Bert’s October Stock Watch List

My last two articles have been reviewing my past performance, checking in on my goals through the end of September and reviewing my September dividend income.  Both of the articles were showing that my portfolio and dividend income are trending in the right direction.  With three months to spare, I’m looking to keep that momentum going.   So I took some time tonight to prepare my October stock watch list and see if I can pinpoint a few stocks to keep a close eye on over the next several weeks.

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Stock #1: Wal-Mart (WMT) – Haven’t I been on a Target shopping spree?  And I’m not talking about our weekly grocery shopping trip to Target.  The spree that I am referring to is that over the last several months, I have initiated and subsequently increased my Target position to 80 shares.  Well, I also have had an eye on their main competitor in Wal-Mart as well.  A fellow Dividend Aristocrat, Wal-Mart is currently trading at a slightly higher P/E ratio (~15X earnings); although this multiple is still lower than the broader market.  WMT’s dividend yield is just below 3% and the 5 year average dividend growth rate is 7.5%.  WMT’s stock finally off their recent prince increase based on an announcement that was headlined by a slowdown in expected physical store expansion during the next fiscal year.  However, I am not that concerned because of the company’s focus on growing their digital presence in an age that favors shopping from a computer versus visiting a physical store.  The strategy should pay off in the long run in my opinion!

Stock #2: Target (TGT) – Do I really need to give a further background on Target here on our website?  We have covered the stock recently…for good reason.  It continues to pass our dividend stock screener, trade at a discount compared to the market, and sport a dividend yield nearly 100 basis points higher than the market.  Plus, the company is approaching a consecutive annual dividend income streak of nearly 50 years, aka half of a century.  Do I need to add any more Target to my portfolio?  No, as I mentioned earlier, I already own 80 shares already and it is definitely one of my largest positions in my portfolio.  But let’s be honest, I would love to add another 20 shares and own 100+ shares.  It is pretty darn tempting if you ask me.  The ex-dividend date is in November, so I still have some more time to think about this one.

Stock #3: Realty Income (O) – Now, remember, this is my stock watch list.  Just because a stock is on here doesn’t mean I am going to buy it tomorrow.  Realty Income has made the cut based on the fact their stock price is down 11% over the last quarter and the fact company is always increasing their monthly dividend.  They are right on the cusp of becoming a Dividend Aristocrat and man do I love their monthly dividend.  We all know the story on O and their status as one of the top REITs in the dividend growth investor community, so I don’t feel like I need to elaborate on the company’s background too much or why they would be a great fit for my portfolio.  Their yield is approaching 4% and if the price continues to fall, I may not be able to resist holding off on buying too much longer.  The good news is that I still have room in my Roth IRA annual contribution for one more purchase before I max it out for the year.  Talk about a great fit for that final purchase!

Stock #4: AT&T (T) –  AT&T, the final stock on the list, is a company I have not considered adding to my portfolio for a long, long time.  But thanks to Lanny’s amazing sales pitch that began with his September stock watch list and many, many conversations behind the scenes, I am open to the idea of adding to my position in the company (Despite the fact I recently ditched them as my cable and internet provider).  They pass every metric of our stock screener, trading below the market, offering ~5% that is nearly double the market, and they have slowly and steadily increased their dividend for a long time.  As you all have read here if you have followed along, I am all on board with the philosophy of building massive positions for my portfolio going forward and watching the dividend snowball roll quickly. I’ve done that with my last two purchases of Target and Cardinal Health. Currently, my cost basis in AT&T is only $2,000 and despite the fact the company I am staring a 33% gain in the face, I would love to double my position here.  Doubling my position would provide me with $66 in quarterly dividend income and add 1.5 – 2 shares every three months (depending on the price).  Now imagine how nice it would be to have that kind of a position as one of the foundations of your dividend growth portfolio?

What are your thoughts on my October stock watch list?  Have you purchased any of the four stocks recently or are you planning to?  If not, why not and what stocks are you focusing on instead?

-Bert

DISCLAIMER: I DO NOT RECOMMEND ANY DECISION TO THE READER or ANY USER, PLEASE CONSULT YOUR OWN RESEARCH.   THANK YOU FOR YOUR UNDERSTANDING.
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22 thoughts on “Bert’s October Stock Watch List

  1. I have purchased WMT and TGt within the past few days, I would also chip in some of my other recent purchases for your review:

    WFC WYN NKE GILD

    Near new market highs, but Im still finding some fair prices.

    • Nice buys Devskee! I’m looking into Wells Fargo as well, but I wold like to see how the dust settles a little more. The question I am trying to figure out is the long term impact of everything. however, it is still a great bank and the yield is looking nice right about now.

      Congrats on the big additions!

      Bert

      • Hi Bert,

        I’ve been staying away from large banks. I think small or regional are more attractive in that many pay reasonable dividends and are less likely to be involved in major issues that could possibly destroy the stock price -I still feel the burn from BAC.

        I own each of the stocks listed in your article with the exception of O. Right now I’m buying LMT and am up to 6 shares with an average share price of $238.

        Best of luck on your journey, I am enjoying watching your progress.

        Lou

        • Lou,

          I love the small and regional banks as well. WFC is interesting because of their situation; otherwise, I would be staying away in favor of a community bank. Lanny owns LMT and loves the stock. I can’t believe the price tag on the company; but, they seem like the kind of company that deserves it. Glad you are on board with most of the companies on my watch list haha

          Bert

      • Hey there Bert,

        Thought I should share this one for your list. Stumbled upon SIG and think it looks attractive at current levels. 6 years dividend growth, good financial health, very reasonable P/E at 12.4x for ttm and just 7.5x next years estimates. Payout ratio is nice and low <20% so the dividend cover isnt an issue and has a buyback ongoing.

