Dividend investing is BACK baby! Talk about undervaluation finally coming out of the wood work! So pumped up to add to my dividend stock portfolio, as the stock market is down over 600 points in the S&P 500 to start off 2022.
In addition, dividend increases have been a plenty. I have a strong feeling and indication that 2022 will be another fantastic year for dividend investors.
Therefore, as I do every month, here is the Dividend Stock Watch List for May 2022!
Dividend stock watch list
Another dividend stock watch list! The stock market has been more volatile than ever since the pandemic of 2020. What does that mean? New undervalued dividend stocks are coming to light baby! It’s all about buying dividend income producing stocks – the best source of passive income source on your journey to financial freedom!
The stock market, specifically the S&P 500, is now below 4,200 again! From the all-time highs of 4,800, now plummeting to 52 week lows almost. What a volatile time period we are in! 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 April 2022. 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 consistently over 1.50% APY and earned over 1% in March 2022 and well over 2% in April 2022. 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.
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 $500 per week into Vanguard (pending the VYM stock price), to stay invested in the market, during the uncertain times. In addition, I am also investing $50 per day into Vanguard S&P 500 ETF (VOO)!
Related: Why I’m Investing $500 Weekly with Vanguard ETFs
Related: Dividend Investing Strategy Added – BUYING $50 per day of VOO
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 May 2022. 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!
Provident Financial Services (PFS)
Provident Financial Services (PFS), similar to other dividend stocks mentioned below, is BACK on my dividend stock watch list. I love regional banks, it’s not a surprise to anyone. I moved my Peoples of Bancorp (PBCT) position into PFS, once PBCT announced they were getting acquired over a year ago. I find value in regional banks and PFS is no different.
First, however, we MUST run Provident Financial through the Dividend Diplomats Stock Screener, which is focused on these 3 metrics. I will also look at the price to book value, as that is a critical metric for the banking industry for valuation.
- Price to Earnings Ratio:Provident Financial Services is looking like a nice p/e ratio at just under 11x, based on the 6 analyst estimaes!
- Payout Ratio: The forward dividend income is $0.96 or $0.24 per share, per quarter. This equates to a perfect dividend payout ratio of 48%! Plenty of room for the dividend and to increase the payout going forward.
- Dividend Growth: PFS resumed dividend increases after the pandemic, with the last dividend increase at 4.35%. I’ll take it and look forward to more from this regional bank!
- Price to Book Ratio: The Book Value is currently at $22.05, as of December 31, 2021. What you want to see is at or below 1x the price to the book value. Therefore, the price of $21.75 is less than $22.05 and the ratio is 0.99. I love it!
The dividend yield is also at 4.41% at the time of this article. Though I own over 194 shares, I wouldn’t mind to continue to add at the current stock price.
Scott’s Miracle-Gro (SMG)
Scott’s Miracle Gro (SMG) continues to be on my dividend stock watch list! We have recorded many YouTube videos on them, as they have been on my stock watch list, but their price CONTINUES to plummet, with the rest of the stock market..
The last month they were on my watch list, Scotts was just under $130 per share. Now… they are about to dip below $100 per share everyone, another $30 drop in stock price. This is incredible.
Let’s run them through the Dividend Diplomats Stock Screener to find out why this could be a dividend stock to buy…now!
- Price to Earnings Ratio: Scott’s is down, no doubt. Analysts are anticipating $7.92 in earnings per share. Taking that with the stock price of under $100.45, the P/E ratio is below 13x actually now. Amazing value here.
- Payout Ratio: Now that we know forward earnings, time to look at the dividend payout ratio. SMG’s dividend payout ratio is only 33%, based on the quarterly dividend $0.66 or $2.64 per year. SO much room to pay, raise and also send out special dividends to their shareholders!
- Dividend Growth: Scott’s dividend growth is over 8 straight years. In addition, every 5 years or so they send out a MASSIVE special dividend. Therefore, due to the inclusion of the special dividends, SMG’s dividend growth rate is 35%, on average.
Now the dividend is just a tad over 2.6% and I have a very significant position here. I continue to buy shares of this stock at and below these stock prices.
Verizon Communications (VZ)
We all know I crossed well over 100 shares in Verizon during the 2020/2021 time period. However, I have not seen the stock prize of Verizon, the 5G winner, in the $40’s. Well, they just cracked into the $40’s recently and the stock is down 8% this year, less than the S&P 500, however.
Therefore, ti’s no wonder this high yielding, dividend stock is back on my stock watch list. Let’s dive into the stock metrics.
- Price to Earnings Ratio: Analysts watching Verizon (VZ) are anticipated $5.41 in earnings per share. This equates to a P/E ratio of 9, another sign of undervaluation on this dividend stock watch list.
- Payout Ratio: Verizon’s dividend over the course of the year is $2.56 or $0.64 per share, per quarter. This equates out to a dividend payout ratio of 47%. This is a perfect dividend payout ratio baby!
- Dividend Growth: Verizon has increased their dividend payout for 17 straight years, at an average dividend growth rate of 2%. Terrible growth rate against the rate of inflation, as the inflation rate is over 8% currently. However, that is why the dividend yield as swelled to well over 5%.
Thought I own over 100 shares of Verizon stock, I would not be against buying a share or two of this dividend stock at these prices.
Dividend Stock Watch List Conclusion
Dividend investing is real and is happening! Here is our video covering the Dividend Stock Watch List for the month!
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 same order as you see above – PFS, SMG and then VZ. Let’s continue to build assets baby!
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