Lanny’s December Dividend Stock Watch List

It’s beginning to look a lot like “investmas”, as the dividend stocks are on this DD’s radar!  I am attempting to sleigh ride my capital, making my list and checking it twice, as I’m trying to find out if the dividends are naughty or nice.  Yes, I had to throw that in there for the Christmas spirit, but there are a lot of interesting opportunities out there for my portfolio!  The cold weather has not only been hustling it’s way in, but also has chilled down the stock market in certain areas.  Come on in and read more on who is on my Dividend Stock Watch List this Holiday Season!

Dividend stock watch list

Since I really am anxious to share the three dividend stocks on my watch list, I’m going to jump right on into them.  I’m going to describe why each dividend stock is on my watch list, talk about what’s impacting them, as well as using our metrics via the Dividend Diplomat Stock Screener.  The stock prices I am using will be from Black Friday and will be based on the most recently financial data released.  Enough of boring you – check the three below!

1.) Cardinal Health (CAH) – Yes, this healthcare entity is still high on the list.  Company remains down 22% year-to-date, due to headwinds within the healthcare reform, Amazon (AMZN) entering the space and pressure over the opioid crisis.  This dividend aristocrat (aka, paying dividends OVER 25 years!) has simply been the dog of the group!  Currently yielding 3.28%, this entity is far pumping out dividends greater than their 5 year yield average of 2.10%, it’s amazing.  Further, the payout ratio currently resides at approximately 53%, with a dividend growth rate over the last 5 years of 15.20%.  The price to earnings, based on an annualized Non-GAAP EPS of $4.16 (see 10Q release, as non-GAAP EPS was $1.04), equates to 13.55.  This is a clear sign of being undervalued.  I want to note – $0.40 of those non-GAAP earnings was from an acquisition, so keep that in mind.  Ex-dividend date is December 29th, so keep your eyes peeled in these upcoming few weeks.  This one was on Bert’s November dividend stock watch list

2.) Aqua America, Inc. (WTR) – Whoa, curveball here right?  Well, I strongly believe that at some point, water is going to be a very interesting topic in the future.  Water as a natural resource is critical to life and I believe that there may be a strain on this resource.  There have been many more instances of droughts, especially in California, and it doesn’t end there.  Icebergs, as well, are becoming less and less, as well as the overall coverage of water.  It’s actually very interesting.  Therefore, companies that control water supply, I would believe, should have pricing power over consumers/us.  Not only that, but we all use and need water!  WTR is a 6B market capitalization entity, based in Pennsylvania, serving the midwest.  They are on pace for $1.40 in earnings for the year.  Further, they have paid dividends since 1939 and have over a 19 year growth streak!  As of 11/26/2017, their share price is $36.57 and they currently maintain a $0.8188 dividend, per year.  Therefore, using the DD stock screener, the metrics are as follows: 26.12 price to earnings (p/e), 2.24% dividend yield and a 58% payout ratio.  In addition, their 5 year dividend growth rate is 8.21%.  Slightly over-priced at the moment and would love to see this stock around the $32-$33 range.  However, this is water and our requirements for the resource isn’t going anywhere!

3.) Delta Air Lines Inc. (DAL) – Back on the list baby!  This is my sleigh for this ride on the watch list.  Delta, based on their 3rd quarter 10Q, has an annualized EPS of $5.53.  Their dividends per year are $1.22 and they currently trade at $50.11.  Let’s break this down Dividend Diplomat style!  First, their dividend yield is a solid 2.43%, not the highest but higher than the overall market.  Next, their payout ratio is at 22%.  So damn low, I expect dividend increases to be well over the double digits going forward, you have to love the sound of those jingle bells.  In addition, their P/E ratio is 9.06?  Say what?!  Deck the portfolio with shares of Delta!  I am loving what I am seeing right now.  I purchased them a few months ago and am thinking it may be time to buy more of this wonderful airline!

Those are three stocks on my “Investmas” list this Holiday Season.  We have one stock in CAH that is over 3%, and the other two stocks are in the low-to-mid 2% range.  Three different industries with airline, healthcare and water.  Talk about diversity right there.  I love the three industries due to the necessities of each.  This is very interesting.  I obviously want to make every dollar count on using my capital, this is a big decision.  Hmm… decisions, decisions… to stick with the theme – who is naughty and who is nice?

