Lanny’s February Dividend Stock Watch List

The stock market is on a screeching downhill plunge.  What does that mean?  Opportunities for us dividend stock investors.  Therefore, it is time to pour a hot cup of coffee and begin my dividend stock research.  Time to tune in for Lanny’s Dividend Stock Watch List – February Edition.

dividends, dividend stocks, investing

Dividend stock watch list

The market is down for the month, but barely.  The last week, though, has been a rollercoaster, as you can see below.  The S&P 500 had risen to almost $3,360 before steam rolling 100 points down hill.

What occurred during the month to have the market slightly increase?  Oil costs have been trending lower and the coronavirus has been taking over the news, as of late, sending the stock market down. As always, I turn off the loud noise and invest as usual, when there is opportunity.

See – Why I Don’t Time or Predict The Market

As the saying goes, one can always find diamonds in the rough.  Therefore, with using the Dividend Diplomat Stock Screener, there is always an undervalued dividend stock up for grabs, that’s where Financial Literacy and Research pays off.

Here is a display of what the market did in the last 30 days:

In addition, capital is necessary to make any dividend stock purchase that is on this watch list.  How do I do it?

I save anywhere from 60-85% of my take-home pay and strongly believe Financial Freedom does not happen by hitting a home run on an investment.  Nothing matters more than your savings rate on your journey to Financial Freedom, plain and simple.

Therefore, I work my butt off to make sure expenses remain in-check and that my savings rate are meeting our investment and financial independence goals!  Then, you rinse and repeat.

See – 5 Ways to Save $500… TODAY

Royal Dutch Shell (RDS)

Can we say they are on my watch list for now THREE months in a row?!  Yes, this is true but they deserve a spot.  You’ll see why below.

Shell (RDS), like other oil/gas plays, has gone through a big storm in January.  Price of crude is around $58-$59 per barrel, down from the low $60’s.  This downtrend has impact all oil companies, including Exxon (XOM), Chevron (CVX) and others.  However, shell still reported net income, which many others did not, for the 4th quarter of 2019 and announced a consistent dividend, as well.

Shell is currently trading at $52.15 (down by $6.96 or 11% from $59.11 in the last watch list) and there is an estimate of earnings per American Depository Share of approximately $5.11 for 2020.  Therefore, you are looking at a price to earnings ratio of 10.20; which is significantly below the S&P 500 or the stock market on average, as well as other big oil players, including Chevron (CVX).

In addition, based on the $5.11 average analyst estimate, their payout ratio is looking better.  The annual dividend is $3.76 per year or $0.94 per quarter.  The dividend payout ratio is at 6873.  For a large oil company this actually is not the worst I have seen.  In fact, they are better than Exxon Mobil (XOM), whom currently shows OVER 100% for their payout ratio.  Chevron’s (CVX) payout ratio has not been looking great, as of late, as well.

Shell has had their dividend on pause over the past 6 years, dating back to 2014.  The dividend growth was just not there and instead of cutting their dividend during the oil & gas downturn, they chose to maintain it and work on their expenses and balance sheet.

Now, relating to dividend growth – I don’t see this happening yet.  However, they have weathered through the storms and still have a below 100% payout ratio.  If the price per barrel goes up 5-10% this year, I still can see a dividend increase in the year 2021. In the meantime, one can earn a dividend yield of 7.20% on their investment while they wait.

Given that Shell yields 7.20% makes a compelling argument to acquire more shares, as they continue to improve their financial footprint and gear up for 2021.

Pfizer (PFE)

PFE, Pfizer

Pfizer (PFE) has been one of my LONG term holdings in my Dividend Portfolio, but everyone may already know that.  I’ve owned them for what could be almost 10 years.  If you don’t know them, they are a massive pharmaceutical company with products such as, but not limited to, Advil, Viagra, Xanax, Epipen and Zoloft.

Why else has Pfizer caught my attention again?  1 year ago, they were at $42.88 and now they are trading at $37.24 or a 13% decline in the last 52 weeks.  How about the other stats of Pfizer (PFE) when put through the Dividend Diplomat Stock Screener?

Pfizer is going on 10 years of dividends, loving it.  The most recent increase, which has been standard, is $0.02 per quarter and  the recent raise came out to be 5.56%.  Continuing that trend, 5.3% would be the next dividend increase.

Analysts of Pfizer are projecting $2.90 in earnings per share for 2020. This represents a price to earnings ratio of 12.84, which is insanely low and is far more undervalued than the stock market as a whole.

In addition, given the projection is $2.90 in earnings, the annual dividend is $1.52 per year.  Therefore, the dividend payout ratio ends up at 52%.  The dividend payout ratio ends up in the sweet spot of the 40%-60% range.

Given I own over 100 shares, I wouldn’t mind adding another 25 shares to the portfolio and creating an even more powerful dividend engine from Pfizer.

