Bert’s September Stock Watch List

After seeing such incredible numbers posted in our latest edition of our monthly dividend income summary from other bloggers in the dividend growth  investing community, I am extremely motivated to invest some extra capital and help push my dividend income forward.  Even though I am working hard to earn extra cash via side hustles to try to pay down our debt as fast as possible, I decided that there was a little room to still invest on the side.  How could I resist buying a potentially undervalued dividend growth stock after all?  This month, I’ve targeted four companies for my September stock watch list.   Let’s see who I am keeping my eye on!

Since I won’t have a lot of extra capital available, I wanted to focus my attention on adding to three positions in my portfolio.  My positions in these companies are lower than I would like and it would be nice to start adding to them, increasing my dividend received quarterly from the positions, and ultimately increasing the fractional shares I receive via DRIP.   For the fun of it, I added one company that I do not own to my list because the price has continued to fall.  So if I do decide to add to a position, it will most likely be with this company.

Company #1 – Archer Daniels Midland (ADM) –   ADM caught my attention in the second quarter when the price fell to the low-$40 price range.  The company’s stock price has recovered over the last few weeks; however, the metrics are still looking great and would pass our dividend stock screener with flying colors.  The  P/E Ratio is ~16.8X  and the dividend growth has continued to be solid, as the despite the company’s recent high single digit growth rate. When I purchased ADM, their yield was about 2.3%.  Now the company’s dividend yield is ~2.90%!  My position produces $13.54 in dividend income quarterly, so it would be nice to increase my stake to receive at least $20 per quarter.

Company #2 – Canadian Imperial (CM) – CM is the highest yielding stock on my watch list, so I would get the most bang for my buck in terms of dividend by investing in CM.   CM’s dividend yield is 4.8% and their annualized payout ratio per their latest press release was around 50% (these figures are in line with the other major Canadian Banks).  After diving further through their financials, I was very happy with their loan quality, recent dividend increase, and their awesome 16% ROE!  That is a very strong mark for the banking industry compared to what we typically see.  One nice thing about potentially investing in CM is that the company’s ex-dividend date is September 27th.  If I invest in the next few days, I would still have time to capture their next dividend payment in October.  It would be nice to boost my income in an “off month” during the quarter.  Man I would love to increase that $10 quarterly dividend check I receive from CM.

Company #3 – IBM (IBM) –  IBM has quietly decrease 12% YTD, which caught me off guard.  I have always been hesitant to invest in the tech industry for some reason, despite the fact that Lanny made performed a stock analysis over Cisco earlier in the year and invested twice in CSCO subsequent to the analysis!  I dipped my toe in the waters by investing in IBM several years ago and well, the position has remained relatively stable.  The price has not appreciated despite all of the share buybacks over the last few years and the only reason I am not showing a net loss on the position is due to re-invested dividends.   The company’s metrics look great, as they always have (P/E = ~10.5X, Dividend Yield = ~4.1%,  and a low payout ratio = 43%).  Since IBM continues to pass our stock screener, the dividend yield is very strong,  and the fact company has an insane cash balance to continue re-purchasing shares or increasing their dividend, I thought it would be a nice company to keep my eye on over the next several weeks and see if I can add to the $21 quarterly dividend I receive from Big Blue.

Company #4 – General Mills (GIS) – Last buy not least, the one company I do not own on this list.  My love for consumer stocks, the company’s -15% YTD performance, and 3.75% dividend yield has General Mills on my radar.   There are a few negatives that I have to consider before initiating a position.  The company has a high debt to equity ratio, their dividend growth rate slowed tremendously in 2017 (only posted a 2% increase during the year), and the company’s payout ratio is higher than the 60% threshold we use in our screener at the moment.  However, if the price continues to fall and the P/E ratio continues to fall (currently just over 16X), I may be too tempted and initiate a position!  But I must say, this is the most unlikely investment on the list.

Four solid companies that I look forward to closely monitoring over the next few weeks.  I would be excited if I could add one of these companies.  Man, over the last few weeks I have felt as motivated as every to keep on reaching deep, keep on pushing, and JUST GO FOR IT.   Are you watching the companies that I included on my watch list?  If not, which companies are you considering?  What are your thoughts on IBM or GIS?

