with the SEC from the International Brotherhood of Teamsters urging investors to vote for an independent chairman of the board in their upcoming vote.  The vote is prompted by the looming legal battles associated with the nation’s opioid crisis.   For a long-term, buy and hold investor, neither of these activities are moving the needle for me.  Therefore, I added CAH back to my watch list for all the reasons I purchased CAH just a few months ago!

Stock #3: Campbell Soup Co. (CPB) –  Honestly, this might be the first time that I have ever had Campbell’s soup on my watch list.  As a huge sports fan though, I have so many memories growing up of watching the old Campbell’s Chunky Soup commercials with Donovan McNabb and his mom.  They always made me laugh!  But nostalgia is not why CPB is on my watch list here in October.   After having a pretty terrible 2017 (down ~25% YTD), CPB is now performing well in our stock screener.  Their P/E Ratio is ~15.1X and their payout ratio is ~46%.  Plus, their dividend yield is now above 3%!

The one downside to CPB is that the company does not have a lengthy streak of increasing their dividend each year.  In fact, their current annual dividend income streak sits at….one.   Reviewing CPB’s investor relations website, the company has paid a dividend since 1980 and their history shows annual dividend increases from 1980 through 2001, when the quarterly dividend was cut from $.225/share to $.158/share.  Since then, CPB has announced nine dividend increases and one special dividend.  History shows the company increases their dividend; the increase frequency just isn’t as frequent or scheduled as some of the other Dividend Aristocrats in our portfolio.   The dividend increase frequency is enough for me to consider adding this company to my watch list.

Stock #4: Canadian Imperial (CM) –   Last but not least, a company that was on my September watch list and was actually the last stock I purchased.  So why is CM still on my watch list?  First, while I purchased additional shares, I only added $908 to my position.  In total, I own 20.37 shares with a cost basis of $1,677.  This isn’t a large position compared to the remainder of my portfolio by any means, so I would love to continue quietly added to my position of CM if the metrics are right.  Which is a perfect segue into my second point.  Since I added shares of CM in September at $88.86 per share, the company’s price has remained relatively the same.  Nothing has changed fundamentally and CM still has not announced a new earnings release.  The company continues to pass our stock screener with flying colors, so why shouldn’t I continue to have them on my watch list?

summary

There we have it. Four great dividend stocks.  Three of which I already own and one potential new addition to my portfolio.  While I likely won’t have a ton of cash for my next investment and I would lean towards building on a current position rather than starting a new, smaller position.  I thought that it could not hurt to take a look at a company outside of my portfolio.  Plus, I love consumer staple stocks and will always considered a potentially undervalued consumer staple stock if the right opportunity presents itself.   In the end, whatever amount I can add to a great income producing stock is going to pay dividends in the long run and bring me that much closer to retiring early.  We always say it and every dollar counts and will make a huge difference.  Here, I will make every dollar count by turning savings into an income producing asset.

What are your thoughts about my dividend stock watch list?  Do you have any of the same names on yours?   If not, what stocks are you watching?  What are your thoughts about AT&T and Cardinal Health at the moment?

-Bert

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

  1. I like your list except CPB. Definitely not my taste for the exact same reasons you gave. Adding strongly CVS, WBA and CAH now. I like T and adding as well to my portfolio. Would love to add Canadian banks to the portfolio when valuation comes down some more. Thanks!

    • Thank you for the comment. understandable why some people aren’t interested in the company. That’s why I historically wrote them off. But the metrics caught my eye so I dug a little deeper into the dividend history and found that while the increases are not regular, they have shown a history of increasing their dividend over time. Not perfect, but not the worst. So they were compelling enough to at least consider going forward. CVS was on my watch list last month and I probably should have added them again. Great company! Canadian Imperial was actually my last purchase, so I can understand why you are also loving Canadian Banks.

      Take care,

      Bert

    • Woah. Love the HRL purchase and I know Lanny spent a lot of time researching the company over the last year. Another great consumer company. T is a great company and I always love receiving that dividend check. Let us know if you add more.

      Bert

  2. Good picks Bert. T is already in the bag for me. Pays a nice dividend. I already exhuasted by investing cash reserves with my recent purchase of TGT, so I will have to wait and “reload” before I can pull the trigger again lol. Thanks for sharing. 🙂

    • Thanks MDD. Isn’t that the worst? When you see some great companies at a discount and you realize you liquidated your cash reserves. But hey, TGT was a great company to unload on haha Congrats on the purchase!

