Lanny’s September Stock Watch List

Fun time of the month!  I have spent my Sunday morning researching and finding stocks that I like, and heck – some may be the exact same from last month’s article.  What matters is that these are attractive, great dividend yielders, easy businesses to understand and are staple names to all!  I was very excited the market has took a turn over the last 30 days and have started to open up more value for us dividend investors.  Let’s see who is on my stock watch list!

Watch List

Intro to the watch list

I am getting back in my favorite routine of having specific stocks on my radar.  Thank goodness the market tanked on September 9th, this has opened up some value.  Heck – my August stock watch list has me very excited in the month of September.  Some may ask, “Why?”, and it is quite simple.  Those same stocks have fallen, even further!  What I will do is compare the prices from last month and then to the price points now, to see which stock is looking even better.  When I’m performing my screener – I wanted stocks that had a forward P/E below 18, payout ratio below 60%, dividend growth for over 5 years, as well as – has a business that is easy to understand.  Additionally, I wanted those entities that I already had in my portfolio, to make my life and reading pleasure a little easier.  Who wants to read additional 10-Ks, Press releases and 10-Qs if you don’t have to?  I already read enough of that crap for my own job haha.  Without further a-do.  The stocks on my watch list.

Watch list stocks

Pfizer (PFE) – From last month’s article, PFE had a price of $35.29, during my review.  The price point as of close on September 9th is $34.10!  Talk about a drop.  That represents a further decline of 3.37% and are that low $34 range where I am strongly considering them.  What is the best part?  The yield is now over 3.50%, at 3.52%, which is fantastic.  They’ve been growing their dividend for at least 5 years with the last increase at approximately 7.14% – which is awesome.  Further, based on forward earnings, I am calculating out a price to earnings (P/E) ratio of 14.40.  This then places the payout ratio at roughly 49% (we now know how important this metric is to us dividend investors).  In my eyes – the P/E is low, the yield is above average, above the S&P yield, the payout ratio is right in the middle and they have the track record plus room to grow.  Further, they are looking to grow as a business and are always going to be in pantries and health-care related entities.  Given that I missed the ex-date for the 3rd quarter dividend, this one will be on my radar, as I love them over the 3.50% yield range, plus they have an increase coming in the 4th quarter as well!

Target Corp. (TGT) – At the time of August’s review, TGT had a close price of $74.10.  Guess what?  Yes, the stock price has further tanked to $69.00!!!!  WOW!  That represents a 6.88% decline in just one month’s time span, holy crap!  The dividend yield is “safely” at 3.48% (up from 3.24%!) and is well over 1 full percentage above the S&P 500 yield.  Further, the P/E ratio based on forward expected earnings is 13.64, definitely a great sign of undervaluation.  In addition – who doesn’t love shopping and just browsing at Target?!  I know the lady loves just simply walking through, and yes, she does own a Red card.  I know Bert knows what I’m talking about.  Also – this was the last monster purchase I made back in June and I wouldn’t hesitate to checkout some more of them.  They are a dividend aristocrat, have grown their dividend for 40+ years and recently had an increase of ALSO 7.14% – take a note from Pfizer (PFE) or something?  The payout ratio also rounds out to 47% and is in that sweet spot I like.  To conclude – an above average yield, already own them, low P/E ratio, great payout ratio and it’s a great/easy to understand business.  I love them at the price they are at, and would be very aggressive in hoping they cross the 3.50% yield barrier.  Again, high on my list!  Why can’t I just have every stock?

T. Rowe Price (TROW) – And again – during the August evaluation, TROW had a close price at $69.10.  One month later, they are now at $67.48.  Bodda bing, bodda boom.  This represents a 2.34% drop.  Enticing.  Another dividend aristocrat with a long as heck growth history, they are now sporting a P/E ratio of 16.00 based on forward earnings.  Not as undervalued based on the Pfizer and Target above, but they are close and they are below the average P/E for the S&P 500.  Further, the yield is at roughly 3.20% (up 7 basis points from last month), not as great (again) as the other two, but above 100 basis points above the S&P 500 yield with a payout ratio of 51.18%.  I had invested $3,130 into them in the first swing and a $1,750 purchase would be nice here, to inch closer to that $5K total  investment.  Last month I talked about the $67 range for them, and here we are – smack dead where I wanted them.  Decisions, decisions I tell ya!

