August 2015 Stock Considerations

With the month of July winding down it’s time, once again, to look forward towards the next month and decide which dividend stocks deserve my fresh capital. Looking back at the month of July my buys were more measured compared to my eight June buys. I knew that I could not keep that fervent buy pace up into July, but nevertheless, I managed to make two buys in excellent dividend paying companies that have seen some dramatic price declines in the past month, Dover Corporation (DOV) and The Toronto-Dominion Bank (TD). Going into August I maintain my decision to not add any new positions to my portfolio rather focus on my current holdings and potentially average down my buy price on some great names that have fallen out of favor as of late. With that being said, let’s take a look at some of my August stock considerations.

 

First on my list is Caterpillar Inc. (CAT). A dividend stalwart that needs no introduction, CAT has fallen dramatically out of favor as troubles in China and the energy sector weigh on this cyclical giant. With a current dividend yield sitting around 4% this industrial name is hard to ignore.

 

In similar vein, another industrial giant that has been taken to the wood chipper and has caught my eye is Emerson Electric Co. (EMR). Another dividend β€œgiant” with aristocrat status, EMR is sitting near 52 week lows and also sports a relatively high dividend yield approaching 4%.

 

Finally, Dover Corporation (DOV) is another August consideration of mine. A company with a very long history of dividend raises is no doubt feeling a bit of pinch because of lower oil prices as demand for their oil and gas services are weakening in the near term. While not the highest yielding of the bunch, DOV looks a lot more attractive in recent months as valuation is coming more in line with present cash flow.

 

Of course, no month of potential stock picks would be complete without the mention of my three favorite Canadian banks stocks, The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS) and Royal Bank of Canada (RY). It seems that all five of the large Canadian banks have seen substantial declines in July driving the current yield for all three of these stocks to well over 4%, a yield which is hard to ignore especially since it’s well covered by present cash flow. Of course, I always qualify these stock considerations with the premise that Mr. Market may have other plans for my portfolio but more often than not I stick with my list each month.

 

What do you think about my August stock considerations? Are any of the names mentioned on your potential buy list as well? Please let me know below.

 

Disclosure: Long CAT, EMR, DOV, TD, BNS, RY

55 thoughts on “August 2015 Stock Considerations

  1. Hi Divhut,

    Nice considerations again. At first glance, it looks like CAT would be my pick out of these three.
    Recently I bought some shares of KMI, so DOV would mean too much Energy in my portfolio.

    EMR looks good as well, but their growth numbers are pretty low at 6~7% over the past decade.
    As my watchlist looks like a candy store in terms of so many stocks trading close to their 52-week low value, I sure think theres a better deal out there!

    Good luck!
    DfS
    Dividend for Starters recently posted…Recent buy – July 2015 (2)My Profile

    • Hi DfS,

      July has proven to be a good month in terms of giving us a greater stock selections with markets in a panic over commodity prices, China, Greece and more. Of course, we can’t forget the constant chatter of Fed interest rate hikes. There’s no shortage of potential negative news that can give us better buying opportunities. I’m still liking CAT and EMR at these low levels. Though the growth of EMR may not be too impressive over the last decade, their dividend consistency over a multi-decade term is. Here’s to better buying opportunities. Thanks for your comment.

  2. I’m liking CAT. I’ve always been drawn to the likes of it (DE). Not much room for industry disruption when you make bulldozers with operating weights of 49 tons and machines that bores holes through the earth. When I was a kid, my favorite toy was my yellow CAT truck. It owned all the other toys because it had a big black blade in the front.
    Dylan recently posted…Our version of frugalMy Profile

    • Hi Dylan,

      CAT has been making the rounds among the dividend bloggers as of late and for good reason. This cyclical giant has performed very well over multiple decades in terms of growth and dividend raises and with prices moving much lower in recent weeks, giving us a yield in the 4% range, it’s a stock that is hard to ignore. While there are several players in the heavy machinery game, CAT does seem to stand out as one of the main businesses that does the real heavy lifting (and digging).

      I had a metal CAT forklift as kid. I still remember that toy fondly. Thank you for stopping by and commenting.

    • Hi DD,

      One thing a new investor to CAT or other industrial names must realize is that it is a cyclical business going from economic high times to economic low times every several years. The business might not look too pretty during downturns which is when their stock price and yield might look the most attractive. I have held CAT for about eight years with no intention of selling going forward. If anything, these dips just entice me to add to my position. As a long term investment CAT should perform well. It’s history definitely suggests the same. As always, I appreciate your comment.

  3. Keith,
    Worries over China and an economic slowdown have the industrials selling at what could be bargain prices. CAT appears to also be looking at some reductions due to a switch away from coal to natural gas; coal mining equipment being one of CAT’s products. EMR is facing the same global economic headwinds. If you have a long term horizon, and don’t mind seeing further price erosion in the short term, both of these stocks look appealing. Note that Morningstar has a buy rating (4 stars with fair value of $65) on EMR, but only a hold (3 stars with fair value of $79) on CAT. I do not have an opinion on DOV.

