A new year and a new month is upon us which is the perfect time to lay out potential stock investments for my dividend income portfolio. This month I am faced with the question of finally dipping my toe into the energy sector, as many dividend growth bloggers have been doing, or perhaps stick with ‘more of the same’ and add to my current holdings and average down where possible. Quite, honestly, despite the recent run up in many of the holdings I currently own I am looking to continue to add to my positions that have worked for me for the past seven plus years. While I recognize that my portfolio might not be the highest yielding among the dividend bloggers, it does offer me reliable dividend growth and peace of mind which I value tremendously. That being said I’d like to highlight several of my January stock considerations. Of course, with all the volatility in the market in recent months, Mr. Market may guide my investment decisions elsewhere.
Looking at my taxable account I am first considering Emerson Electric Co. (EMR). An industrial and dividend paying stalwart, EMR seems to be a relatively attractive investment within its sector. Currently, in line with its five year average PE of 20.3, EMR offers a very attractive yield of 3.10%. Similarly, though not in my current portfolio, I am also considering initiating a new position in United Technologies Corporation (UTX). Another dividend stalwart UTX has a lower PE of 16.95 which is in line with its five year average. Yielding 2.10% I may be inclined to pay a little premium for the EMR stock instead.
In the consumer staples space I am considering two names that really need no introduction, Kraft Foods Group, Inc. (KRFT) and General Mills, Inc. (GIS). Lower growth KRFT is attracting me because of its current yield while better growth prospect GIS might offer both good current yield with future overall value in the form of dividends plus capital appreciation.
Finally, for my taxable account I am considering health care giant Johnson & Johnson (JNJ). After slipping a bit from its recent high and currently yielding a decent 2.60%, JNJ’s valuation appears cheaper than many of its industry peers and is in line with its five year average PE. I have not bought shares of JNJ for quite a few years and would like to add additional exposure to the health sector in my portfolio via this stock.
Moving to my ROTH account I have the option to average down on three of my relatively new Canadian bank holdings which I initiated towards the end of 2014. Those names include, The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS) and Royal Bank of Canada (RY). Each of these banks are considered relatively high yield for my portfolio as their rates range from about 3.60% to over 4.0%. A nice rate, to say the least, to be paid to wait while holding the stock.
The last stock I am considering for January is Unilever plc (UL). UL is a name that many are very familiar with and around $40 a share seems like a decent value considering future growth prospects and its fairly high current yield of 3.50%. On a valuation basis UL is in line with its five year average but well below industry peers which makes it more attractive than other consumer staple names.
On the surface it may seem like I have a long laundry list of potential stock holdings I am considering but the reality is that I am quite familiar with all the names listed above as most have been with me for many, many years. UTX is the only new name I’d potentially add to my portfolio and at current levels seems like a decent risk/reward ratio to take.
What are some of the stocks you are considering for your January purchases? Are any of the above names on your monthly watch list? Please let me know below.
Disclosure: Long EMR, KRFT, GIS, JNJ, TD, BNS, RY, UL