As we head into the home stretch of 2014 a great opportunity is seemingly handed to us for the month of December. That opportunity comes in the form of continued weakness in the oil and materials sector as depressed commodity prices have given rise to a sea of great dividend income opportunities for those willing to take them. While I’m not currently invested in energy or material stocks I can’t help but feel strongly compelled to at least consider some new names for my dividend income portfolio. For those that have been following DivHut for the past several months you already know that I do not add new positions to my portfolio with ease. In fact, 2014 was the first time I added four new names to my portfolio since I began investing in this manner in 2007. Those new names included, The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS), Royal Bank of Canada (RY) and Unilever plc (UL). While I would much rather continue to add to my current holdings, I must, at least, consider adding some new names at these new great valuations. With that being said, let me highlight some of my December stock considerations.
The first name that comes to mind as a potential stock purchase is BHP Billiton plc (BBL). A well diversified mining company that is exceedingly popular among many of the dividend growth bloggers these days as depressed commodity prices have brought this stock down to its 52 week low while sporting a high 4.90% yield with an attractive PE of 9.12.
Joining BBL, I am looking at many oil patch stocks as well which include, BP p.l.c. (BP), TOTAL S.A. (TOT) and ConocoPhillips (COP). While CVX and XOM also look appealing to me I’ll admit that yield is driving me to consider the first names I mentioned.
Of course, my conservative roots might take hold and I’ll simply add to my current stock holdings in my portfolio. There are still many great names that I would love to add additional shares to but have really run away in the past couple of months. Foremost, were Becton, Dickinson and Company (BDX) and V.F. Corporation (VFC). Share prices have really run ahead of earnings for these two companies in just the last month and I’m just not willing to pay up for that kind of valuation. I guess time will tell where I’ll ultimately deploy my fresh capital. With such tremendous volatility in the market since October no one really knows where the next opportunity will come from.
What are some of your stock considerations for December? Are any of the names on my current list on yours as well? Please let me know below.
Disclosure: Long BNS, TD, RY, UL, VFC, BDX
DivHut,
I see we share the same thinking when it comes to the energy sector. I would much rather sit on the sidelines for now and invest into other sectors. I don’t like the volatility and would rather take a conservative approach to finish off the year. My stock considerations include NGG, DEO, and BNS at the moment. I will provide a post this week with what I decide to invest as I am not too sure what my plan will be for the week.
Hi DM,
Glad to see I’m not the only soul out there that isn’t jumping in to energy at this time. I really like the values being offered these days but the volatility will keep me up at night, that’s for sure. I’d rather buy on the way up at lower valuations than on the way down if possible. Your picks are all solid looking. I have DEO and BNS in my portfolio and have added more BNS in November. Look forward to see what you’ll be investing in. Thanks for commenting.
I’ve bought BBL, BP, and XOM on the recent dips. Will add to my position in CVX if prices continue to go down.
Love BDX, but I bought at much lower prices. Don’t own VFC (or NKE) because they are over priced, but both are great companies.
Good luck,
KeithX
Hi KeithX,
Basically, anything commodity related are the go to picks of the day. I’m still on the sidelines with energy but am watching closely. I may start a small position in December just to get my feet wet unless some of my current holdings are pulling me more. Regarding my VFC and BDX wishes, I agree, that they are too rich at current prices though I would really love to add more to those holdings. We’ll see what December brings. Thanks for stopping by.
i agree with everything in this article and have a similar investing philosophy with one exception or warning. ConocoPhillips, since it’s spin off of Phillips 66, is now an upstream oil and gas company while the others cited were integrated oil companies. Upstream oil companies are the ones falling with the price of oil so I am putting money only into the integrated companies at this time.
Everything else I agree with totally. Best wishes.
Respectfully,
Dennis McCain
Hi Dennis McCain,
Thank you for bringing this distinction to my attention regarding COP. I’m still not ready to jump into the sector quite yet and all names mentioned are merely on my watch list for now. For my personal investing taste I need a little less volatility for underlying commodity prices. I don’t mean to sound negative on the sector and I can fully see where the valuations are standing these days, I just also believe in capital preservation as well even being a long term dividend growth investor. Thank you for commenting.
Keith,
I bought BP, RDS and Total during recent dips. With the current oil price decline, I’m itching to add more. At this point in time I’d like to diversify more into other industries, but if prices keep going down, I’ll probably jump in again.
