March Stock Considerations

As 2015 is rapidly moving along another new month is upon us which brings my portfolio back into focus as I look forward towards my March potential stock buys. Looking back at February my potential picks exclusively rested on the large Canadian banks 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). March is looking no different as I am continuing to look at the large Canadian banks as potential investments while potentially allowing myself to average down on my purchase prices in one or more of those names.

 

Along with the large Canadian banks other names have cropped up on my radar as well as recent weakness has potentially made some of these names interesting too.

 

First up is Caterpillar Inc. (CAT). A long time holding of mine in both my brokerage account and ROTH, CAT currently yields a healthy 3.40% with a current PE of 14.4 which is well below its five year average and below industry peers as well. No doubt, recent share price weakness is making this name a lot more attractive than in months past.

 

Another name I’m considering is Johnson & Johnson (JNJ). Like CAT, 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 15.8. Recent weakness in share price has made JNJ a popular pick among many of the dividend bloggers as well, as the $100 mark piqued the interest of many long term investors, myself included.

 

In general, I would like to boost my health sector allocation as it still represents a smaller portion of my portfolio especially when compared to my consumer staples and industrial names. Companies that I’d like to boost investment in include CR Bard Inc. (BCR), Becton, Dickinson and Company (BDX) and Abbott Laboratories (ABT) just not at current share price/valuations. For now, JNJ seems like my best bet to boost my health sector exposure.

 

Of course, I always qualify these posts with the notion that Mr. Market may have other plans for my portfolio and new potential investments may crop up that are not included here.

 

What do you think about my March 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, CAT, JNJ, BCR, BDX, ABT

54 thoughts on “March Stock Considerations

  1. Nice list DivHut. I’m watching JNJ and CAT as well. Like you, I’ve held JNJ for years……and I can easily figure out what I’m willing to pay per share. CAT is a bit trickier for me. It’s highly cyclical and largely influenced by industries like farming, mining, construction, as well as grow in emerging markets. I have not been able to put a price on CAT, but the price slide caught my eye.

    Have a great week
    -Bryan
    Income Surfer recently posted…The Time-Value of Money and Three Potential InvestmentsMy Profile

    • Hi IS,

      It looks like JNJ has become a lot more popular among the bloggers as well after its price drop. That’s what got me looking at CAT too in recent weeks. Comparing both, JNJ definitely has the edge when it comes to stability and is less cyclical than the boom and bust cycle CAT has to endure. Of course, if there is still continued weakness in the large Canadian banks I may add more to that sector. As always, I appreciate you stopping by.

  2. I need to look into the Canadian banks more. I’m thinking of adding another financial company or two and a Canadian bank might be joining my portfolio. JNJ is one that I’d like a bit lower than the current price but when I saw it dip below $100 I started getting interested. I wish BDX wasn’t always trading at a relatively high valuation because that’s a company I for sure want in my portfolio. It’s just a matter of getting a fair price because I doubt we’ll get truly undervalued situations too often on that one.
    JC recently posted…Takeaways from Berkshire Hathaway’s 2014 Shareholder LetterMy Profile

    • Hi JC,

      Like you I wish BDX and many other health names wouldn’t be trading at such sky high valuations but at least we have JNJ to consider. Even though it has climbed from that magical $100 mark it still presents some decent value and good current yield going forward. Regarding the Canadian banks it seems that some of us are gong ‘all in’ while others are sitting on the sidelines. I still think the cash flow, payout ratios, current PEs and high current yield make them all look compelling. So far it seems that the Canadian banks are weathering the low oil, low Canadian currency storm quite well. How much longer can this continue? Who knows. Thank you for stopping by and commenting.

