Dividend Stock Watch List: Lanny’s July 2020 Edition

dividend stock watch list

Even though the stock market is volatile, you cannot predict what will happen.  On the road to financial freedom, you have to keep saving and investing funds into income producing assets.  That’s what the dividend stock watch list is all about!  Let’s buckle up and read Lanny’s Dividend Stock Watch List – July Edition.

Dividend stock watch list

The stock market continues the vicious cycle, the ups and downs, you name it.  To reach financial freedom or financial independence, the stock market definitely isn’t making it easy on us.  We have gone through protest and tension among the government and population.  Further, coronavirus spikes are occurring everywhere in the south and eastern coasts.  What’s a dividend investor to do?

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.

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

Here is a display of what the market did in the last 30 days:

Even with the stock market being volatile and slightly rising, there is always a way to find an undervalued dividend stock.  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.  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:

  1. Price to Earnings Ratio – We look for a price to earnings ratio < than the overall Stock Market.
  2. Payout Ratio – We aim for a payout ratio between of less than 60%.
  3. 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

Aflac (AFL)

Aflac, AFL

The duck that everyone knows and loves.  Further, they are in an industry to invest in that is for LIFE.  Everyone has some form of insurance – health, life, auto, home owners, renters, etc.. That is why Aflac (AFL) stands to be on my watch list, specially with the dividend history they have.

Further, their stock price has also dropped from the start of the year of $52.90, down to $34.68 as of June 26, 2020.  That’s a 34% stock price drop year-to-date.

  1. Price to Earnings Ratio: Based on a share price of $34.68 and an analyst expectation of $4.47 from 13 analysts, the price to earnings ratio is 7.76.  This is far less than the S&P 500 and definitely is lower than competitors, such as Cincinnati Financial (CINF) and Traveler Companies (TRV).
  2. Payout Ratio: The safety of the dividend and a great stock metric, no doubt.  At a forward dividend of $1.12 over expected earnings of $4.47, the dividend payout ratio is 25%.  This represents safety, no risk of dividend cut and high expectations of dividend increases on a go-forward basis for this dividend aristocrat.
  3. Dividend Growth: As a dividend investor, Aflact has over 25+ years of dividend increases and they are headed for 40.  Their dividend growth rate is typically one cent per year, at 3.50% to 4.00%.  I would anticipate this for the next 2-3 years, post-COVID-19.

Aflact has been a solid position in my portfolio.  I own 250 shares, but can see myself adding an additional 10-15 shares at these price levels.

General Dynamics (GD)

General Dynamics (GD) has been on my dividend stock watch list many times before.  Therefore, they don’t that much of an introduction here.  Again, another dividend aristocrat.  General Dynamics is one of the largest aerospace and defense corporations in the world.

Therefore, which you will see below, GD has been hard to keep off my dividend stock watch list with the stock metrics they are showing.  Here are their results through the Dividend Diplomat Stock Screener:

  1. Price to Earnings Ratio: GD’s stock price is $146.05.  21 analysts are projecting $12.26 in earnings per share for 2021.  Therefore, dividend the stock price over the earnings per share, equates to a price to earnings ratio of 11.91.  Definitely below the S&P 500 and other competitors in the industry, including Lockheed Martin (LMT).
  2. Payout Ratio: At $4.40 in dividends per year and dividing that by $12.26, you come to a great answer.  The dividend payout ratio for GD is only 36%! A critical dividend stock metric and it appears that GD has plenty of safety and room to continue their dividend increases.
  3. Dividend Growth: A dividend aristocrat, no introduction here necessary.  Their last dividend increase was 8% and I expect/anticipate the range of 7-8% for the future, during this pandemic-era we are in.

I own 24 shares of GD and would be interested to going up to 30 shares at the current prices and valuation points!

Johnson & Johnson (jnj)

JNJ, Johnson & Johnson

The one, the only, good old reliable – Johnson & Johnson (JNJ).  We all know JNJ, the band-aid, Neosporin, Aveeno, Listerine, Johnson’s baby products, etc..  Further, they are a Dividend Aristocrat and Dividend King!  Further, they are almost $400 billion in total market capitalization!  They are one of THE Biggest companies in the world, in fact they are #8.

How about Johnson & Johnson through our Dividend Stock Screener?  Here are the results:

  1. Price to Earnings Ratio: JNJ’s stock price is $137.81 and the 20 analysts project earnings of $9.05 next year.  Surprisingly, that equates to a price to earnings ratio of only 15.23, definitely lower than where they have been recently. JNJ sliding 13% from their 52 week high definitely helps.
  2. Payout Ratio: JNJ currently pays a dividend of $4.04.  At a projected earnings of $9.05, this equates to a dividend payout ratio of 45%.  JNJ’s dividend payout ratio is right in the middle of the 40-60% range that I like to see. As a dividend investor, there is much safety in their dividend.
  3. Dividend Growth: 57 years.  Isn’t that enough?  JNJ is the pinnacle of a dividend growth stock.  Further, their dividend growth rate is typically between 6 and 7%.  As a dividend growth investor, JNJ is the cream of the crop.

I own 45 shares and would love to bring that up to the 50 mark.  At these prices, I would be interested/intrigued to acquire, but am looking for in the low $130’s/upper $120’s.

Johnson & Johnson allows no wonder how they are on my dividend stock watch list.  It also helps they are a Top 5 Foundation Dividend Stock for your portfolio!

Dividend Stock Watch List Conclusion

All three are dividend aristocrats, JNJ would be ideal, if they hit that 3% dividend yield for me.  However, Aflac and GD are definitely looking attractive at these prices.  Prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.

I could see adding more shares in this order: 5-10 more shares of PBCT (~$100), 2-3 more shares of GD (~$400) and 5 shares of AFL (~$160).  It would be a nice deployment of capital and the average yield should be right at/above my current yield on my portfolio.

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!


6 thoughts on “Dividend Stock Watch List: Lanny’s July 2020 Edition

  1. Nice watchlist. It’s hard to go wrong with AFL, GD, and JNJ. I especially like GD at the current 3% yield paired with annual 7-8% long-term dividend growth potential.

  2. This might be a dumb question, but if Aflac’s dividend growth rate is routinely 1%, and inflation is approximately 1.2% – 1.8% annually, won’t the speed of inflation outpace the dividend growth rate of your investment?

  3. Great watchlist Lanny. Aflac for whatever reason always falls out of my radar but the the metrics look good. Maybe because I am already strongly invested in UNM and PRU. Always good to get a different point of view. Thanks.

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