Also, keep in mind that France keeps a 30 or 15% withholdings tax on Total dividends. I don’t know if you can recover them, but it might be worthwile to take that into consideration when choosing companies.
Best wishes,
NMW
No More Waffles recently posted…Savings Rate for November 2014
Hi NMW,
I have been following all the dividend blogs very closely the past week watching where everyone is deploying cash and energy is the sector of choice. All three of your picks are very solid especially after the recent drop in price from the summer highs. I remember seeing BP over $50 and TOT over $70 just a few months ago. I’ll still be watching those names going forward but I have to admit those yields are really getting me excited.
I know TOT does have a withholding tax but in taxable U.S. accounts it does come back as a foreign tax credit. Even with the withholding TOT is still a very high yielding stock. Thank you for stopping by and commenting.
I would love BBL but they got double whammied with lower iron prices and now lower oil. I’ll wait till they hit $40… 20% lower then right now as their next year EPS estimates are looking grim. You are correct that BBL is the popular stock in the community. I will disagree with the majority though that this is a dip. The buying opportunity is coming just not quite yet.
Hi Pullingmyselfup,
I know I may get called as a “stock market timer” by not jumping in at these levels regarding any of the energy names or BBL but I happen to feel that jumping in now might be a bit premature. I realize a lot of us are buying for years or decades into the future and by not deploying cash immediately we are missing out on dividend compounding time. I’m OK with that fact. I’d rather wait to buy and even buy on a price rise than trying to constantly average down on a losing position. Thanks for stopping by and commenting.
The div community is too quick to write off market timing.
Market timing all the time? Now its too hard.
Being selective with it to give an edge? Absolutely.
Looking at BBL its been dropping since August without stopping. Even Oct was slowing down but still dropping. At the least one should wait for “A” pullback. Will it be “The” reversal? Chances are no but its better then it dropping.
Hi Pullingmyselfup,
Well said. I don’t believe in market timing in the traditional definition but I would consider myself as a selective timer.
Some strong names there….and obv lots of good finds in the oil sector. It is a great time to build a good energy portfolio for folks starting out…or for seasoned investors – refortify the investment.
R2R
Roadmap2Retire recently posted…Qualcomm’s Vision For the Future
Hi R2R,
The names mentioned in the oil patch are definitely starting to look very compelling for both new investors and ones that already have positions in them. I just think better buying opportunities may come down the road which is why these names are on my watch list for December. While adding some new energy names might be nice for my portfolio I’d rather wait to at least see some price stabilization first. Thanks for sharing your thoughts.
Well, the oil companies are looking appealing to me. I have my eye on XOM, COP, HP, NOV, and CVX (adding rather than new position here). Outside of oil, I like BBL and PCP. I suspect that my December purchase will be equal parts BBL and NOV, but we shall see. I agree with sentiment that oil will get worse before getting better, so I just hope it lasts long enough that I get to add to all 5 of my oil choices!
DividendDeveloper recently posted…Income/Expenses Report – 11/2014
Hi DD,
The question we are all asking, while prices of oil are tumbling, is when the bottom will hit. I know that valuations and current yields are really looking very appealing at this time which is why so many have already jumped aboard and why these names are now on my watch list too. The names you mention are all solid picks no matter where oil is and the HP pick is a name that I feel doesn’t get the attention it deserves. Not really sure why. I’m kind of waiting to see how December is starting out before jumping into the sector. Thanks for stopping by and commenting.
Big oil and Canadian banks are lookig good to me right now. If Oil drops below $60 some small players might get forced to close down so quality big names look like solid bet. TSX looks oversold with energy draggin it down making the banks look good.
Asset Grinder recently posted…November 2014 Dividend , Options , Adsense and Interest monthly report
Hi AG,
Well I’m on board with the large Canadian banks. I have been adding TD, BNS and RY for the last several months to my portfolio and plan to keep them as long term holdings. I’m still very much on the sidelines regarding the oil patch stocks but have added several to my watch list as those yields are really tempting me. Thanks for commenting.
DivHut,
Energy stocks are getting very popular nowadays. Their valuation are getting lower and lower and their entry yield going higher although we probably still havent seen it bottom down, right now maybe a good time to start accumulating shares on energy. Thanks for sharing your December consideration.