Viacomcbs (viac)

I have been gobbling up ViacomCBS (VIAC) recently, dating back to the CBS investment in November of 2019.  It wasn’t long until CBS and Viacom completed the merge and are now held under one ticker symbol – VIAC.  They are now a news and entertainment behemoth, going up against the other giants in the landscape (think – AT&T (T), Comcast (CMCSA), Disney (DIS)).

Why is ViacomCBS high on my watch list?  They have gone from $42.07 per share at the beginning of January and have fallen down to $34.13, or a 19% drop!  What does this mean for dividend investors?

Based on a go-forward dividend of $0.96 per share, ViacomCBS now yields 2.81%, which is respectable, better than a few in the industry, as well as is better than the S&P 500 index, as a whole.

Further, analysts are projecting $6.10 in earnings for 2020. WOW! That is all I have to say.  Well, I’ll talk about the dividend payout ratio, first.  That means, their dividend payout ratio is a minor 16%.  Dividend increases should be large and plentiful in the future, NO DOUBT.

In addition, ViacomCBS recently increased their dividend in December by 33.33%, post-merger close.  Talk about an insane jump!  I anticipate a dividend increase once every 3 years.  Therefore, I do not anticipate receiving one again until 2022.

Given the entertainment industry is firing on all cylinders and the population cannot seem to get off their couch, this seems like a well-timed investment.  From all of the subscription based services that started with Netflix (NFLX), this seems to be the direction the industry is heading for the upcoming future.  Disney (DIS) and their Disney+ service is insane, Google has their YouTube TV and we cannot forget about Amazon’s (AMZN) prime streaming service.

I have invested almost $3,500 into VIAC and I could see myself doing another $500 in the future.

Dividend Stock Watch List Conclusion

The best part about all 3 companies above is that they all are currently part of my dividend income portfolio.  Prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.

Out of all 3 dividend stocks above, Pfizer (PFE) may be the first up there, then ViacomCBS (VIAC), wrapped up by Shell (RDS).  Definitely am eager to be active during February, as I make the march towards Financial Freedom.

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!


23 thoughts on “Lanny’s February Dividend Stock Watch List

  1. Yoda just read your post and said “Solid Lanny’s choices are. Wrong with any of them you can’t go.”
    Yesterday, I posed mine – Morgan Stanley and AO Smith.
    I actually may like Viacom over AO Smith with the big dip they took. (which means I am criticizing my own choices…lol)
    I am definitely going to consider VIAC this month. I need more media in my portfolio!

    take care,

      • Lanny –
        It looks like VIAC has more room to grow. Both in terms of dividend AND equity price. VIAC has a 4.42 P/E to AOS 19.14
        The Earnings estimate is FAT.
        Their payout ratio is tiny vs AOS’s 43%. With a 33% increase in December, this bodes well looking forward.
        The yield is higher at 2.81% vs AOS’s 2.25%
        The huge drop this year for VIAC has made it uber affordable and as they recover, your yield after purchase will rise accordingly.

        Many companies like to maintain a certain yield. Hopefully VIAC will do so too. If they keep up a 2.8% yield as the price recovers, they will be raising it at a higher rate than AOS. Maybe…. AOS has increased their dividends by 26.19% over 5 years. But that is nothing like that 33% increase.

        They were off my radar until you wrote this piece. They did not make my programmed screener on Fidelity because of the PEG ratio being under 0.
        You sleuth you…
        – J

        • CW –

          You brought tears to my eyes. NOW THAT IS WHAT A DIVIDEND INVESTOR DOES! Great job in the comparison and analysis. This is what it’s all about.

          Further, on finding VIAC… they don’t call me a Dividend Diplomat for nothing… hehe…


    • PCI –

      Nice, 3M is looking better, no doubt, from a price standpoint. Financials are looking interesting, though, as of late.

      PFE should contain the same dividend when combined with their spin-off. Looking forward to it.


  2. I think I have said this before, but I don’t like investing in companies that I am either rooting to fail or that I don’t believe will be a major player in 20 years. Looking at Shell, I cannot believe any major gas and oil player will continue to grow as the industry switches from gas to electric vehicles. IF one of these companies began turning their existing infrastructure into a split between electric charging stations and gas stations and also began putting their charging stations in common areas (a partnership with a coffee shop where you will stay for 15-30 minutes while your car charges would be great, think Starbucks!) would change my mind but I have seen nothing to encourage these thoughts of mine.

    All of this said, I am very curious of Pfizer, and I already own MMM which is getting closer and closer to the buy range.

    I want your opinions though on what do you think of dividend-focused ETFs (like SPHD or VYM) vs buying individual company stocks?

  3. Looks like a great list Lanny.

    I couldn’t agree more with your statement “stick to your investment strategy”. I’ve been a buy and holder of ETFs exclusively since I started back in Dec 2015. Looking to continue the same 🙂

  4. Good call on RDS. I’ve been adding shares as rapidly as I can since about last October. A well-covered dividend north of 6% and the chance for serious capital appreciation? Yes, please.

  5. Nice watchlist. I own PFE and RDS.B and they both appear to be priced attractively for the long run. I’ll have to check out VIAC in the future.

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