  3. DivHut,
    Very nice list of stocks for March. I have a couple that are not on your list and may not be as popular with the community. VIAB and WMT seem fairly valued. I know Warren Buffet just bought a ton of VIAB, so I can’t go wrong there. I like the Media content stocks and want to eventually add more TWX. From your list I really like JNJ. The Healthcare sector is looking good right now and wouldn’t mind adding to BAX soon as well. So many names with so little capital to invest with. : )
    Dividend Mongrel recently posted…February 2015 Passive Income and ExpensesMy Profile

    • Hi DM,

      This is what I love about our community and the sharing of different stock ideas. Your affinity for VIAB and WMT along with TWX shows how we differ. For me, media stocks are something that I am not interested in at all along with giant retailers such as WMT or TGT. Not that there’s anything wrong with any of those companies. It’s just a different comfort level we each have towards different stocks and sectors. I know some think I’m way too heavy in the Canadian bank stocks. I really think we have a great community to bounce ideas off of one another. It seems though we both like health care stocks. I think it’s a sector with major long term tailwinds. The key is to try and jump in at decent valuations. Thank you for sharing your stock picks.

    • Hi ANHA,

      The large Canadian banks are, so far, weathering the storm of low oil prices and a softer Canadian dollar quite well. I think this is a testament to their resilience in tough economic times. While no one is sure how long oil and the Canadian dollar will remain depressed it seems that in the interim they can handle this tough economic climate and yes, TD raised its dividend 8.5% percent to 51 cents recently. Thank you for stopping by and commenting.

    • Hi R2R,

      Like you the health sector has shrunk in my portfolio as well, as additions to other sectors minimized their relative value. I know many like the health space but it seems like a tidy premium is attached to may of those names. I’m watching JNJ too and I guess I’ll have to wait to see if other health names come down a bit from the stratosphere. I imagine we both have a long list of stocks we’d like to buy just waiting in the bullpen for reasonable valuations to come in. As always, I appreciate you stopping by and commenting.

    • Hi DG,

      As I always state in my posts, sometimes it’s all up to Mr. Market. We may plan and lay out potential stock buys but sometimes those best laid plans are all for not when Mr. Market decides to go his own way. I’ll be watching those health names I mentioned as well as the Canadian banks and I’ll just wait and see how March unfolds. Thank you for commenting.

    • Hi MRtHaM,

      It sure seems that many of the health names are becoming more popular among the dividend bloggers in recent weeks. I guess most are filled to capacity in the energy space and others feel uncomfortable buying into financial names such as banks so we are starting to look elsewhere. I would love to add to all three of those health sector names but as you mentioned only JNJ seems to be the best value. Sometimes you have to pay a premium for a quality name. That’s just the way it is. Thank you for stopping and sharing your thoughts.

    • Hi AG,

      I know you are firm on all the Canadian banks as you have positions in all five of the large ones and they seem to be a core holding for you in that specific sector. I just added to my TD and RY last week and will still be looking at those names going forward. Of course, I would like to buy in other sectors too which is why health names starting popping up on my radar. I know CAT is still a little shaky these days as the world seems to be falling off a cliff in terms of growth but that’s the nature of a cyclical name like that. Thank you for stopping by and commenting.

    • Hi TGE,

      JNJ seems to be the mother of all health care stocks and you’d be hard pressed to find anyone not being a long term fan of it. I’m curious to know how you feel about the large Canadian banks. As you know I have been buying into the space with the recent weakness in oil and the Canadian dollar and still like the space going forward. I appreciate your comment.

      • I like the big canadian banks. I recently added BNS to my portfolio, which includes RY. To me, you are good to go with any of the Big 6. I basically chose RY because it’s my bank. And BNS because it’s cheaper nowadays and is the most international for our banks. Can’t go wrong either with CIBC, BN, BMO and TD.
        The Great Escape recently posted…My Net Worth Updated (February 2015)My Profile

        • Hi TGE,

          It seems that every Canadian dividend blogger is very confident owning the large Canadian banks for a long term dividend income portfolio. I get the sense that many Americans are less enthusiastic about the Canadian banks after the financial meltdown took down many large U.S. banks. Just a feeling I have. Of course, I happen to agree with your comment and sentiments towards the large Canadian banks which is why I have been adding to them for several months as they all dropped from their summertime highs. Thank you for stopping by and commenting.