AT&T (T) – Ah… my favorite telecommunications stock.  We all know I love having the dividend stocks I own, pay for the bills that I have, and T definitely fits the bill.  I already own over 156 shares of this big guy, but the share price has dropped recently.  The September 9th close price is at $39.71 and the yield is 4.84%, almost back to the traditional 5% range it was in.  I am calculating a forward P/E of 13.88, with a 67% payout ratio at the moment, so not too shabby for this dividend aristocrat.  Further, with the DirectTV deal, I am hopeful that the $0.01 annual increase will for sure continue, and maybe if we are fortunate, a $0.02 increase could be in the future.  Due to owning over $6K and this being the bigger position out of the total 4 stocks here, I will more than likely wait on investing more into T, unless it gets into the lower $38’s, then – damn, may be too hard to not.

Watch list summary

The big decisions and debate with the four stocks above!  I could always do an even spread with the top 3 of PFE, TGT and TROW, say $1,750 a piece?  I could just go on a bender and buy a few thousand with of TGT.  I just do not know!  What I do know is that you cannot go wrong with investing into one of those stocks on my watch list.  That I know.  This is what makes it exciting, building these positions, adding forward income and decreasing your team to financial freedom!  Can you taste it?  Let’s get closer to the prize!  I know I am trying to do everything I can to get there.

What do you think of the stocks on the watch list?  Think they are undervalued?  Would you buy them?  See any new opportunities from the last 30 days?  Waiting to make a move, hoarding cash or are you buying?  Please post and I cannot wait to read what you have to say!  Thank you for coming by, as always.

-Lanny

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25 thoughts on “Lanny’s September Stock Watch List

  1. Target and T are on my watch list. I particularly want to get into T but am waiting for a 5% yield before pulling the trigger, may be greedy but so be it. Glad to see the markets coming off their highs a little but there is no telling what will happen so hopefully we can all get a solid pick this month.

    • Stefan –

      Not greedy at all, I’m the same way, show me 5% and then we’ll talk. So don’t think that you are greedy, you know what price you’d like to pay and that’s the end of the story. Great foundation stock in my book and hope the price hits for you!

      -Lanny

  2. Those are some nice stocks that your looking to acquire Lanny. I wouldn’t mind adding more to my position in TGT but I’m not sure if that’s the best use of my capital because there have been a lot of interesting opportunities popping up lately!

    • More Dividends –

      Speaking of your name, don’t we all want some more of that? TGT is really nice, I may even have bought some earlier this week at around the 3.50% yield mark! I always think that if the P/E now and going forward looks ripe, with a nice yield, great dividend history, with a huge crowd that loves to shop there – sadly/especially with those that have a Target RedCard – then awesome investment. Maybe I can own enough that it pays me back when I shop there? So many good buys coming up!

      -Lanny

  3. Great list — I’m long all those stocks!

    My September list include GD, NKE, TRV, WFC, and TGT. Like you, I still need to decide how I’m going to deploy available cash. I also like DIS, AAPL, VLO and QCOMM but I’m somewhat overweight in those already.

    Take care and happy investing!

    • Ferdi –

      Great list, big, big names there. WFC I thought would have had a different impact given the news, but it still has come down a bit, nonetheless. This is great, though, a lot of aristocrats there and great dividend increase-ers. Ahaha. And of course – I love target, and have made a stop there for a few days in a row, I’m hooked! Love the combination of coupons, app saving devices + cart wheel. More money in the pocket!

      -Lanny

  4. Some great picks. TROW gets my vote if that helps. Still not a long term fan of TGT but the other names seem OK to me. Thanks for sharing. Look forward to seeing where you deploy your cash.

