Lanny’s November Dividend Stock Watch List

October has opened up additional dividend stock opportunities.  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 – November Edition.

Dividend stock watch list

The market is up 0.50% from September 15th through October 25th (40 days).  How interesting is that?  The graph you’ll see below doesn’t do it justice, as the last article I did was written on September 15th.  Therefore, the graph is skewed, due to being a 30 day display and the market dropping over that 10 day span.

What occurred during the month to have the market remain flat?  Well, the brokerage/wealth management firms went to $0 cost per trade, which caused quite a bit of excitement amongst the market.  In addition, this was an earnings release period for the quarter-ending September period, for a majority of companies.  Their earnings have been relatively strong, from those that I have been reading.

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

However, 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, just need to look hard enough.

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

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

Johnson & Johnson (jnj)

Johnson & Johnson (JNJ) has been facing a headwind with the Opioid crisis, chipping in a whopping $4 billion to the lawsuit settlement.  The stock has changed only +1.5% this year.  JNJ has been a high of $143 and is now down to $128.35, essentially a $15 drop.  How do the Dividend metrics look for this Top 5 Foundation Dividend Stock?

Trading at $128.35, they are trading far from their 52 week high of $148.99.  That’s a solid 14% from their high!  JNJ currently yields 2.96%, which yields higher than their 5-year dividend yield average of 2.66%.

In addition, the analyst expected earnings are $8.68 (average from 16 analysts).  The annual dividend is $3.80.  The dividend payout ratio is a solid 44% baby!  Right in the sweet spot between 40% and 60%.  JNJ continues to keep the balance approach to their payout ratio, allowing ample room for growth.  It’s no surprise they’ve increased their dividend for over half a century.

JNJ’s dividend growth has been slightly declining, the most recent at 5.6%.  Their 3 year growth rate is 6% and the 5 year growth rate being slightly higher.  Given their incident with Baby Powder and involvement with Opioids, their earnings were most definitely impacted there.  Still, an almost 6% growth this past year is pleasing, even when JNJ is going through significant headwinds.

Lastly, JNJ’s price to earnings ratio is a sound 14.79.  This is far below the S&P 500, on average.  This ratio shows signs of undervaluation.  That is hard to argue, given the recent price decline.

Delta Airlines, Inc. (dal)

I’ll tell you what.  I love flying with Delta Airlines (DAL), in case you did not know this.  Further, I was pretty excited to earn Delta Miles, as part of my Travel Hack with Airbnb recently (I earned a 550 miles!).  You’ve seen in previous articles and will see in my upcoming October Dividend Purchase article, but I have had no problem continually adding this airline to my Dividend Portfolio.  How about DAL’s dividend metrics?

Trading at $54.60, they are trading far from their 52 week high of $63.44.  That’s a another solid 14% from their high, similar to JNJ.  DAL currently yields 2.95%, similar to JNJ (again), but they yield significantly higher than their 5-year dividend yield average of 1.94%.

In addition, the analyst expected earnings are $6.99 (average from 17 analysts).  The annual dividend is $1.61.  The dividend payout ratio is a crazy-low 23%.  Below the floor of 40%, but that’s due to their double digit+ dividend growth.  DAL’s most recent increase was 15% to their dividend and the year before that… the same, 15%.  Delta is now 5+ years of consecutive increases.

Therefore, since their payout ratio is lower, Delta has had ample room to grow their dividend.  The 5 year average dividend growth rate is 40%+ but the 3 year growth rate is slightly lower at 39%.  This is due to DAL increasing their dividend 50% a few times within that time period.

Lastly, DAL’s price to earnings ratio is a significantly low 7.81.  This is far below the S&P 500, on average.  They’ve historically been low and that’s partly due to the volatility within the airline industry – one bad move, plane, news/press and the impact to Delta’s financial statements can be tremendous.  This is not even considering the price of energy to perform the necessary transportation, as well as increasing wages/costs.

Dividend Stock Watch List Conclusion

Two big companies, similar dividend stats but a lot of potential!  Prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.

JNJ’s ex-dividend date is 11/25, so I have some time there.  Delta’s was missed last week, dang it!  I would love to see both dividend stocks cross that 3% dividend yield threshold, but I know beggers can’t be choosers.

As you have noticed, I have trickled many articles on this page, to hopefully 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!

-Lanny

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26 thoughts on “Lanny’s November Dividend Stock Watch List

  1. I wouldn’t mind picking up some more shares of JNJ. Preferably at a nice 3% starting yield. But who’s really going to argue about 0.05% or so. MSFT and SYK look decent, but they’re more of a total return play with the dividend yields as low as they are. MO isn’t as good of a value as it was a month or so ago, but that 7%+ starting yield is nice and I fully expect 4-5% dividend growth moving forward. Happy hunting!

  2. nice short list.

    Delta doesn’t tickle my fancy but jnj does. Hopefully we see some red days this month. Everything is green these days… haha

    I’m still debating next months purchase but jnj is definitely in the top of my list.

    cheers man

  3. Metrics look good, solid companies. I’d like to initiate positions in both names this year. The 3% mark on these would be nice, we’ll see! MMM and ABBV are starting to take off again.

    -Divcome

  4. Hi Lanny,

    Quick question as I am pretty new on the dividend investing topic. When do you decide to sell a stock? What is the critical threshold to sell and what factors are you considering to make this decision?

    Best regards,
    Nikos

    • Nikos –

      Thank you for the question. Honestly, I usually/normally don’t sell a stock! haha, as that’s normally not the intention. However, if one of my stocks gets acquired and I don’t want to own that “next” company, I will sell, such as what I did with Lorillard when they got acquired. Does that help?

      AKA – I buy because I’d love to hold them for… life, if it all makes sense to (i.e. paying an increasing and safe dividend).

      -Lanny

  5. I haven’t looked into Delta because my first screen is a company that has increased their dividend at least 20 years. Loving JNJ now! Been selling puts recently for income but I am pretty sure I’ll be buying a position come November!

  6. Lanny,

    I don’t own DAL, but it is a company that I would one day consider owning. It certainly looks attractively priced at these levels. A 3% yield on JNJ would be attractive and compensate for the added legal risks considering the 5 year average yield of 2.66%.

    • Kody –

      Definitely should consider them, no doubt. Great airline, but I know they are subject to a lot on the macro-level – i.e.economy, oil/gas, etc..

      As for JNJ – would LOVE 3% there… so bad.

      -Lanny

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