Dividend stock watch list conclusion

Okay, time for the round up.  Three solid stocks above.  WTR has a slightly higher price to earnings that I would hope, but they are similar to Consolidated Edison (ED) (which is a Top Foundation stock), as they are a primary resource that is being used by individuals, families, companies – each and every day.  Therefore, I don’t expect prices to really ever be on a great decline, and to go with the flow of the market.  However, there is a better yield from Delta (DAL) with better valuation.  Though metrics are stronger with Delta, they are in the airline industry, which is always going through some form of negative news/press and are accustomed to customers going with, typically, the lowest price.  Then there leaves Cardinal Health (CAH), the bargain dividend aristocrat.  Are they priced this way for a reason?  Amazon having them shake in their boots?  Tough choices here.

What do you think?  What is YOUR top stock here?  Any preference on one over the other?  Which would you put money into, today, regardless if you have capital or not?  I would love to hear from you!  Thank you again for reading the article, I appreciate it, as always!  Keep on saving, good luck and happy investing!

-Lanny

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19 thoughts on “Lanny’s December Dividend Stock Watch List

  1. HRL, GIS, and CAH have been on my watch list for months. HRL has finally rebounded and is no longer at buying price. GIS has bounced back a lot too. CAH still is in a great spot to buy. Just hope it stays down, because I don’t see me making any more buys till about January. Too many big bills coming up and the holidays will drain what is left of the free capital. Thanks for sharing your list. Looking forward to your next buy.

    • Daze –

      Yep, HRL has rebounded nicely and I know since purchase – I am over 20% in appreciation right now!

      CAH is still hanging in, but even that company has had a few $’s added to the share price.

      Thanks again Daze, get the ammo of capital ready!

      -Lanny

  2. CAH was my pick on November and it still looks pretty good at current levels for Dec. even with a nice rebound from its lows. Look at HRL and GIS coming back nicely too last month. I can’t tell you how many negative comments I read about both companies, falling sales, outdated foods, unhealthy, AMZN, etc. etc. I always write that, while never a guarantee, those aristocrats, champs, kings, etc. tend to come back nicely given enough time to adapt. I think CAH and WTR interest me from your list in that order. End of 2017!?!?!?!? Can’t believe it’s here.

    • Hut –

      I know, the negative press on HRL & GIS were wild and they are holding strong, with solid dividend increases to boot. Turning down the noise, as we find out, is a good thing to do.

      WTR is very interesting, take a look at them. Think about the resource of water… very interesting!

      -Lanny

  3. Lanny,
    WTR Has been on my list for 2 months now. I own zero utilities, but that is at the top of the list – especially if a price drop occurs. Water is just an irreparable commodity. Electric – people can go solar, off grid, and sometimes choose a different provider. Gas – can replace electric for heating and cooking, but can also be replaced. Water? Good luck.
    – Gremlin

  4. I started buying WTR at the beginning of this year. I liked it more at $30 but it’s a quality company with a nice history of growing through small acquisitions.

    Their DRIP plan (through Computershare) has no fees to buy – and reinvested dividends buy new shares at a 5% discount. It’s a little annoying to have an extra account with one stock in it, but I can put up with it since it’s giving me more shares each quarter.

    • Brian –

      If there’s ever a time to buy fundamentally sound, irreplacable resource that has a strong dividend history – and to do that at a 5% discount – DO IT! Pumped that you’ve been buying. Keep drinking that water!

      -Lanny

    • Millenial –

      Of course and to take the thinking out of investing – the index in an etf/fund is a smart move to make. Further, healthcare – as you indirectly said it, isn’t going anywhere… haha

      -Lanny

  5. I just can’t quit you CAH!

    It hasn’t been a great year (or three) for them but it’s a great buy in my opinion.

    Definitely feels undervalued, especially with the low P/B.

    Keep up the great recommendations.

    • Nick –

      CAH is hilarious, always on the list, but it has had some nice appreciation of around 10% the last few days, which stings a bit from a potential stand point. I’ll keep writing and trying to find some different opportunities, can we cool the market off a little? haha!

      -Lanny

    • PCI –

      Yep, a resource that is always being used, interesting, right? Excited to do something – as the market has impacted CVS quiet a bit after Aetna official announcement. Their investor deck shows that CVS plans to keep dividend flat this year, with no increase, hmm.. They need to kill off that new debt asap.

      -Lanny

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