April 2017 Stock Considerations

With a new month quickly approaching it is time, once again, to lay out my potential stock picks and decide where I’d like to deploy my fresh capital for the month of April. As was the case last month, I am finding it increasingly difficult to pick a clear cut direction of where I want to invest. It’s an old song, as many of you are already familiar with the lack of good value and yield that exists out there. Nevertheless, there are still some stocks offering ‘relative’ good value and decent yield which is where I ultimately will invest.

 

This month was a very unique month for me as I initiated two new positions in my portfolio. In general, I have been investing in stocks I already hold in my portfolio with new positions coming into the mix very infrequently. Following my March 2017 Stock Considerations and February 2017 Stock Considerations the two new positions I added to my portfolio included LTC Properties, Inc. (LTC) and Hormel Foods Corporation (HRL). I guess initiating two new positions in one month essentially supports the notion that I was having a difficult time finding good places to invest. With that being said I’d like to share my April stock considerations.

 

First up is a name I recently bought and am considering once again, Johnson Controls International plc (JCI). JCI is a solid long term dividend paying industrial that has been lagging a bit post it’s Adient plc (ADNT) spin off and continues to look decent to me at current levels.

 

Similarly, several other dividend stalwarts seem to have been falling on harder times as of late as their stock prices declined considerably driving their yields to attractive levels once again. Those names include, in no particular order, Hormel Foods Corporation (HRL), T. Rowe Price Group, Inc. (TROW) and General Mills, Inc. (GIS). Seeing HRL with a yield around 2% and TROW and GIS well over 3% continues to entice me.

 

Finally, I am looking at the health REITs once again with HCP, Inc. (HCP) and Care Capital Properties, Inc. (CCP) my top picks for the start of April. As always, Mr. Market has a way of changing his mind on a dime and other names not mentioned here might suddenly become attractive to me. Of course, I have a very good track record of sticking with my stock considerations as my buys are always foreshadowed in these posts.

 

What do you think about my stock picks going into April? Are any of the names above on your potential buy list too? Please let me know below.

 

Disclosure: Long LTC, HRL, JCI, ADNT, TROW, GIS, HCP, CCP

56 thoughts on “April 2017 Stock Considerations

    • Hi DGI,

      Like you, I think HRL is a good buy at $34 or below. For me, it’s all about seeing that yield at 2% or more. TROW is another solid dividend paying stock but I don’t see myself making it a large position ever in my portfolio. For now, I have a token investment in that stock. I question the long term prospects of the industry they operate in. Regarding GIS, I actually like it at $60 or below. The food staples continue to struggle as of late giving us much better buying opportunities in a traditionally expensive sector by value. Thank you for stopping by and commenting.

    • Hi MSF,

      Like you, I plan to ease into HRL. I don’t plan it to be a large position in my portfolio but will happily increase my position should I see that yield at 2% or more. As always, I appreciate your comment.

  1. Nice considerations. I picked up some HRL earlier this week and already own GIS. I was also looking at TROW but only have so much capital. Ideally, I would like to pick up some more REIT since there are a few at reasonable levels lately. O is starting to look good but I still feel it is overvalued. Looking forward to seeing what you choose for your next buy.
    Dividend Daze recently posted…Recent Buy – Hormel Foods (HRL)My Profile

    • Hi DD,

      The REITs have started to tick up a bit in recent days but still offer pretty good value and yield. I think the play with REITs is ‘buy when the Fed/financial talking heads mention interest rates,’ as the whole sector always has a knee jerk reaction lower and then recovers as we are seeing now. Going into April I think it’s the food staples that are looking interesting as SJM, K, HRL, GIS and even CAG are generally weaker. I am excited to see how April unfolds and will, no doubt, share my recent stock purchase(s) with you. Thank you for stopping by and commenting.

    • Hi DD,

      TSN does look very appealing from a dividend growth perspective. It’s been ‘super boosted’ the last several years and with a very low payout ratio as well. It would be nice to see a slightly higher current yield though. I did mention TSN back in 2014 when I did a round up called, “Dividends: The Breakfast Of Champions,” but have not heard a peep about TSN from any of our fellow investing peers. I wonder why. Are you considering them in the near term? Thank you for sharing your thoughts.

  2. Hut,

    HRL and TROW are high on my list, and I am about to make another big purchase. However, also at the top I have AFL, TRV, and AMGN. I know AMGN and AFL make the rounds on lots of sites, but TRV has been quiet. I am starting to really eye up companies with low payouts, and good increases. Still, I admit it is tempting to add QCOM as well.