Take care,
FFF
FrugalitytoFinancialFreedom recently posted…November 2014 Portfolio Update
Hi FFF,
I’m still very much on the sideline regarding the energy stocks. I have put many names on my watch list in recent days and I may make an entry this month but I prefer the volatility to drop somewhat and see where oil settles for a few weeks first. Thanks for commenting.
Hi DH,
BBL is definitely getting a lot of attention lately and from what I understand seems to be a fair pick. I would need to do more research myself before initiating a position there.
On the Canadian side of the oil patch, I have SU and IMO on my radar with there being a good chance I pick some up of one, if not both, by the end of the week.
Take care!
– Ryan from GRB
GetRichBrothers recently posted…Black Friday
Hi GRB,
I have never looked at IMO before. Thanks for sharing that potential stock pick. It seems that almost every DGI blogger is jumping into the oil patch with both feet because of the recent run down in price. And while I can appreciate these much better valuations and very tempting yields I’m just not too settled in my belief that the worst is over in the space. Thank you for stopping by and commenting.
DivHut, I personally don’t mind this volatility. I have been picking up many energy names over the last several weeks, CVX, COP, ESV, HAL, NOV, HP, BP, and BBL. I just can’t pass up these low prices.
Mr. Stock Fox recently posted…Dividend Income Update Nov 2014
Hi MSF,
I think it’s great that you are taking advantage of this increase in volatility and lower prices no doubt averaging down on many of your positions. For me, I like my sleep at night and as you can see from my portfolio I’m mostly invested in lower volatility stocks in the consumer staples and industrial space. I’m not against the energy names at all. Many of the names you mention are on my watch list. I’m just waiting a bit before I potentially nibble in the sector. Thank you for sharing your thoughts.
It’s hard not to like the energy sector stocks right now. The price is very attractive.
Tawcan recently posted…On the road again – December dividend stock considerations
Hi Tawcan,
That seems to be the going sentiment among many of the DGI bloggers. I keep stressing the point that I’m not against many of the energy names I just want to be a little more selective and patient than jumping in to five or six names that have all dropped tremendously. As I have commented to others, the yields on many names are really tempting me. Thank you for commenting.
Hi Divhut
Looks like quite a number of bloggers have been accumulating BBL.
They do offer a great yield ahead of the usual two suspect, XOM and CVX. One of my favorite in the past was Schlumberger and National Oilwell Vargo. Maybe I’ll revisit them again if they come to undemanding valuations.
Hi B,
It’s true that XOM and CVX have been the go to energy names for such a long time and now it seems that BP, TOT, COP, RDS and many others have joined in the popularity of those two stalwarts. As I mentioned to others, I’ll be sitting on the sidelines for now and just keep looking at my watch list and follow many of the energy names and BBL too. I have not jumped on board the energy train yet. Thanks for stopping by and commenting.
Hi DivHut,
I have also made some purchases in the energy sector. I have recently acquired positions in Canadian Oil Sands and Husky Energy in December! I am also keeping an eye out on BBL right now.
Jeff recently posted…Talk Personal Finance – December 2014
Hi Jeff,
Canadian Oil Sands and Husky Energy are two names that don’t get thrown around the dividend blogging community much. Usually you hear about CVX, XOM, BP, COP, etc. I fully understand your commitment to energy at this point. Oil is still dropping further and I’m sure more deals will be available going forward. Thanks for stopping by and sharing your thoughts.
After BBL’s further drop early on Monday, I decided to pull the trigger. Couldn’t say no to that yield anymore!
Seraph recently posted…Recent Buy
Hi Seraph,
The seductive siren call of high yield. I understand why you got in when you did. I have added BBL to my watch list and I’m also getting very tempted to pull the trigger soon. Everyone has been jumping on board that train. Thanks for stopping by and commenting.
Nice list of stocks. I just initiated position in BBL as part of my weekly purchases and looking to add to it over the next few weeks. I also added to my COP position in November and looking to add to my position in other Oil stocks as the sector is going through a period of weakness. Let’s see how this plays out.
Dividend Growth Journey recently posted…Sharebuilder Purchase – 12/2/2014
Hi DGJ,
I’m still on the sidelines with the energy and materials names. I have added BBL, COP and others to my watch list so I am interested in potentially adding a position there. Happy to hear that you are adding to your position on a weekly basis. That’s one of the best ways to remain consistent through thick and thin and build up a portfolio. Thanks for sharing your recent buys with us.