I can hardly believe that one quarter of 2015 is already in the books. Whoever coined the phrase “time flies” certainly knew what they were talking about. Looking back, the first quarter finished at pretty decent levels considering the insane volatility we have seen in stock and commodity prices. Going forward I can only guess that we’ll be seeing a lot more triple digit moves in the stock market along with 1% to 5% swings in oil and other commodity prices. Of course, the beauty of being a dividend income investor is that we can tune out a lot of the market noise and volatility and focus on what really matters to us, reliable, growing dividend income.
As in previous months it seems that many of us are facing the same high priced stock market that makes finding real and even relative values harder to come by. It seems that we are left with our standbys of finding value in energy and financial names once again with the occasional exception to be found in consumer and industrial names as well. Without sounding too much like a broken record I will continue to look at the large Canadian banks in April as continued weakness in share price and more attractive valuations along with juicer yields put The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS) and Royal Bank of Canada (RY) at the forefront of my potential buys along with Bank of Montreal (BMO) and Canadian Imperial Bank of Commerce (CM).
Of course, I realize that I must also look beyond the Canadian banks and try and find other relative bargains to invest in. With that being said I’d like to highlight some names I’m considering in April.
First up is an industrial company that has a very long and proven dividend track record but does not seem to get much attention among the dividend blogging community. I’m speaking of Dover Corporation (DOV). DOV is one of those companies that produces products that surround our everyday lives yet is often out of sight. Clamps, conveyors, connectors, specialty glass, display cases, commercial glass refrigerator and freezer doors, kitchen ventilation systems and much more lay in DOV’s core competency. DOV reminds me of Illinois Tool Works Inc. (ITW), another long term dividend payer that produces dozens of industrial items that one never gives consideration to. DOV has a current yield of 2.31% with a low payout ratio of 33.7% based on an EPS of 4.65. DOV also stands in a class of its own having raised its dividend for over 59 years consecutively. Just as impressive as its dividend raise history is the ten year annualized dividend growth rate of 11.84%. From a dividend perspective DOV seems to be firing on all cylinders. From a PE standpoint DOV has a current PE of 14.9 which is pretty much in line with its five year average. Forward PE looks more enticing at 13.3. Trading near its 52 week low range this might be an interesting pick up for my long term dividend growth portfolio.
Another name I’m considering that needs no introduction is Johnson & Johnson (JNJ). JNJ has been with me since the beginning and is currently yielding a decent 2.70% with a current PE of 17.6 which is slightly below its five year average. Forward PE for JNJ looks a lot more enticing at just 16.3. Recent weakness in share price has made JNJ a popular pick among many of the dividend bloggers last month as the stock price hit the $100 mark and piqued the interest of many long term investors, myself included.
Finally, I have been looking at another company that needs no introduction, Philip Morris International, Inc. (PM). This name has really been hot among many of the dividend bloggers and for good reason. A dividend monster with a very juicy yield, PM sports a pretty decent PE of 15.8 which is pretty much in line with its five year average but well below the S&P. Of course a 5.31% yield is nice though a high payout ratio might suggest slower dividend growth going forward.
What do you think about my April stock considerations? Are any of the names mentioned on your watch list or in your portfolio? Please let me know below.
Disclosure: Long TD, BNS, RY, JNJ, PM