July was an interesting month, right? June soared, but what happened in July? Pretty much the same, as you will see within the article. I will be honest and say this. Finding dividend stocks that are undervalued continues to be a challenge in the summer of 2019. Though the stock market ride is not controllable, dividends and dividend stock opportunities are there. It’s time to check out my dividend stock watch list.
Dividend stock watch list
Here is what the market did in the last 30 days, from the screen shot below:
The market is up 3% from end of June through July 26th. Fed is still set to announce on 7/31, about what they will do with the interest rates. There’s been better news/talks on the trade/tariff front. Additionally, the labor/jobs market continues to excel. In addition, earnings releases have been fairly solid thus far.
The big ticket I am waiting on is the 7/31 Fed release on interest rates. This could cause the market to either drop quickly or increase quickly. In addition, the mortgage interest rates should have a nice reaction to what is announced come Wednesday, the 31st.
See – Interest Rate Cuts, YOUR Investment Portfolio & YOUR Mortgage
However, there is always an opportunity. It takes patience. It also takes sticking to your strategy. Further, using our Dividend Diplomat Stock Screener, helps identify those opportunities. It also scopes out those that aren’t undervalued.
See – Dividend Diplomat Stock Screener
3M Company (MMM)
Dividend Aristocrat Baby! Trading at $173.98, 3M is down $45 from their 52 week high, representing a decline of 21%. The 3M Company primarily produces items related to worker safety, health care, and consumer goods. They’ve been around for forever, that’s for sure.
They have an approximate 60% payout ratio, with a price to earnings of ~17.5. Further, their yield is now over 3.30%, which is far higher than where they historically are at. Their last increase to their dividend stood strong at 5.9% and the prior two raises were 15.7% and 5.9%, respectively. Therefore, their most recent increase doesn’t deviate from what they’ve done before. Given their payout ratio is higher, I would anticipate low-to-mid single digit increases going forward.
See – Bert’s 5 Always Buy Stocks
LyondellBasell (LYB)
I have purchased LYB on quite a few occasions, including twice in May. They continue to hover around that mid-$85 stock price point, which causes their dividend yield to be close to 5%. Further, their dividend increase this last go around was a solid 5%. They are in the chemical industry and the competition is obviously Dow Chemical (DOW), as well as Eastman (EMN).
The price to earnings is a little over 8 and the payout ratio is around 40%. Therefore, they still have room to expand their dividend going forward. I’ve invested ~$3,500 and I could see myself adding another $1,500 to the position.
See – The Power of the Dividend Growth Rate is Real
Dividend Stock Watch List Conclusion
3M would be a great dividend aristocrat addition to my portfolio. Then, a full LYB position would be nice, and that dividend train will be adding shares on each DRIP! Further, both companies above pass the Dividend Diplomat Stock Screener Metrics. Therefore, what’s not to love?
Here is a point that I’ll make. Even though the market can surge in a month, there is ALWAYS an opportunity there. One has to run their metrics that they like and find the undervalued dividend stock in the mix. The 2 dividend companies above in 3M and LYB, aren’t every day names that you see on watch lists and purchase articles. Guess what? That is OK!
Stick to your investment strategy and dividend stocks will be there. As always, good luck and happy investing everyone!
-Lanny