It’s that time of the month, where I have my calculator, the pen & pencil & I start analyzing what I love most, dividend stocks, and to see which companies have a chance to be on my watch list. I like to come out with the watch list towards the end of the month, as I line up my capital troops to see where they may be deployed. I did not make any investment stock purchases in July, yet, and the capital lineup is getting bigger.
The Dividend Stock Watch List
What’s the goal here? To Just Go For It – dividend investing style, of course. This month’s watch list shows quite a bit of promise and has changed slightly from last month, but also nice to have three different industries within here. All three companies are in my portfolio, which I am sure you can remember, I love adding to current positions if I can. Let’s take a look at the stocks (which are heavily vetted by our Dividend Diplomat Stock Screener) that are on my watch list!
AT&T (T): Can’t get enough of the big telecom here? I know T was both on my July AND June dividend stock watch list, but guess what – they were at $38.79 at the date I wrote that article in June, and were at $37.95 in July. Guess what? They are now trading at $36.51 as of July 21st or another 3.79% drop! Did anything really change? No, no. But – their yield has sweetened a little bit more to 5.37%, which is “lovely”. AT&T, as we know, is a massive telecom player here in the states, is a dividend aristocrat by increasing dividends over 25+ years strong and also has the ability to buy the latest technology to stay ahead. With the price to earnings (P/E) now at 12.55, they are in a very “sweet” spot. There has been a LOT of rumbling going on with the big merger/acquisition of Time Warner (TWC), with news articles talking about the bumps and bruises T has faced to close this deal and I believe President Trump had initially stated he wouldn’t let this go through, but now may have a few other thoughts. Time will tell. However, I’m more curious on what they’ll do about that dividend this winter : ) Further, as you’ll see in #3 below, the ex-dividend date was just a little bit ago, so there is quite a bit of time between now and the next dividend date.
Grainger (GWW): Now, I purchased Grainger, not once, but twice. They still have an under 16 price to earnings, based on earning analyst expectations of $10.38 for the year and their payout ratio is below 50%, a nice sweet spot for dividend investors. They’ve been shaken up lately, with transitioning to a more mobile/online friendly customer platform. However – I was JUST watching the news last night and there was a long discussion about hwo Amazon (AMZN) will find it difficult to compete with expertise on their platform, which is what Grainger (GWW) brings to the table for warehouse/operations, as well as higher quality products & smarter decisions for consumers (since consumers still like to “feel” the tools and supplies they are buying). Therefore, I believe if GWW makes a solid transition to mobile/online with their unique specialization and higher quality, they should still bode well into the future. Heck – revenues were even up in their latest quarterly earnings release. With a yield now over 3%, at 3.10%; keeping this one again on my radar.
Cisco (CSCO): I purchased Cisco back in mid-June at $31.525 per share and they’ve only gone up slightly to $31.84 since then. Their dividend yield is still at a ripe 3.64% and with an earnings expectation of $2.38, their P/E ratio is also favorable, at 13.38. Their payout ratio is less than 50%, and their latest dividend increase was over 11%. A great combination for success for a dividend investor. I only own $1,250 or so worth, and could see myself doubling this position, for sure. Are they at a solid price point? Yes. However, their ex-dividend date was only about 3 weeks ago, therefore, we have quite some time before they go ex-again. Not saying that’s a reason to hold off, by any means, but something to consider, now that there is more time in between now and capturing the next dividend.
The watch list summary & Conclusion
Why am I watching these powerful dividend beasts above? Well, I recently wrote about the power of $50,000 in dividend income and this is definitely a stream, with today’s tax situation, that I would love to have more of, obviously. Further, as I described in my earlier post, I need to close that gap on my dividend income goal this year and these stocks on the watch list could help me get there. On a different note, the three stocks on the watch list I’ve listed out above, all have yields that are at or above my overall portfolio yield, something I’ve been lacking in my recent purchases of Kroger (KR) and CVS Pharmacy (CVS), whom had yields below my average.
Are any of these names on your watch list? Are you nervous about what AT&T (T) is doing with their merger/acquisition move of Time Warner? Do you think this deal will go through and/or do you think this will impact their ability to pay their current dividend going forward? Think Grainger (GWW) is a sinking ship at all with Amazon’s (AMZN) space online? Would love to hear your thoughts on these stocks above and also, what YOU are looking at! Thanks everyone for checking out my watch list for the month, check back soon, good luck and happy investing!
-Lanny