Tough month for Clevelandars with our Finals loss to the Golden State Warriors in June. It’s okay, another year to plan and strive for the trophy. Our Cleveland Indians are playing some pretty damn good baseball and the perfect summer weather of low 70s and sun has started to peek through, as we recently had muggy/humid 80 degree weather. Amazon (AMZ) has purchased Whole Foods Market (WFM) and stocks are showing a few signs or better signs of opportunities based on valuation metrics. I wanted to share my July dividend stock watch list and to see if they happen to be on yours as well. Now, onto the stocks!
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 a little from last month, but also nice to have three different industries within here. Two companies are in my portfolio, but the other one is not. 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): Okay, yes this was on my June dividend stock watch list, but guess what – they were at $38.79 at the date I wrote that article and as of June 25th – they are trading at $37.95 or a 2.17% drop. Did anything really change? No, no. But – their yield has sweetened a little bit more to 5.16%, 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 13.04; there could be some potential value here. It is worth to mention, however, with their over 5% dividend yield, this then has a built in low expectation of dividend growth – which has historically been around 2% each year and I don’t expect that to change. However, I’d be okay with a surprise this year.
J.M. Smucker Company (SJM): A new name to the list this month and this came from a discussion with Bert, as the stock was hammered post Amazon’s (AMZN) announcement. Year to date they are down 5.7%, and are down to $120.72 from their 52-week high of $157.31, or 23.26% down. Based on expected earnings this year of $7.95, this equates to a price to earnings of 15.18 – definitely below the S&P 500 average of 25.79, by a long shot. Further – who doesn’t live Jif peanut butter, Smucker’s jelly/jams and their other products? Additionally, they are based in Ohio… no bias, right? haha. Their yield is hovering around 2.49%, at the moment, with over 15 years (July – expect an increase) of dividend growth and their 5-year average yield is 2.20%; so getting a little more bang for your buck this time around. Keep an eye out for this one, I know I am and that is why it’s on the watch list. With a name like Smucker’s, it has to be good : )
Canadian Imperial (CM): Another familiar face, one which I have a 3.85% concentration in my individual taxable account portfolio. However, with a current price to earnings of less than 10 at 9.94 based on forward expected earnings of $8.11; this stock had to make the watch list, especially with their yield approaching the 5% mark. These metrics all are far below the S&P 500 average metrics. Question is – currency power has negatively impacted their dividend to US investors, and the housing market in Toronto + the suburbs outside of Toronto is bubbling up at a fast as heck pace. Will that last? Will banks suffer at some point? This hasn’t occurred yet, due to their regulations somewhat, but I cannot imagine how this can keep going. I am keeping this big Canadian bank on my watch list for any sudden movements.
The watch list summary & conclusion
What do ya’ll think of the watch list stocks above? I am sure many of you own these companies. We have a few industries going on here – consumer-staple with SJM, telecom/technology with T and then banking with CM. How do you feel about these three industries? Are you seeing these industries as better plays with the uncertainty going forward in the economy? I won’t be purchasing right away, but I need to remember to make every dollar count in this situation and press forward in the right way to reach my goals I have set for myself. Any other stocks you are seeing? Please share and talk soon! Happy investing.
-Lanny