  4. I would have liked to be able to put some more in JNJ but I’m having other priorities right now that leads me with barely no money to invest. Go for it if you can! Loving CAT too and it’s no secret that I hold some of these lovely Canadian Banks! 😉 So yeah, nice list!
    DivGuy recently posted…6 Days to Dividend Growth InvestingMy Profile

    • Hi DG,

      I guess that’s the struggle we all share each month in trying to come up with cash to invest. As you mentioned, sometimes other life priorities take precedent. Waiting to see how March unfolds. With the market marching higher and higher it’s becoming more difficult to diversify and find stocks trading at decent valuations. I guess energy and many financial names still present good values but I would like to add to other sectors as well. Thank you for stopping by and commenting.

    • Hi w2r,

      So far the market is marching higher and valuations are getting richer. JNJ seems the obvious choice among the health names in recent time. As you mention pretty much everyone is a long term fan of that stock. We’ll see how the month unfolds and how my other holdings are doing. The Canadian banks might make another appearance for me if they remain at these depressed prices. As always, I appreciate your comments.

  5. Divhut,
    I am also eyeing CAT. I think it is fairly priced at the moment. (Slightly below my entry point – which is good)
    I wanted to add jnj last month, but missed entry point. Point to self – must not overthink…..
    I added BAX instead though it’s a different level of healthcare compared to jnj. I like your other choices (bdx etc) but they are too expensive for me.
    Good luck with your purchases in March.
    Div4son
    Div4son recently posted…Getting Started Part IIMy Profile

    • Hi D4s,

      CAT has come down a lot from its recent highs which is why it has been making my radar screen. A long time holding of mine, I am aware of the cyclical nature of this company and I’m willing to ride out the bumps as long as those dividend keep climbing. Your comment brings up a good point about not over thinking when you discussed JNJ. Sometimes analysis paralysis takes over and we miss out on some great buys as we quibble over a dollar or less entry price. I’ll be watching many of the health names but will only buy if I like the valuations that are present. If I don’t see anything I like I’ll most likely stick with my Canadian banks. Thank you for stopping by and commenting.

  6. Great list. I have my eyes on JNJ as well. CAT looks interesting too. Canadian banks continue to look attractive as well. Can’t wait to hear what you end up buying this month.

    • Hi Tawcan,

      For my portfolio, I wouldn’t mind making another Canadian bank buy. My financial sector is still relatively small among my taxable and ROTH account and they all still offer good value, better prices, high yield and the ability for me to average down my purchase price. Of course, I mention JNJ and CAT as I do want to buy into other sectors as well and those two names are at the forefront of my March watch list. As always, I appreciate your comment.

  7. Keith,
    I got lucky and bought BDX a couple of years ago; it’s up 40% since then. The P/E looks a bit high at 20, but that can be deceptive; the forward P/E is only 20. If you are going to hold the stock then it’s not necessarily a bargain, but it’s not outrageous either.

    I recently added to JNJ around $100 a share. I would be comfortable adding at current prices FWIW.
    Good luck,
    KeithX

    • Hi KeithX,

      I would have liked to add more to my BDX too. It’s been a long time since I added to any of my health stocks and it is a sector I would like to be a lot more invested in. As you mentioned, having a long term perspective for BDX still shows it to be a potential good long term buy.

      I still may be biting on the Canadian banks though if they remain at these depressed prices. I’m in no rush for a March buy. I made my February purchase at the tail end of the month. In the meantime, I’ll be watching. Thank you for sharing your thoughts.

    • Hi ADD,

      I know the feeling. The goal is to minimize and eventually eliminate the feeling of regret for missing out on potential buys. So we both missed on adding to BDX but in the meantime we added to other dividend paying names so it’s not a total loss. The consensus seems to be a JNJ buy from the comments I have been reading. I know many are long term fans of that one. Thank you for stopping by and commenting.

    • Hi Vivianne,

      Percentage wise I’m at about 4% cash in my account. The way I have been investing for many, many years is by always having a decent chunk of cash sitting on the side to take advantage of potential sell offs. In this way I am never fully invested yet make sure to make purchases every month no matter how high or low the market is. I feel consistency is key if you are a dividend growth investor. As always, I appreciate you stopping by.