    Thanks for the watchlist,
    Spring Weather Gremlin
    Dividend Gremlin recently posted…Loyal3 Buys, March 2017My Profile

    • Hi DG,

      Finding those sustainable dividends is always important for us income oriented investors. You mention many great names too with some on my long term watch list but still not in my portfolio. Names like AMGN and TRV look interesting to me but I think I’ll simply be adding to my current holdings in April. AFL has my seal of approval. It’s been in my portfolio a long time and it my largest holding overall. As always, I appreciate your comment.

    • Hi tx,

      Talk about an unloved health REIT and no doubt you’ll hear mention of HCP. That’s exactly why I am considering adding to it in April. Thank you for commenting.

    • Hi FV,

      ABBV is one of my larger positions in my portfolio and I wouldn’t mind adding even more but not at current levels. Ideally, I’d like to see it at $60 or under before considering it. Thank you for stopping by and commenting.

    • Hi MD,

      You just know KHC is putting the feelers out there to buy some “growth.” I like what HRL and GIS are doing shifting towards more organic/health options by making strategic acquisitions in the space. The health REITs are my favorite REITs to invest in long term. CCP entered my portfolio via the VTR spin off and I have been adding to that name slowly. I don’t plan on making it a large position. Thank you for sharing your thoughts.

    • Hi IH,

      HRL has really become the name to buy in recent weeks as that yield approached 2%. The food staples as a group have really been hurting and are starting to offer some better values and yields not seen in a while. As always, I appreciate your comment.

    • Hi tbdi,

      Always comforting to be in good company. I’m with you. I like the consumer staples and the food staples specifically have really been hammered as of late. It will be interesting to see how April unfolds. Thank you for commenting.

    • Hi BHL,

      I always enjoy sharing these road maps for potential buys. I think many of our fellow investors are considering similar stocks. HRL has really been mentioned a lot as of late. Thank you for stopping by and commenting.

  3. I have had TROW on my radar for likely a few years, finally dove in today, at $67.90. While there are certainly risks with it they seem well positioned to minimize that risk relative to their peers. The dividend is good and I trust will increase consistently over time.

    • Hi Ashley,

      TROW is a name that I’m kind of lukewarm on long term. While it’s in a strong position to continue paying its dividend and raising it as well, I fear that TROW might become irrelevant way down the road. It’s a very, very small part of my portfolio so I may just hold on for now and maybe add to it if it continues to drop. In other words, TROW really won’t be able to impact my portfolio if it really falls on hard times. Thank you for sharing your thoughts.

      • Interesting comments about TROW. What is your thought process on “way down the road” in terms of years. Are you thinking 5-10 years or more like 20+?

        • Hi Ashley,

          Clearly, I do not have a crystal ball so it’s really anyone’s guess but that being said I am thinking 5-10 years just seeing how tech is disrupting the entire finance industry these days. As I commented earlier, I still own a small piece of TROW and will continue to hold and maybe add to it should prices fall further. While TROW continues to be assaulted by many fintech upstarts it’s still in a very strong financial position.

  4. I think the health reits are a solid buy. In Canada I’ve been keeping my eye on extendicare which pulled back 5% today because the chairman of the board decided to step down. (hes 76) He is still going to be part of the board. Seems overblown just didn’t have a stockpile sitting to take advantage of it. The baby boomers are ageing, those industries will do fantastic!

    • Hi passivecanadianincome,

      I have been looking at the health REITs for at least the last three months as the whole sector was beaten down pretty hard because of uncertainty regarding how the government will treat health care in general and, of course, the rising interest rate environment. I have been looking at HCP, LTC, CCP and others and like the long term prospects of the sector as a whole. I’ll continue to pay attention as long as it remains unloved. Thank you for commenting.

  5. Bought TROW a few months ago and love the company! Lanny introduced me to Hormel/Tyson and I am very intrigued by the companies. Some great companies here on your list, keep us updated with what you select.

    Thanks!

    Bert

    • Hi DD,

      TROW does look good from almost every financial angle except the fact that their business model might be in jeopardy long term. I own it, and it is a very small part of my portfolio and would only feel comfortable increasing my stake if the shares drop much lower than current levels. I much prefer the consumer staples like HRL long term. Somehow, I don’t see their business model being disrupted. As always, I appreciate your comment.

  6. I invest in the index and usually avoid individual stocks, but I’d say that energy is definitely my favorite sector right now. After the crash of 2015-2016, it seems that oil has stabilized around the $50 mark. As inflation comes in the next few years and oil prices go up, I think energy stocks will do well.

    • Hi MH,

      A very hotly debated topic among our investing peers… invest in (index) funds or individual stocks. Nothing wrong with doing one or the other or some combination of both. I still do not own any energy in my long term portfolios but know that many dividend growth investors have exposure to the sector. It’s just a little too volatile for me. Of course, the time to buy into the space was in early 2016 when no one wanted to touch anything related to energy. The best time to buy anything is when no one else wants to. You do make a good case for oil prices to rise going forward though. Thank you for sharing your thoughts.