    Good luck with the Canuck banks. They do look attractive at these prices.
    Best wishes,
    Keith

    • Hi KeithX,

      Worries, worries, worries. Right? No matter how well the economy is doing, or not there will always be negative headlines. I remember in April and May of 2009 headlines asking if the market recovery is real or just a ‘dead cat bounce.’ I would be kicking myself if I had not been investing all that time. All these worries and headlines do is create volatility which simply gives us better buying prices and higher yield. CAT and other industrial names are no exception. The key is to look long term as you stated and not worry over near term price declines. Personally, if a dividend is safe and continues to be paid quarterly, I’m a happy camper. I’ll be looking at those names for myself and potentially baby DivHut’s portfolio too. As always, the Canadian banks entice me as well. Are you holding any Canadian banks? Thank you for stopping by and commenting.

  4. I am also looking to add CAT, EMR, DOV if the prices remain good. I missed the dip the last couple of days due to my lack of capital, but I should get some fresh dough in soon.
    Thanks for sharing your ideas!
    D4s
    Div4son recently posted…My 3 QuestionsMy Profile

    • Hi D4s,

      Market timing is never an exact science. Prices are still depressed relative to a few weeks ago and better buying opportunities in CAT, EMR and DOV remain today. No one ever buys at the exact low nor sells at the exact high. The reality of being a dividend growth investor though is making sure our quarterly payments are made and growing. Thank you for commenting.

    • Hi R2R,

      With China in the news a lot and their markets in turmoil along with depressed commodity prices across the board, people are questioning the need for many industrial products and services thus, the beat down. It’s kind of refreshing to look at other sectors besides finance and energy. I’m still waiting for a consumer staples meltdown. I sure would love to add to my KMB, PG, CL, CLX, UL, PEP, KO and many more. As always, I appreciate your comment.

  5. Great finds!

    Man, I wish I could have a lot more free capital now to average with industrial, railroad, oil companies right now. I’m looking at some real estate, I might even have to sell some stock to fund the down payment.

    • Hi vivianne,

      The need for fresh capital is never ending. I find it refreshing that among our community we want more money to invest. Not buy toys or waste as others do. Whether it’s stocks or real estate you are investing in your future and not sinking your money into a lease or fancy wheels on a car or some other nonsense. How is the real estate market where you live? I know in Canada it’s pretty crazy now. Thank you for stopping by and commenting.

      • It’s been steadily picking up. My house might be back to where I started. They didn’t take my full price offer after having agree to it. (I had a bad realtor who didn’t nail the paper work down). If I was going to move, I’d move to a brand new house, or the house that I want to be in for the rest of my life. That’s how you invest in real estate. πŸ™‚

        • Hi vivianne,

          Thanks for the update. It’s always nice to get a first hand assessment rather than just reading about it online. I like your attitude about home ownership. Thanks for sharing.

    • Hi liveoffmydividends,

      It’s been a long time since CAT went on sale, and the whole industrial sector slowdown because of China or Europe worries is hurting many in the sector. I have to say that when a CAT yield is around the 4% mark it will get attention. Thank you for stopping by.

    • Hi Tawcan,

      I’d say that I stick to my lists about 99% of the time. Sure markets can and do change on a daily basis but it’s always nice having a plan for potential buys in the coming month. As I commented earlier, it’s nice to be able to look at some industrial names for a change instead of just energy and financial plays. Thank you for stopping by and commenting.

    • Hi Ashley,

      I agree with you that every name I have chosen does have great long term prospects which is really my time line. I feel very comfortable weathering any near term price decline or headline noise that can and will affect stock prices negatively. I guess that’s the bottom line with any stock pick you ultimately make. You have to be comfortable with it through thick and thin. Thank you for stopping by and commenting.

    • Hi Patrick,

      Thanks for sharing your recent buy of BNS. The Canadian banks have all seen a major decline in July and quite honestly those yields are looking very tempting. It is nice though that we have the option of looking at the industrial sector too going forward. Names like, CAT and EMR have really come down a lot in recent weeks. Thanks for sharing your thoughts.

    • Hi ARB,

      Ain’t that the truth. Markets are cheap, markets are expensive. There’s always something good to buy. Both EMR and TD have their own respective headwinds in the hear term such as reduced industrial demand, China slowdown and depressed commodity prices in the case of EMR and a weakened currency, low oil and a lowering of interest rates for TD. I’m looking at both going into August. Thank you for sharing your thoughts.

    • Hi BSR,

      It’s always great when you can buy solid companies at a “sale” price. Every stock I mentioned looks good to me but I’ll have to choose a select few as capital allows. No doubt the industrial sector is facing some near term headwinds which should bode well better stock prices. As always, I appreciate your comment.

  6. Awesome List Divhut. I’m still a fan of the banks here and would love to add to BNS / TD / RY / BMO / CM. LoL… I know I know, too many huh. Dang. Just love the yield on them at the moment. Who needs junk? These quality companies will be on my purchase in August as well. Thanks for sharing and hope to hear your purchases shortly. Take care.
    Dividend Hustler recently posted…2015 Forwards Dividend Update. Milestone!My Profile

    • Hi DH,

      You don’t have to tell me twice about the Canadian banks. I am getting a bit heavy on BNS though I could add to my TD and RY to balance things out. There’s no denying that relatively high yield each of them are sporting these days. In a couple days a new month will be upon us and we’ll see where I ultimately end up deploying my fresh capital. Thank you for your comment.

