The new COVID-19 variant is now hard pressed in the news. The omicron variant is what they are calling this one. This set the stock market and cryptocurrencies to fall hard through Thanksgiving week. I call that as opportunities for dividend investors. When the herd is running away, we run in. It’s time to put money to work, build your assets and your passive income stream, on the road to financial freedom.
Therefore, as I do every month, here is the Dividend Stock Watch List for December 2021!
Dividend stock watch list
Welcome back to another dividend stock watch list and I’ll share with you the stocks hot on my radar, potentially stocks I will be buying THIS MONTH. The turbulence in the market is still high, with recent events, such as: Omicron-Variant, inflation, the hot cryptocurrency market and the like. In addition, inflation is so high that I know gas by me is nearing $3.50 per gallon. Lastly, the news is still calling this the great resignation time period. What a world we are in.
The stock market, specifically the S&P 500, still is high, but is down for the month of November so far. We hit new highs over 4,700, but now are settling below 4,600. Chart is below:
Interest rates are significantly low on your savings, including high yield savings, accounts, as well as money market accounts & funds. In fact, Ally Savings reduced my interest rate to 0.60% back in September 0.50% in mid-December of 2020. Luckily, I can still say that I am earning 0.50% on my savings account as of late November 2021. Will that stay, though? I am taking matters in my own hands… HOW you ask?
I keep MORE savings in my Yotta Savings Account, that has earned 1.82% in August and over 1.4% in September 2021. The account is FDIC-insured, of course. Definitely sign up if you want to have fun and earn more yield on your savings account!
Related: Sign Up For Yotta Savings
What else has been going on? I have been investing more and more into Fundrise, as of late – finally crossing over $10,000+ invested there. See my Q3-2021 review. In addition, I have been LOVING the SoFi financial app and platform. In fact, check this article out, as I showcase how SoFi has helped me build wealth this year. You can earn bonus money for opening an account, as well as free stock! Definitely check it out.
As a dividend stock investor, it’s been harder and harder to find an undervalued dividend stock. I have written two articles related to the topic of – the Coronavirus Dividend Stock Watch List and Industries that truly thrive during a pandemic.
See – Lanny’s Coronavirus Dividend Stock Watch List
See – Industries Built for the Coronavirus and Dividend Investors
See – Why I Don’t Time or Predict The Market
In addition, given the uncertainty, I continue to make smaller, weekly investments into Vanguard Exchange Traded Funds (ETFs). The specific ETF my wife and I have been loading up on is Vanguard High Dividend Yield (VYM). We are investing $400-500 per week into Vanguard (pending the VYM stock price), to stay invested in the market, during the uncertain times.
Related: Why I’m Investing $500 Weekly with Vanguard ETFs
Therefore, on the road to financial freedom, acquiring assets that produce cash flow or income is the goal! Like I always say, there is always a diamond in the rough. How do I find an undervalued dividend stock? Time to introduce our beloved Dividend Diplomat Stock Screener!
Dividend Diplomat Stock Screener
If you don’t know already, we keep the stock screener metrics to THREE SIMPLE items. They are:
- Price to Earnings Ratio – We look for a price to earnings ratio < than the overall Stock Market.
- Payout Ratio – We aim for a payout ratio between of less than 60%.
- Dividend Growth – We like to see history of dividend growth in a company.
See the video below, for further details and explanation. If you don’t like to watch videos – see our Dividend Diplomat Stock Screener page!
Time to find the answer to… how did the dividend stocks on my watch list grade on the stock screener?
Dividend stock watch list
Here is the list of dividend stocks that are on my radar going into the month of December 2021. I typically like to keep it at 3 dividend stocks, keeping the focus locked in. Finding dividend stocks isn’t easy, but there are also other factors, such as composition of my portfolio by industry (such as – am I overweight/underweight in an industry), as well as exposure to one stock and the concentration there.
There, the dividend stocks on my list cater to those other facets when building a dividend stock portfolio. This is a fairly defensive, consumer-goods intensive, dividend stock watch list!
Store Capital (STOR)
This dividend stock STAYS on my dividend stocks to buy list! Store Capital (STOR) is a single tenant operating real estate company. Hence, their acronym and ticker is STOR. STOR was formed in 2011, went public in 2014 and even Warren Buffett invested over $375 million into the company in 2017, holding (at the time) almost 10% of all shares outstanding.
STOR almost has $10 billion in market capitalization, steadily growing over their 7 year period of being public. The last 30 days, since last report, this dividend stock is down 3.55%, hence why this stock is on my watch list!
Now they are a Real Estate Investment Trust (REIT) and, as such, payout in dividends ~90% of their earnings and you are taxed at the ordinary income rate for dividends received from a REIT, if held in the taxable brokerage account.
Therefore, when looking at REITs you do want a little bit higher on the yield, to make up for any increase in tax burden you may have. However, owning a REIT or combination of REITS, offers you the potential for exposure to real estate! In addition, we evaluate REITs by using the Adjusted Funds From Operations (AFFO) vs earnings per share.
