April Stock Considerations

I can hardly believe that one quarter of 2015 is already in the books. Whoever coined the phrase β€œtime 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

48 thoughts on “April Stock Considerations

    • Hi DD,

      JNJ is a great buy to say the least. It seems that it rarely goes on sale. Sometimes you have to pay up for quality companies. Thanks for sharing your recent addition to your dividend portfolio.

  1. Thanks for the April considerstions DivHut. I like the Canadian bank stocks here. Bit of a pullback from them. PM is awesome value right now. So many choices. Take care and hope you pull the trigger. Cheers bud.

    • Hi DH,

      Even though many great dividend paying companies are not on sale there are still quite a few that are presenting some pretty good values these days. It’s no secret I am fond of the Canadian banks but I also would like to add to other companies besides the banks. DOV seemed like a new interesting choice for my portfolio. I wonder what other bloggers think of that one. As always, thank you for stopping by and commenting.

    • Hi FV,

      I know JNJ has been a very popular pick among many of the dividend bloggers when the price hit $100. I realize it’s a great company to invest in long term but I also would like slightly better valuations with that one. But, as I mentioned elsewhere, sometimes you always have to pay a premium for a quality company. Thank you for stopping by and commenting.

    • Hi MDP,

      Thanks for sharing your recent buys with us. The bottom line is that it seems PM, JNJ and many of the large Canadian banks are presenting some good to very good valuations and yield these days. I’m still looking for an outside opinion regarding DOV. On the surface it looks amazing yet not really sure why it isn’t getting much attention from the dividend bloggers. Thank you for sharing your thoughts.

  2. DivHut,

    PM and JNJ are well known dividend machines. DOV is one of those old hats that hangs around flying under radar from time to time. DOV has been on my watchlist since I started doing DGI and I have never bought it. For the most part I wonder why I have not – it is a consistent smart play that one day I would love to have.

    Hope you have a great April,
    – Dividend Gremlin

    • Hi DG,

      Your sentiment towards DOV is similar to mine. It’s one of those companies that is an awesome dividend payer in an industry that’s very consistent manufacturing products that many use yet, like you, I never pulled the trigger on it. If it stays near its 52 week low this month I may initiate a position in it. Glad to see I’m not alone in recognizing this hidden gem. Other under the radar names include JCI, GWW, BCR and VFC that all have great dividend histories yet don’t seem to get the attention they deserve. Thank you for stopping by and commenting.

  3. Would love to add some more JNJ if it gets down less than $98. The cheaper the better. DOV looks very interesting here and their history and headline metrics look pretty spectacular. I think PM is a really good value here because the currency headwinds will eventually turn into tailwinds. The oil majors still look good but with my income tied to that sector im trying to keep from adding. XOM looks really good here.
    JC recently posted…Dividend Update – March 2015My Profile

    • Hi JC,

      I am itching to add to my health sector stocks. JNJ, BDX, BCR, ABT, ABBV and the like but not at current valuations. Like you, I’d like to see JNJ below $100 before considering adding to that stock. As a whole the market seems very overvalued but there are quite a few gems hidden that seem to make sense. I’m trying to gather some outside opinions regarding DOV. It just seems like a company that is firing on all dividend cylinders and I think would make a great addition to any long term dividend portfolio. As you know I still don’t hold any energy positions as I’m still watching from the sidelines. Thank you for stopping by and commenting.

  4. Some great names there, DivHut. I would like to get my hands on some more JNJ shares, but waiting for them to get to a better valuation. Ive been waiting for months now,…. maybe I should just go ahead and buy it already. It seldom goes on sale.

    R2R
    Roadmap2Retire recently posted…Outlook for April 2015My Profile

    • Hi R2R,

      Judging from the comments it seems that JNJ is the go to stock of choice from the names I mentioned. Sometimes you have to just bite the bullet and initiate a position and average down if need be. JNJ is a stock that always has a premium attached and as you mentioned rarely goes on sale. Believe me, I’d love to add to that one too but I’m also waiting for better valuations. As always I appreciate your comment.

    • Hi DD,

      Good to hear you like DOV. I’m trying to get some opinions about that one from our community. From what I have seen it looks like a great addition to any long term dividend portfolio. If it stays near it’s 52 week low I may initiate a small position this month. I appreciate you stopping by and commenting.

  5. Keith,
    I like JNJ enough to have made it the largest holding with 4.4% of our portfolio. I probably won’t add more shares unless it gets ridiculously undervalued, but I was happy to add for $100 per share.

    I hope Mrs. Divhut and the new addition are doing great!
    KeithX

    • Hi KeithX,

      I wish I would have added more to my JNJ back when they had those Tylenol issues and the stock was in the $60s. Oh well, I have what I have and cannot complain but like you I’ll gladly wait for a little better pricing. I hope it comes in April, if not, I have my other stocks to go to.

      Four weeks into parenthood and myself, Mrs. DivHut and baby DivHut are all doing well. Where did the last month go!?! Thank you for asking and for sharing your JNJ thoughts.

        • Hi KeithX,

          Hindsight… right? Oh well… there will be other times to buy in I’m sure. Time flies. What else can I say. Everyone is telling me to enjoy every moment because it really goes by that fast.

  6. This year is going by so fast! The volatility of the market last month helped me initiate a position in both JNJ and PM. But, with the market still a little choppy, I may have to look into adding some shares of JNJ. I plan to have that company as one of my core holdings.

