The final ‘stock considerations’ of post of 2015 is finally at hand. At the beginning of the year it’s sometimes hard to imagine what the next twelve months will have in store for us as we outline our dividend income goals, future buys and more. What is certain is that no one can accurately predict the future no matter what the credential may state. All you can do with certainty is be consistent with your dividend investments, seek out relative good value and sustainable yield and not panic when the market declines and your portfolio bleeds red. Do that, have patience and everything else will fall into place. It just takes time.
As we knock on December’s door, I find it a bit challenging to determine where I’d like to deploy my fresh capital. In the late summer we experienced a total collapse of the industrial sector as Caterpillar Inc. (CAT), Emerson Electric Co. (EMR), Dover Corporation (DOV) and many more names within the sector fell dramatically offering us much better prices, value and very high yield. With their recent comeback in the last couple of months buys in the space seem less attractive. The same has occurred for other solid dividend payers when bad quarters were reported as we saw in the case of V.F. Corporation (VFC), Yum! Brands, Inc. (YUM) and Archer-Daniels-Midland Company (ADM). Of course, when names like these drop dramatically you have no choice but to nibble on those positions at discounted prices.
Similarly, in early November the health REITs such as HCP, Inc. (HCP), Welltower Inc. (HCN), Ventas, Inc. (VTR) and more were demolished only to have rebounded quite nicely towards the end of the month. I’m happy that I have been able to add to many of the names listed above and take advantage of ‘sale’ prices but looking into December I’m not really sure where to invest if market conditions pretty much stay the same, though with all the volatility we have been seeing in recent months all it takes is one small catalyst and we’ll witness a 1,000 point drop in the DOW in a snap. With that being said, I’d like to review my potential buys going into the home stretch of 2015.
Looking at my current portfolio holdings my first choice for a December buy is Archer-Daniels-Midland Company (ADM). After reporting a pretty bad quarter and guidance the stock got hammered and is my worst performing holding in my taxable account. Currently yielding a historically high 3.07% with a moderate payout ratio of 41.5% I feel compelled to nibble more on this name and 1) average down on a high quality long term dividend raiser and 2) take advantage of a historically high yield while it’s still available. The long term prospects for ADM remain strong but near term commodity price headwinds are a drag on this stock currently. Buy when others are selling? Isn’t that the best time to add to a position when things aren’t rosy.
Finally, as with my November stock considerations, I will consider adding to my positions in the health REIT sector with potential buys in HCP, Inc. (HCP), Welltower, Inc. (HCN) and Ventas, Inc. (VTR) in my IRA. I’m less inclined to add to these names as each has rebounded quite a bit since the beginning of November but I realize they still do offer good value and yield at current levels.
As always, I qualify these posts with the notion that Mr. Market may present a new buying opportunity not mentioned here. After all, we do play by his rules. I’d love to hear what you are planning to buy in December. Perhaps an investment idea left in the comments may assist me in my decision making process. Please let me know below.
Disclosure: Long CAT, EMR, DOV, VFC, YUM, ADM, HCP, HCN, VTR