      Bert

  3. Bert,
    Love the watchlist. I’ve opened in a position in T earlier this year and I have room to build it, however, I must say of the few purchases I’ve made this year, I have been most hesitant about T due to debt and evolving cable/satellite industry trends such as the advent of YouTube TV and the impending stand alone streaming service DIS will make available in the near term – will shareholders look back and see the DirectTV acquisition as a value add? Will the earnings remain sufficient to service the fixed costs associated with the debt associated with the acquisition?

    Also, I just posted on my blog last week a record of my purchase into CPB. If valuations hold steady or improve, I’ll be looking to add to my positions in CPB, GIS, and SJM over the coming months.

    Best of luck!

    PIV

    • Also, I meant to ask if you happen to have seen the 60 Minutes episode that aired last night (Sunday)? The first segment was about a DEA whistleblower who argued he was demoted and forced to resign because he began pursue criminal cases against the big 3 distributors (MCK, CAH and ABC). I found the segment to be very interesting and will be interested to see what comes of it.

      • Sorry for responding to this one separately. I didn’t watch the 60 minutes; however, I read some articles today about the situation. It is sad on all fronts regardless of the companies that are involved. I will be watching this closely and I’ sure things will be turbulent as new information becomes available over the next few months.

        Bert

    • PIV,

      Interesting take on the DirectTV acquisition. Cord cutting is becoming the trend. But don’t forget, DirectTV now is AT&T’s streaming service and their increased subscriptions were highlighted in their earnings release. The one benefit is that AT&T can offer the full spectrum of services compared to other organizations. It was a big acquisition for sure, but I personally like the long term aspect of it.

      I’m excited to wing by and read about your CPB purchase. Thanks for the comment.

      Bert

  4. Nice list. AT&T is also on my stock watchlist right now. It will be a week before I have some capital to invest again, so I’m hoping the share price will stay low for another week or so. I’m a little surprised to not see CVS on your list. Any reason for that?
    -SD

    • SD,

      CVS was on my watch list last month. I could have included it, but decided to change it up a little bit. That being said, I still think they are a great company and would have no problem adding to my position if the right opportunity presented itself. I’ll keep my fingers crossed for you about AT&T.

      Bert

  5. Nice list. I was really interested in cardinal health and when researching i came across a page about insider buying and selling. I didnt bookmark the site unfortunately. The highups were selling a tonne of shares. Always a red flag to me when the highups (ceo’s etc) are clearing their stocks.

    • Thanks PCI. That is very interesting. I would love to learn more about the insider selling and see if there is any sort of insight to gain from it. I’ll do some research and see if I can stumble upon it.

      Bert

  6. Bert, Interesting stuff. Long T and holding, but glad to see the other 3 I do not own for consideration. CAH and CPB have considered in past, but never pulled the trigger. Love the consumer staples like you. They have been beat up recently, but I haven’t decided yet if it’s value or value trap. Need to do my homework here. Not familiar with CM. Good luck with the next purchase. Tom

    • Hey take your time and do your homework. No need to rush into an investment. There is something about consumer staples that I will always be drawn to, I’m not exactly sure what it is haha

      Best of luck with your next purchase as well.

      Bert

  7. In the various accounts I have three of these four. The one outlier (CAH) was previously owned and am sitting on the sidelines (along with CVS) for a decision once the dust settles on the health care debate.

    CPB has been a holding since 1999 and doesn’t have a stellar track record (as you observed) for dividend increases. This is a bet on their new and improved offerings. The drag is family ownership concentration. CM is going nowhere due to the ongoing concerns with the Canadian housing market (bubble or not?)

    T I like best based on the merger. If approved they will join DIS and CMCSA as the big three in content creation.

    • Charlie,

      Interesting take on the family ownership. I didn’t dive that deep into the information, but that is always great information to have. CAH’s situation is interesting and things seem to be heating up with investigations related to the health crisis. T is a great freaking company and it still may be my favorite on the list. Like your inclusion of DIS on your watch list as well.

      Bert

  8. Have been watching T for a while. Especially after the big drop last week. I expect a lot of people to take advantage of that dip. Too bad I have no capital right now for any buys. Haven’t seen CPB on anyone’s radar that I can think of. Interesting pick. Looking forward to seeing what you choose.

    • Daze,

      That’s a bummer that your timing of capital is off. But guess what, there will be a fresh crop of undervalued dividend stocks for you to go “shopping” for with your capital. Hopefully the market continues to dip and we face some no-brainer investment situations.

      Take care,

      Bert

  9. I think all of us who bought CAH after that big drop are still waiting around to see the payoff.

    It’ll come, but just taking longer than expected to get its legs back.

    • Agreed. CAH has stalled for a while and I am one of the individuals that purchased during the dip. I’m in this for the long haul, so I have no problem waiting it out and reaping the benefits years from now. And guess what, if it continues to lag, we receive more fractional shares via DRIP.

      Take care,

      Bert

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