-Bert

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19 thoughts on “Bert’s September Stock Watch List

  1. Taking a break from adding new positions right now Bert. Just focusing on building the positions I currently have. However, you have identified a good list of companies to look out for. I’m still a fan of GIS, which is why I recently added them to my portfolio the beginning of this month, although I did technically invest $10 in GIS last month (as a placeholder). Looking forward to seeing what you eventually decide on investing in.

    • Dividend Portfolio,

      I understand that sentiment. Heck, that is why three of the four companies on my watch list are holdings that I already own. I’m really digging the idea of building larger income streams to help receive additional fractional shares and continue to push my income forward! Glad to see you are a fan of GIS and it helps solidify why it is the one company that I do not own that is on this list.

      Take care! I’ll be sure to let you and the others now what stock I eventually decide to purchase.

      Bert

    • I agree, INTC and AAPL are great tech companies that are in many great dividend growth investors’ portfolios. I don’t think I could have gone wrong adding them to my watch list either. AMC though, I don’t know if that’s my target area at the moment. What metrics have you interested in AMC?

      Bert

      • Movie Pass. This company is putting butts back in the seats by offering a $9.95/month unlimited movie subscription service. They pay the theaters back the price of full retail ticket and then make money by selling the data. By the way, HMNY owns Movie Pass. That stock is going to explode!!!!

  2. Bert,
    I added ADM last month to my taxable account. I really like their long term outlook, along with GIS, SJM, HRL – and several other stocks in that consumer staples space. Canadian banks are excellent too. I already have CM and BNS, and would add to them or any of the other big guys.
    Happy hunting!
    Gremlin

    • Gremlin,

      Nice pickup with ADM! I’m still shocked their price has fallen as much as it has and am excited for the potential opportunity to add to my position. SJM and HRL are also some great consumer staples that I always keep an eye on. I may be biased about SJM though because their headquarters are a little over an hour away from my house. Strong brands should produce great long term results!

      Thanks for the great comment!

      Bert

  3. I recently sold my ADM shares as I needed cash for financing our rental apartment purchase. I’ll probably buy it back when I have a chance. I also really like IBM (currently my 3rd biggest holding) and I would probably also add GIS in the future. Yes, currently their dividend increase rate is not that impressive, but their yield is still higher than their industry average.
    I’m not really familiar with CM but will look into it. Thanks for the ideas as always!

    • Roadrunner,

      You had me nervous when you said you sold ADM. I was about to ask for some details about why you sold the stock and what metrics you were seeing that caused you to sell. But it sounds like you just needed the capital for a different kind of investment. I’m happy that you and a few other people are high on IBM at the moment 🙂 Let me know if you decided to act!

      Bert

  4. Archer Daniels and IBM are both on my watch list, along with like 50 other companies.I initiated a position in GIS a few month back, which now is 25 % down. I probably buy more to average down, if only I knew where the bottom while be reached. This stock just seems to fall further and further at the moment.
    I think for now my next purchase will be an initial position in AT&T. Another company that has been on my watchlist forever!

    Martin

    • haha i love the size of your watch list. I guess I would argue that you are never going to truly know where the bottom is and when it will happen. Sadly you may only realize that after the stock price starts to climb. Is that the only think holding you back from adding to your position?

      AT&T is a great choice and it is on Lanny’s watch list! Don’t think you will be upset with that addition.

      Take care!

      • You’re right about never knowing where the bottom is. It is one of the reasons I am waiting, another one being my employer not sending me more money every month 😉
        Also when I started investing it was all very easy, I just invested in one new company after the next one. Now I have lots of options to reinvest in stocks that came back or invest in ones that already went well. Anyways, I think it will all work out as long as I keep investing new money regulary.

  5. Great watchlist. I have IBM and GIS already in the bag, but there is a possibility I will add to my position should they become more tempting. With so many great stocks it can be hard to decide lol. I am patiently bidding my time before I pull the trigger. Thanks for sharing Bert! 🙂

  6. Nice picks. GIS keeps going down and down. I keep buying it. I should probably hold off but the price is just too good right now to resist. Keep lowering my cost basis. That and the high dividend yield makes for a good choice. Good luck in your choice.

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