Hopefully your stomach has been able to endure the extreme volatility, as of late. April was a fairly positive month on the valuation front, but there are always stock opportunities. Let’s buckle up and read Lanny’s Dividend Stock Watch List – May Edition.
Dividend stock watch list
The stock market is up 16% from the trail-end of March through April 24th. The Economic Impact Payments (EIP) are out to the citizens of the U.S. and other stimulus packages are pumping heavy cash out into the economy. Therefore, the markets are taking this in a positive light, though I am not 100% on board with the direction that the stock market is going.
As a dividend stock investor, for the first time, I have feel a little uncertain of what the future may hold. We continue to save and invest in very conservative dividend stock investments, in smaller purchases. I have written two articles related to the topic of – the Coronavirus Dividend Stock Watch List and Industries that truly thrive during a pandemic.
Therefore, with using the Dividend Diplomat Stock Screener, there is always an undervalued dividend stock up for grabs, that’s where Financial Literacy and Research pays off.
Here is a display of what the market did in the last 30 days:
In addition, capital is necessary to make any dividend stock purchase that is on this watch list. How do I do it?
I save anywhere from 60-85% of my take-home pay and strongly believe Financial Freedom does not happen by hitting a home run on an investment. Nothing matters more than your savings rate on your journey to Financial Freedom, plain and simple.
Therefore, I work my butt off to make sure expenses remain in-check and that my savings rate are meeting our investment and financial independence goals! Then, you rinse and repeat.
The big telecom! It’s no wonder AT&T (T) fits on my dividend watch list during the coronavirus pandemic. Internet an entertainment have not been more used, than ever. Cell phones, data plans, internet, television, streaming, the list goes on. These are all in heavy use, especially during work at home and self-isolation periods.
Further, their stock price has also dropped from the start of the year of $38.86, down to $29.71 as of April 24, 2020. That’s a 23.5% stock price drop year-to-date. Further, they belong on the Top 5 Foundation Dividend Stocks for YOUR portfolio.
We have put AT&T (T) through the Dividend Diplomat Stock Screener:
Price to Earnings (P/E) Ratio: Analysts of AT&T are projecting $3.25 in earnings per share for 2020. This represents a price to earnings ratio of 9.14, which is insanely low and is far more undervalued than the S&P 500 index or stock market as a whole.
Dividend Yield and Dividend Growth: AT&T is paying $2.08 in dividends per year. At a share price of $29.71, this dividend yield calculates to be 7.00%, well above the S&P 500 dividend yield and my portfolio’s overall yield. AT&T is also a dividend aristocrat and steadily raises their dividend approximately 1 cent per share, per quarter. I anticipate that happening again this year.
Dividend Payout Ratio: In addition, given the projection is $3.25 in earnings, the annual dividend is $2.08 per year. Therefore, the dividend payout ratio ends up at 64%. The dividend payout ratio is slightly over the 40%-60% payout range. This may be the trend over the next 12 months, as earnings may slightly weaken due to the coronavirus.
Philip Morris International (PM)
Originally founded in 1847 and has been around since that time frame. Philip Morris has the legendary brand of Marlboro and Parliament cigarettes and are on the cutting edge of smokeless tobacco.
Further, since their spin-off from Altria (MO) they have increased their dividend, which has been for 11+ years. During pandemic time periods, tobacco and liquor usually perform fairly well. PM’s stock price is down $11.42 year-to-date, from $85.09 to $73.67. This represents a stock price decline of 13.42%. Let’s see Philip Morris (PM) stats through the Dividend Diplomat Stock Screener:
Price to Earnings (P/E) Ratio: Analysts of PM are projecting $5.04 in earnings per share for 2020. This represents a price to earnings ratio of 14.61, which is low and is more undervalued than the S&P 500 index or stock market as a whole.
Dividend Yield and Dividend Growth: PM is paying $4.68 in dividends per year. At a share price of $73.67, this dividend yield calculates to be 6.35%, well above the S&P 500 dividend yield and my portfolio’s overall yield. Technically considered a dividend aristocrat (due to Altria), PM has stood the test of time. Their yield is greater than their 5 year dividend yield average of 4.95%.
Dividend Payout Ratio: In addition, given the projection is $5.04 in earnings, the annual dividend is $4.68 per year. Therefore, the dividend payout ratio ends up at 93%. The dividend payout ratio is high, no doubt about that. That is a stock screening metric I will be keeping an eye on.
I love recession proof stocks and PM should stand with the best of them.
People’s United Financial, Inc (pbct)
This is another historical company – that started in the year of 1842. Further, they are a dividend aristocrat, increasing their dividend 25+ consecutive years. Peoples United (PBCT) is a $59 billion financial institution, based in Connecticut, and they have weathered all pandemics and recessions. Therefore, I believe they will stand and persevere through this one, as well.
In addition, PBCT has seen their stock drop from $16.90 to start the year, down to $11.88, as of close on 4/24/2020. That’s a 30% drop, folks.
Price to Earnings (P/E) Ratio: Analysts of PBCT are projecting $1.01 in earnings per share for 2020. This represents a price to earnings ratio of 11.76, which is low and is more undervalued than the S&P 500 index or stock market as a whole.
Dividend Yield and Dividend Growth: PBCT is paying $0.71 in dividends per year. At a share price of $11.88, this dividend yield calculates to be 5.98%, well above the S&P 500 dividend yield and my portfolio’s overall yield. They’ve increased their dividend for 25%+ years, the most recent increase being only 1.4%. Essentially, they are in the low growth, high yield frame, right now. They increase, usually, a quarter of a penny; i.e. $0.175 to $0.1775, per quarter.
Dividend Payout Ratio: The payout ratio is 71%, with the dividend at $0.71 and projected EPS of $1.01. A higher dividend payout ratio, but that is fairly typical for PBCT.
Given they’ve weathered everything, over the last 180 years, I am confident they can endure this pandemic, as well.
Dividend Stock Watch List Conclusion
All three are technically dividend aristocrats and 2 of the 3 are in my dividend portfolio, PBCT being a new stock I’m watching. Prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.
I chose all 3 companies for very specific reasons. All 3 have weathered recessions, depressions, pandemics, you name it. They stand the test of any problem that the macro-economy endures.
As you have noticed, I have trickled many articles on this page. The goal is to educate new dividend investors out there, or to sharpen the terminology for current dividend investors. As always, stick to your investment strategy and dividend stocks will be there. What do you think of these stocks above? Thank you, good luck and happy investing everyone!