    Cheers!
    Ron recently posted…New Portfolio PageMy Profile

    • You said it. I can hardly believe one quarter of the year is gone. Such is life I guess. We always look back and marvel at where the time had gone. Happy to be a fellow shareholder with you in both JNJ and PM. The wild market swings definitely presented some great buying opportunities even though many were short lived. I think having JNJ as a core holding is a solid choice. It’s a stock that I plan to keep for a very long time. Thank you for stopping by and commenting.

    • Hi Tawcan,

      Well JNJ is a solid company to say the least and after it came down from its recent highs it started to catch our eyes. I would love to add JNJ but hope for slightly better pricing than current levels. Thank you for commenting.

  7. I am very interested in PM at the moment. I think good times to buy are when things look really bad. PM is having a tough time with the strong dollar but I think things will change for the better eventually.

    • Hi YD,

      I agree that the U.S. dollar’s eventual decline will help many companies including PM with earnings. Getting a 5%+ yield to wait is not a bad deal either. Thanks for commenting.

  8. Great stock considerations here, I would be happy to add any of them to my portfolio. I always forget about DOV, and love the way it looks on a fast graph. It’s cyclical, but the trending dividend line never even budges, it almost looks perfect! Thanks for these ideas πŸ™‚
    Ryan recently posted…Portfolio Update: March 2015My Profile

    • Hi Ryan,

      It’s funny how DOV gets overlooked by many dividend investors even though it has a stellar dividend record and earnings history going back multiple decades. It seems that riskier REITs or high yield MLPs get more attention than this quality company. I may just add a small amount of DOV just to initiate a position and see where it goes. As long as it stays near its 52 week low and has a decent PE I’ll be interested. As always I appreciate your comment.

  9. Good pick DH,

    I’m looking at PM myself. Can’t past up on a 4% consumer staple stock. I’ve looked at DOV in the past but it just won’t go down to 2.5% before I can initiate a position. Besides going into oil, mining, or industries like EMR; there is not many deals going on in the market right now.
    The Broke Dividend Investor recently posted…March ResultMy Profile

    • Hi TBDI,

      The bottom line is that every name you mention is a high quality name. PM, EMR, DOV and the like are steady dividend payers that any dividend growth portfolio should have. Sure we’d like better buys and better valuations for these names but sometimes quality demands a premium. Have you considered the Canadian banks like BNS, TD and RY? They are high yielding and trading at pretty good valuations. Thanks for stopping by and sharing your thoughts.

      • DH,

        I’ve been looking into Canadian stocks but I’m still trying to grasp the foreign income tax credit /etc. Something about $300 dollars and then determining how much taxes i owe still confuses

        • Hi TBDI,

          I know that if you hold Canadian stocks in retirement accounts such as a ROTH or IRA then no withholding taxes are taken. If those stocks are held in taxable accounts they are subject to a 15% withholding tax and you can most likely claim a foreign tax credit on the amount that was withheld. Of course, consult with a tax pro before making any moves of your own.

  10. DOV seems like something I should put on my watch list, although I’m really trying to get more healthcare in the portfolio. JNJ has been good thus far and the $100 mark is okay, but I think since I already have shares, I might look elsewhere for a better bargain. Hope your and your family are doing well!

    – HMB
    HMB recently posted…Stuffing MoneyBags – March ’15My Profile

    • Hi HMB,

      Like you, I would love to add a lot more to my healthcare holdings but many of the names I want are a little pricey from a PE standpoint. I know that these are great long term buys but sometimes it’s tough to buy stocks that are trading at certain multiples. DOV is starting to look more interesting to me and I may start a small position in it just to get my feet wet. Thanks for asking about my family. We are all doing well. Mrs. DivHut is continuing to get back to her normal self slowly but surely and baby DivHut is growing up very fast. As always I appreciate your comment.

  11. Great list of stocks with special focus on Canadian banks. I hold PM and JNJ though would like to add more to either stocks if possible. I added PM in March and have been adding JNJ as part of my weekly purchases as well. Banking is one sector that I don’t have much exposure in and would like to initiate some positions.
    Dividend Growth Journey recently posted…Portfolio update – March 2015My Profile

    • Hi DGJ,

      PM has been on the buy list of many of the dividend bloggers. After falling from its recent highs the yield and value makes it a very tempting stock to own. Keep watching those Canadian banks. I’m sure you have noticed quite a few of the dividend bloggers hold one or even all five of the large Canadian banks. I think that’s for good reason. As always I appreciate your comment.

    • Hi DG,

      That’s an interesting move to say the least. Selling BNS is definitely going against the grain as many, including myself are loading up on it and other Canadian banks. Never heard of SNC. I’ll have to take a look. Let’s see how JNJ fares this month too. It still is a tad too expensive for my taste so we’ll see if I buy into it. As always, I appreciate your comment.

    • Hi MU,

      DOV just happens to be one of those solid names that seems to belong in many dividend growth portfolios but for whatever reason doesn’t get a lot of attention. As you know I am still partial to the Canadian banks but would like to buy in other sectors as well. Thank you for sharing your thoughts.

    • Hi Geblin,

      In general we all have the same high quality names that are on our watch lists and/or in our portfolios. I’m really considering a bit of DOV especially after that nice decline last week. Thank you for stopping by and commenting.

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