        Its a smaller company (6.4B mkt cap) so I would stick to a smaller position in the portfolio. Adds a nice diversification element nonetheless.

        Cheers,

  2. That’s a couple of good companies that your watching. I have been looking at a nice monthly payer as well. It is always nice when the stock has a 10% pullback off of their 52 weeks high. I look forward to seeing what your next acquisition is going to be. Nice article. Thanks for sharing!

    • Which monthly dividend payer have you been watching?? Yes, it is still higher than other levels, but it is nice to see that they are heading in the direction that may allow me to purchase them without feeling too guilty . Hopefully I will be writing a purchase article sooner rather than later. What other stocks are you watching?

      Bert

      • I really like a couple of closed index funds that pay monthly, like ETJ and EXG. Yield stays fairly consistent (same actually for 5+ years). Although I am extremely new to this whole investing and dividend thing. Only going on for 4 months now but I hope to enter into more stable stocks that have a longer track record and actually grow.

  3. Those are some solid companies! We have none of the above in our portfolio or watchlist currently.

    We would love to get our hands on a REIT. The one we were looking for last year (OHI) is not offered by our broker. So ever since we have not been paying much attention anymore.

    There are still several companies on our watchlist, but the ones we are most interested in are WFC, NKE, SBUX and ABC or CAH.

    • Thanks Divnomics. Love your list as well. Based on my last purchase, CAH, you know I am a big fan of the healthcare giant. Which broker do you use? I feel like OHI is a large enough name that your broker would offer them. That’s really interesting that they don’t.

      Best of luck in your October shopping!

      Bert

      • Hi Bert,

        We invest through our own bank. Because Mr. Divnomics is working there, we have limited options to go somewhere else. The only stocks we could invest in are those listed on S&P 500 or DowJones, at least I thought.

        CAH is most definitely interesting and we keep our eye on it. It might even pop up as our October buy, we don’t know yet.

  4. I was at a Target yesterday and it was a mad house. It looked like Walmart does on a Saturday afternoon. I could barely maneuver through the aisles. Regardless of what the naysayers say they still appear to be thriving. At least in my town.

    • That’s exactly why I am not concerned about Target’s long term health. I see the same thing in all the targets located near my house. That’s why I would have no issue continuing to add to my position and keep on building it.

      Thanks for stopping by!

      Bert

    • That’s the problem with adding REITs right now. Mortgage REITs are already down 10% from their September (no-hike) high. Look at the REM (mREIT ETF) chart for during the “Taper Tantrum” March – Aug of 2013. Prices cut by a third. Now look again in December 2015, down another 20%. Grandma Yellen will likely raise in December, and these 4% yields will quickly become 6%. Now you can DCA it, but I would wait. The beneficiaries of rising rates are banks and insurance companies, that’s who I am buying. I like energy because the rising price of oil protects from the rate hike for MLPs. I have a lmt order for KMI in play.

      • BigAl,

        Definitely now a fan of mortgage REITs at the moment, the last thing I want is to be exposed to a REIT with only mortgage exposure in a looming increasing interest rate environment. I prefer diversified REITs such as Realty Income, HCP, and so on. I haven’t thought about KMI in a long time and committed to holding firm with my position after the cut. Interesting thought process there, time to look into it more.

        Bert

    • Definitely some Stalwarts here Tristan haha It may be on my watch list for a long time here and the time I would trike would most likely be with an interest rate announcement. Hopefully the price keeps on sliding and I can add them sooner rather than later.

      Bert

  5. AT&T is an interesting one after the recent downturn. I’m not quite sure how I feel about them but the near 5% dividend is attractive but I’m not sure what their performance beyond the dividend will be like for the next couple of years.. They’ve got a lot of debt(100B+) after the Direct TV/wireless spectrum licenses but solid enough cash flow to start paying that down but that high an amount is always a concern. I’m also not sure if I like or dislike their international expansion(Mexico for wireless and latin america via direct TV acquisition) since those are likely going to be margin shrinkers in the near term but could pay off in the long run.

    • Time in the Market,

      Fair point on the debt. High debt can be concerning, ask KMI. The one thing for AT&T that makes me less concerned versus a KMI is that the revenue stream isn’t tied to a commodity such as oil. Expansion is always risky, but as you said, it has the potential to pay off in the long run.

      Thanks for the comment!

      Bert

  6. I had VZ! WMT! T and O. I sold them all, now I’m looking to get them back. They certainly fell below the level that I sold them for except for O and T.

    I was at the Verizon store today trying to get my phone activated, it was busy as ever, although I don’t think they are the true winner. AAPL might be the ultimate winner when T, TMUS and VZ are fighting for subscriber. I bought an iPhone 5s for $140, I can trade it in for $300, they were trying to get me to buy the 128gb for $750 as the 32GB is out of stock. Yup! They don’t have enough to go around. Okay, back to my VZ and ATT buying pitch. Eventhough, they offer $300 credit, it seems like they want to sell more expensive iPhone, as you can see the different in price for over 24 month is $4.24, but talking about millions of customers …

    I know we’re don’t have to look at the macroeconomic, or politic, but the election outcome might change the direction of the stock market, at least for shortterm. Say, Donald trump is in cash position, so he’s hoping the market would crash. More reason for him to force the interest rate to be raised as quickly as possible. Versus Hillary Clinton might be pro-Wall Street, we might see the “patient FED”. So, I might hold in to some cash for now.

    Also, GE is below $30 now, if it fall below $27, I might strike again even before the election result.

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