    • Hi R2R,

      The Canadian banks are looking extra enticing going into August. July has been a brutal month for the sector and has driven up the yields pretty nicely there. Of course, the industrials are showing some signs of weakness as well which is why I included the names CAT, EMR and DOV as well. All three have extensive dividend histories and all are facing near term headwinds because of depressed commodity prices as well as cracks in the Chinese and European economies. Thank you for stopping by and commenting.

    • Hi Adam,

      I like CAT too. It’s been years since I added to my holdings and this recent drop might be a good time to finally pick up more shares at much better values as well as yield. EMR is another great industrial company that operates in many different sectors. Similar to an ITW that produces many consumer goods but also “behind the scenes” products that we rely upon each day. EMR like CAT has an extensive dividend distribution history. Thank you for for stopping by and sharing your thoughts.

  7. DivHut,

    I like that entire list. Question for me is which Canadian bank to I like more, and which direction I will sent my money next month. I tell you though with railroads and CAT being listed so nicely of late, they are earning the most attention.

    – Gremlin

    • Hi DG,

      Seems like the Canadian banks have been looking “cheap” for a while but the industrial names like CAT, EMR and DOV are only now looking more attractive. While the Canadian banks all have a nice current yield you have to admit that seeing CAT at around 4% looks just as enticing. No doubt, that’s why we have been seeing a lot of CAT buys among our dividend community. Thank you for stopping by and commenting.

    • Hi GRB,

      Thanks for sharing some of your potential buys next month. We used to do business with Rogers for quite a few years enabling their video on their online portal. No Canadian banks for you? As always, I appreciate your comment.

  8. Keith,

    Nice picks here. I continue to like many industrials that have fallen quite heavily over the last few months. Just recently added more EMR for the first time in years. UTX is looking attractive once more. And I’m likely to average down on CAT after the recent drop. Loving the discounts. πŸ™‚

    Have fun shopping over there!

    Best regards.
    Dividend Mantra recently posted…Recent BuyMy Profile

    • Hi DM,

      It certainly is refreshing to look at another sector for potential buys besides the financial or energy sector. The whole industrial complex seems to have collapsed in July because of depressed commodity prices, China, Europe and the like. Why not pick up some quality names on sale. The higher yield doesn’t hurt either. Thank you for stopping by and commenting.

  9. Hey DH,
    Still really like TD from your list – heavily leaning towards adding them in August. I still need to add a REIT ((wasn’t able to this month)) but it’s on the list. Saw Jason above picked up EMR – can’t believe they’re at 50+ years of steady dividend payments (so many symbols to add to the watch list).
    Rich
    Redeemed Finance recently posted…Recent Buy – Wendys and PaneraMy Profile

    • Hi RF,

      I think many might think it’s getting old for me to keep mentioning my desire to add to my Canadian bank positions but with the current drop in price, value and extra high covered yield, how can I not consider TD, BNS or RY month and after month? July has given us opportunities in the industrial sector too which is why I am looking at EMR, CAT and DOV as well. We’ll see how things start out in August. As always, I appreciate your comment.

  10. I’m with you on CAT and EMR, although both would be new positions to me. CAT slightly in the lead for me as I’m too heavy in energy. I’m not sure what to think of the oil-impacted stock. I think many div investors are exposed to oil prices. Hence I like your finance acquisitions, I just added RY earlier in the month. At least the Greece and Iran situations are more stable now. What’s gonna hit us in August ? Good luck!
    Active Passive recently posted…First Ever July DividendMy Profile

    • Hi AP,

      As long as the Canadian banks are still depressed I’ll most likely be buying. I like the yield, the valuation and their future prospects once commodity prices start to rise and one day interest rates as well. Of course, industrial plays are looking good too with talk of a China slowdown and European woes which is why EMR, CAT and DOV are interesting. Thank you for stopping by and commenting.

    • Hi DD,

      Can’t deny the attractive price of EMR these days with that pretty hefty yield. Good buy for Bert. We’ll see how August opens up for us. No doubt July has given us some great new buying opportunities. Thank you for stopping by and commenting.

  11. I like the list. All of your stocks are on my shortlist. If only I had more money :-(. I need to ay for the first semester of my daughters college so my buying power just took a big hit. Thanks for sharing your list.

    • Hi DD,

      It’s kind of nice to see some industrial names sporting much better prices/value and yield. Seems like the last year or so all we could do was find value in the energy and finance sector. Keep saving whatever you can for future buys. It’s OK to not make a buy every month. Education sounds like a priority now for your family which is commendable. Thank you for commenting.

    • Hi DH,

      I’ll be sharing my recent buy this week. Been a few weeks since my last buy. I went crazy in June with eight separate buys and tapered July with two and looks like August will have one or two as well. I’m still a fan of the Canadian banks and those industrial plays I mentioned too. UNP seems to be the most popular rail stock among the ones you mention. Thanks for stopping by and sharing your thoughts.

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