    • Hi DFG,

      TROW seems to be fairly popular these days among our peers as it’s come down the last three months or so giving us better prices and yield. I own a very small amount of TROW and don’t think I’ll ever make it a large position in my portfolio. I guess I’m thinking about how relevant TROW will be years down the road. As always, I appreciate your comment.

  7. DH,
    I agree about Hormel. I have thought about this a few times over the last year or two but haven’t pulled the trigger. It is a solid company. The yield is climbing to a better level than in years past. I also like JCI but their debt is a little high for my liking. Good luck with your purchases.

    -Brian
    Brian recently posted…March Dividends 2017 – Solid Month !My Profile

    • Hi Brian,

      I’ve had HRL on my watch list forever and only last month initiated a position. I like it long term as I think they are making the right moves today to adapt to the changing consumer tastes. As long as the yield remains around +/- 2% I’ll consider adding. Thank you for sharing your thoughts about HRL and JCI.

  8. Good options. Here are the stocks I´m looking at now, and i find most of these stocks undervalued or fairly priced

    – OHI
    – TGT
    – CMP
    – WPC
    – TROW
    – IBM
    – GIS
    – HRL
    – HCN
    – TEVA (mostly dividend)

    Probably If one look at the nordic contries, Hennes & Mauritz AB, H & M ser. B (HM B) is struggeling these days. I bought some stocks last week.

    Probably more stocks to be considered, but it´s better than nothing 😀

    • Hi Stockles,

      Nice to see several names in common that we are both looking to buy this month. I know we tend complain about not finding any good places to invest but there are some acceptable places to add fresh capital even when the market is near all time highs. Thank you for commenting.

    • Hi Stockles,

      Yes, I also like CCP. After the spin off from VTR not many of our fellow investors have been buying into this name. I added a bit last month and will continue to watch if the health REITs remain beaten down.

    • Hi Stockles,

      Never heard of SFL before. Without looking into this name further just seeing that yield raises red flags for me. I see Ocean Yield has a yield around 10%. Thanks for sharing!

  9. DivHut,

    HCP is definitely on my list. I was concerned about adding it because I already have Realty Income and my understanding is that the taxes you pay on dividends are higher on REITs. Perhaps more importantly, I just started investing in both JNJ and ABBVIE, and didn’t want to invest heavily in just one sector.

    I’m also considering HRL. Out of curiosity, how do you determine when a stock is undervalued?
    Data Lore recently posted…April 2017 Major Update: Dividend Portfolio Freedom FundMy Profile

    • Hi DL,

      HCP is a health REIT that continues to be unloved which is why I am still considering it in April. I recently added to my CCP and initiated a position in LTC last month which just affirms my belief in the long term prospects of the health REITs. Of course, I “spread my bets” just in case. REITs technically do not pay qualified dividends rather “distributions” which are taxed as regular income instead of dividend tax rates. That is why I hold all my REITs in an IRA account to defer any taxes on distributions that come in. I love both JNJ and ABBV long term and think they belong in any long term DGI portfolio.

      Valuation, while based on actual numbers, is very subjective. For me, I look at basic PE ratios and compare to historic PEs for the company as well as how it relates to peers and the S&P. Of course, PB is another value metric to look for as well as whether or not a company is growing in terms of revenue/net income. Here is an interesting clip about valuation from CNBC. Thank you for commenting.

    • Hi DG,

      Judging by the comments it looks like many of us are looking at similar names. Like you, I also would like a clearer direction in the market, whether up or down, instead of this sideways movement we have been having. I guess the beauty of a market going nowhere is the fact that our dividends continue to roll in. Thank you for stopping by and commenting.

    • Hi DC,

      GIS continues to look beaten down at current levels and is starting to offer us much better yields. I’ll admit, it’s still an expensive stock but a much better looking stock when compared to just a few months ago. In fact, many of the food staples are looking a lot better these days on a relative basis. Just look at HRL. Thank you for sharing your thoughts.

  10. HRL is one that I’ll definitely have to look closer at. Haven’t heard much about it until recently. Another dividend payer that I just purchased is Target (TGT). All the analysts seem to hate them now, but they have more then enough cash flow to easily cover their dividend, which ~4.5% right now!

    Scott
    Two Investing recently posted…New tastyworks Options Trading PlatformMy Profile

    • Hi TI,

      HRL has been quite popular the last few weeks among our fellow bloggers. After they missed on earnings their price dropped bringing the yield to about 2% which is historically high for HRL. While not “super cheap” they are trading at much better levels than in recent months which is why it’s looking more attractive. I guess TGT with a 4.5% yield looks even more attractive 🙂 As always, I appreciate your comment.

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