First, however, we MUST run them through the Dividend Diplomats Stock Screener, which is focused on these 3 metrics (with AFFO replacing EPS)
- Price to AFFO Ratio: AFFO was $1.49 through 9 months/year-to-date for 2021. To keep it simple, we will simply annualize that and estimate that they will earn $1.99 AFFO for the year. The share price is $33.11 as of 11/26. This equates to a price to AFFO ratio of 16.64. Earnings is higher than anticipated vs. my last review. Not expensive, not cheap. However, fairly good value here.
- Payout Ratio: STORE Capital currently pays a quarterly dividend of $0.385 or $1.54 per year. This equates to a dividend payout ratio of “only” 77%, which is lower for a REIT. Therefore, we should see signs of dividend growth for Store Capital going forward.
- Dividend Growth: Increasing their dividend since they’ve been public, Store Capital (STOR) has been fairly consistent in this department. The average dividend growth rate is right at 6%. The best part, the last dividend increase was above this average rate and was ~7%. I like where STOR is heading.
Lastly, STOR’s dividend yield isn’t too shabby at 4.65%! I would say that is definitely higher than Realty Income (O) and is far higher than your average yield, which you typically should require for a REIT.
I currently own 75 shares, but I have a goal of reaching 100 shares of Store Capital. I discussed my investment strategy at a previous article about two Dividend REITs we are investing into weekly, including Store Capital (STOR)!
Viatris (VTRS)
Viatris (VTRS) is BACK on the list! It has been 3 months since the stock has been on my radar, but Viatris stock price has significantly tumbled from the mid-$14 range they were once in. For those that do not know about Viatris, they were created from the Pfizer (PFE) spin-off with Mylan, to create a cash-flowing, brand empire essentially. Viatris has monstrous brands, such as Lipitor, Xanas, Viagra, just to name a few.
The stock has been in the $13-15 range for the better part of 5 months, but Viatris was once at the $18-$19 range. Now they are BELOW $13.00 per share. Definitely love an undervalued cash cow in this pharmaceutical company.
First, however, we MUST run them through the Dividend Diplomats Stock Screener, which is focused on these 3 metrics:
- Price to Earnings Ratio: Viatris is trading at $12.75. Therefore, with an earning expectation of $4.73, that equates to a price to earnings (P/E) ratio of under 4x earnings?!?! Just… WOW. The P/E ratio is barely calculable at this rate, due to lack of SEC filings for Viatris to see the true earnings. However, that’s what the calculation shows!
- Payout Ratio: Earnings are projected to be $3.72 and the dividend is $0.11 per quarter or $0.44 for the year. The payout ratio is insanely low based on the expectations the company has. The payout ratio is 12%. This shows that dividend growth will be around the corner and Viatris can also reinvest heavily back into their business.
- Dividend Growth: N/A. This is N/A as the company has not even been in existence for 1 year. More to come here, with a payout ratio like this, it has to.
I have 133 shares of Viatris and the goal is to reach 150 shares. Under $13 per share, should be pretty “easy” to start pooling in shares to hit the 150 share target. At 150 shares, this produces a dividend of $16.50 quarterly, or at least one additional share reinvested using DRIP.
Aflac (AFL)
No introduction is needed here. Aflac (AFL) is a dividend aristocrat, increasing their dividend for over 39+ years right now. They are one of the largest insurance carriers in the country, with almost $40B in market capitalization. In addition, they recently increased their dividend 21%! Now you know why this dividend stock is on my watch list heading into December!
Alright, you know by now that we are going to run them through the fundamental stock metrics from the Dividend Diplomats Stock screener, here we go.
- Price to Earnings Ratio: Analysts are currently expecting $5.27 on a share price of $55.57 for Aflac (AFL). This calculates out to a price to earnings ratio of 10.54. Insurance companies usually trade at lower; but under 11 is significant low. A great reason why Aflac is an undervalued dividend stock to buy.
- Payout Ratio: AFL pays a quarterly dividend of $0.40 per quarter or $1.60 per year. Therefore, the dividend payout ratio is 30%. Such a low dividend payout ratio. This allows Aflac the room to continue to grow the dividend at a double digit rate, which we have seen recently.
- Dividend Growth: Aflac has grown their dividend for over 39 years, a dividend aristocrat no doubt. The 5 year dividend growth rate average is also at 10%. Makes sense, as Aflac just recently increased their dividend by a whopping 21%! As a dividend investor, you’ll take that any day.
The dividend yield is approximately 2.88%. I would love it at 3%. Come on downturn!
Dividend Stock Watch List Conclusion
Dividend investing is real and is happening! Here is our video going over the 3 undervalued dividend stocks to buy!
Of course, prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.
Talk about great, every day dividend growth stocks. My order, right now, would be the order that you see them above! Store Capital (STOR) to round out that position, then Cummins (CMI) and followed by AEP (AEP). How about you?
Related: 5 Reasons Dividend Income is the Easiest Passive Income Source
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!
-Lanny