    • Hut –

      Funny, funny! I may have made an investment into TROW.. stay tuned. Not liking Target? Big-time in Ohio, my friends and my girlfriend are obsessed! What don’t ya like about them? Few reasons? Just curious is all. Let’s keep making moves, I like your list as well.

      -Lanny

      • TGT has the amazing history and seems to be valued properly with an attractive yield too but I just never liked the retail sector long term. Other retailers have been very volatile as of late and it’s just an industry I’m not a fan of, unlike the consumer staples, health, industrial, etc.

        • DivHut –

          Understandable – such as walmart, kohls, macys, etc.. then? They have been volatile lately and there are the occasional hick-ups that receive “huge” public news. Appreciate the response.

          -Lanny

    • J –

      This one has garnished quite a bit of attention lately, eh? Hard not to love where they are at price-wise, current yield compared to 5 year yield and the DGR being better than a 1-2%. Not a bad move if you buy them!

      -Lanny

  5. I bought TGT and TROW on the downturn and already own T, which has had quite a run YTD. PFE is interesting and the dividend is safe but I suspect there will be a further weakening in pharma due to regulations, especially if the Democrats win in November. A definite candidate for further watching.

    • BigAl –

      Funny, those two may have been the one’s I purchased… or were they? Haha, trying to play trickery here in the comments. I was very excited that opportunities were coming back a little, something we do not traditionally see, especially in aristocrats, right? Congrats on your purchases. Agree on AT&T, they’ve had a great run YTD, and I believe are now coming back to real price ranges. Thanks again for the comment and keep on going!

      -Lanny

  6. Great list. I’m watching all 4. I did buy 40 shares of AT&T yesterday. I’m also selling puts on TGT. But if TGT falls any lower, I’m going to buy shares too. I like PII right now too. We could see it drop into the $60s in the next few weeks.

    • IH –

      Nice work scooping up some massive dividends from AT&T. PII Eh? Didn’t consider. Also – hope the puts go well, if they even get close to 3.75-4.00% yield, if that even happens – you better get some haha. Thanks for sharing. I bought 1 or 2 of the 4 above : ) Post to come later!

      -Lanny

  7. Lanny, its a great list. I already own Target. Maybe i will average down in some days. Yesterday i bought TROW ($67.3 – 1st Pos.) and some more PFE ($33.8). I love the 3.5% Yield from PFE. Today i also start a position in SJM ($136.51).

    • Walter –

      Thank you for the comment, always appreciated. Nice job on the T. Rowe and PFE!!! Man, great yield there. Also – love the OHIO based Smuckers : ) Right here south of me in Orrville (about 1 hour). Congrats, you are making moves sir!

      -Lanny

  8. Anyone have any experience using Merrill Edge? I just opened an account for the 100 free trades per month. I figured this would enable me to buy a few shares stock in different companies at a time and not have to wait until I have enough to buy 100 shares of a security to save on commissions. I’m interested in knowing about people experiences with this firm. Thanks.

  9. What do you guys think of the Proctor & Gamble spinoff of it’s beauty product division to COTY? I know other consumer staples such as J&J are more desirable right now amongst most dividend chasers, but, didn’t know if their recent announcement has changed the consumer staples field.

    • Josh,

      Great comment. I think PG is trying to really define who they are and what products they want to offer, and this (along with others), is another example of just that. I think it’s fine, if it means getting leaner, more focused and opens up more cash flow, right? I love JNJ, as well, over PG.

      -Lanny

      • It wasn’t a spin off where you get shares of the new company. I had the opportunity to swap my shares of pg for coty but chose not to do it. I’m sticking with pg and the dividend.

  10. Hi Lanny,
    Thanks for the summary – all great companies! I own WMT instead of TGT, but own the other three. Would like T to be cheaper but I’m overweight in them so not planning any more purchases at the moment.
    Best wishes,
    -DL

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