We are heading into fall, Halloween is on deck with Thanksgiving not too far behind.  The world is still battling the coronavirus, but on the bright side – the Cleveland Browns are 3-1 baby!  Also, we just came off a September month – which is one of the best months to earn dividend income!

Therefore, as I do every month, here is the Dividend Stock Watch List for October 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: Delta-Variant, Government Shutdown, Inflation, etc..  However, this allows opportunities out there to invest in the stock market.

The stock market, specifically the S&P 500, still is high, but the S&P 500 did finish below 4,400 on October 1st, the date of this writing.  If you re-call, the S&P 500 was setting record-highs, when they were swinging above 4,500!  Nice to see the pricing come down a bit.  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 early October 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 Q2-2021 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.  In addition, estimates on earnings are still difficult to determine.  I do believe we will see comparable earnings in upcoming releases and will be able to set better expectations.  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 $600-$650 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:

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

Here is the list of dividend stocks that are on my radar going into the month of October 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!

Kroger (KR)

Kroger (KR) is back on the list!  Why?  Their stock price has started to come back to reality, below $40 per share.  They were trending in the mid-$40’s and I thought at one point they would hit $50.  Kroger, for those that don’t know, is the large grocery chain based in Ohio!

First, however, we MUST run them through the Dividend Diplomats Stock Screener, which is focused on these 3 metrics:

1. Price to Earnings Ratio: Analysts are anticipating $3.33 in earnings for the upcoming year.  At a share price of $39.14 for Kroger, this equates out to a P/E ratio of 11.75.  This is definitely below the S&P 500, which is currently at 34x earnings.  See the Kroger Stock expectations, per Yahoo Finance:
2. Payout Ratio: Given that Kroger’s earnings are anticipated to be $3.33, we can evaluate the dividend payout ratio.  Kroger currently pays a $0.21 per share, per quarter dividend or $0.84 per year.  Kroger’s dividend payout ratio is very low, showing extreme safety, at 25.23%!  Plenty of room for strong dividend growth in the future!
3. Dividend Growth: This is my favorite part about Kroger (KR) stock.  THIS IS WHY it could be the RIGHT TIME to scoop up more and buy their stock, actually.  Their dividend growth rate is 11.55%, with the recent increase at 16.67%!  Kroger has been increasing their dividend for 14+ consecutive years, on the road to dividend aristocrat status.

Now, I own 170 shares of Kroger stock, as you can see in my dividend stock portfolio.  I wouldn’t mind reaching the land of 200 shares baby!  It’s all about moving your low yielding, slow growth money into stocks like Kroger.

Hormel (HRL)

It has been some time since Hormel (HRL) has been on my dividend stock watch list.  How did this consumer foods company make my list of stocks to buy this month?  Well, they are DOWN 12% so far this year and are down almost 17% since last September.  Is there value in this stock?

Time to run them through the Dividend Diplomats Stock Screener.

1. Price to Earnings Ratio: Analysts are expecting only $1.70 in forward earnings.  Given Hormel’s share price is at $40.89, this equates out to a higher P/E ratio, at 24.05.  Still, lower than the overall market, on average.  Here are the analysts expectations from Yahoo Finance:
2. Payout Ratio: Can we get a perfect payout ratio (between 40% and 60%) here with Hormel?  That we do.  Hormel pays a quarterly dividend of $0.245 per share, which equates out to $0.98 per year.  At a forward earnings of $1.70, Hormel’s payout ratio is just under 60%, at 57.65%.
3. Dividend Growth: Hormel is a… DIVIDEND KING!  This is BETTER than a dividend aristocrat, as Hormel has increased their dividend for 54 straight years.  The 5-year average dividend growth rate is 11.60%, though 2020 was lower, though.  It will be interesting what Hormel does, come November.

I like Hormel (HRL).  Hormel is a solid pandemic-proof dividend stock to own.  I only own 51 shares of Hormel, which is a fairly small position for me.  I’d like to boost that up, closer to 100 shares if possible.  Is now the right price to buy Hormel stock?

Scott’s Miracle Gro (SMG)

Scott’s Miracle Gro (SMG), another Ohio-based cmopany, performed exceptionally well during the pandemic.  As families and homeowners were house-ridden from COVID-19, money was being spent on the up-keep of the home, which includes landscaping and outdoor yardwork.  That is right where Scott’s comes into play!

However, their stock price is FINALLY coming back down to reality.  In fact, the stock price is down 27% year-to-date, see the chart below.

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.

1. Price to Earnings Ratio: Analysts are expecting $9.18 of forward earnings for Scott’s Miracle Gro.  At a stock price of $147.14, this represents a P/E ratio of only 16x forward earnings.  This is definitely a good sign of undervaluation for SMG!  Far lower than the overall stock market.  However, is the DIY trend over?  Are people done working on their yards?
2. Payout Ratio: So far, the other 2 stocks on the list were below 60%.  Can we have a trifecta here?  You better believe we do!  Scott’s pays a $0.66 per share, per quarter dividend or $2.64 annually.  This is yet another LOW payout ratio, at only 28.76%!  Definitely allows Scott’s to reinvest back into the business and the ability to continue to juice up the dividend.
3. Dividend Growth: This is where things get interesting.  Scott’s is known for their special dividend that they payout once every 4-5 years.  In fact, during the pandemic, they paid a $5.00 per share, special dividend!  Therefore, this gets factored into the dividend growth rate and pushes the rate up higher.  They also increase their dividend each year and have done so for 11 straight years.  The 5-year average dividend growth rate for Scott’s is 36.04%!  Definitely the highest growth rate on the list, no doubt.

Similarly, I only own 45 shares of SMG, which was way back – at least 5-7+ years ago when I made that purchase.  Therefore, I’d like for this to be a bigger position.  Do I wait and see if Scott’s goes to a 2% yield, as they currently yield 1.80%?  Is this the time to buy Scott’s Miracle Gro stock?

Dividend Stock Watch List Conclusion

Dividend investing is real and is happening!  If you haven’t caught our recent dividend increases YouTube Video, we went through the dividend stocks to buy on the BIG SCREEN!

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 Scott’s Miracle Gro, Hormel and then Kroger.  All 3 stocks are showing signs of undervaluation though, and for me – it’s about how large my positions are with each!

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