    • Hi Adam,

      You’d be hard pressed to not find JNJ sitting in a dividend growth portfolio. Good job picking some up at the $100 mark. Like you, I plan to keep JNJ for a long time and make it a core holding. In general I’d like to be heavy in consumer staples, which I already am, and health care which I need to boost. Thank you for stopping by and commenting.

  8. Keith,

    Great picks!
    I’ve been looking at CAT too and I wish I had some spare capital left to deploy in JNJ. With the current decline of the Euro, however, I’ll most likely continue to invest in European stocks for the next couple of months.

    Looking forward to what you ultimately decide to purchase!

    Cheers,
    NMW
    No More Waffles recently posted…Dividend Income for February 2015My Profile

    • Hi NMW,

      I’m hearing the same currency concern from some of the Canadian bloggers too as weaker local currencies are making shopping in the U.S. dollar based stock market less appealing. I’m sure there are many great European names on sale these days for you to choose from though. I’ll be watching my JNJ that’s for sure as well as the Canadian banks if weakness persists. Time will tell. As always I thank you for your comment.

  9. Hey DIVHUT,
    I know you mentioned this a thousand times already but JNJ does seem to be on everybody’s watchlist at the moment. As far as CAT goes, them and DE (john deere company) are both on my watchlist for the spring/summer to see if any pullbacks pique my interest.

    • Hi FII,

      Thanks for sharing your top picks going forward. I never pulled the trigger on DE and can see its merits as a solid dividend stock. I guess I just went with CAT and didn’t want that redundancy for such a cyclical stock even though I have redundancy elsewhere. I always find it interesting to watch how our dividend community picks and chooses various stocks from month to month and many times there are some great picks that just make long term sense… JNJ being one of them at present. I appreciate your comment.

  10. Solid names on your March stock considerations DH. I like the Canadian banks especially they just reported and declared their dividend increase, whats holding me off right now is the 15% foreign tax thats deducted right away in my passive income since its in my taxable account.
    I mentioned in your previous post that I am still looking forward to add some more health care sector in my portfolio.
    Thanks for sharing!
    FrugalitytoFinancialFreedom recently posted…March Portfolio UpdateMy Profile

    • Hi FtFF,

      It looks like things might still remain depressed for the Canadian banks throughout March and it may just be where I deploy my cash once again. Of course, the health sector is really beckoning me too and I may just nibble a bit there. I do wish valuations would come down a bit for many of the names in that space. Regarding your Canadian banks, why not add some of those names in a retirement account and save that 15% withholding tax? Thank you for stopping by and commenting.

  11. DH,

    I picked up JNJ in the $60s and plan to hold that core position for decades to come (subject to continued due diligence, of course). It’s one of my favourite holdings and one of the top stocks I’d pick if I had to narrow down my list. They have a slew of product offerings to serve the health care needs of the world well into the future. With demographics on their side, it’s a winning combination.

    Take care,
    – Ryan from GRB
    GetRichBrothers recently posted…The Purge, UpdateMy Profile

    • Hi GRB,

      Like you, I plan to keep JNJ “forever” subject to continued due diligence. There’s no question that I like the health sector as it does seem to have long term tailwinds at its back with the demographic shift occurring as the Baby Boomer generation retires in droves. Besides for the health names mentioned I also like several of the health REITs as long term holdings. VTR, HCP, OHI and others come to mind. Thank you for stopping by and commenting.

    • Hi MU,

      It seems many are liking the Canadian banks besides me. While I would love to add to other names in varying sectors I am finding it difficult to find decent values elsewhere. It seems that finance and energy are the only two sectors where great valuations can be found easily. As mentioned in other comments, I would love to add to my JNJ or CAT but will go with the Canadian banks again if continued weakness persists in the space. I appreciate your comment.

  12. JNJ is always a great buy and CAT is another good suggestion. CAT is my biggest unrealized loss so far. (I’m down 19%.) You’re right that it probably is a good time to add more to it. I’d like to first max out my Roth IRA for 2015 and then I’ll consider lowering my cost basis in CAT. Thanks for the suggestion!
    Scott recently posted…February 2015 IncomeMy Profile

    • Hi Scott,

      Judging from the comments it seems that everyone is just fine with JNJ. I don’t recall a single negative comment about that stock. Guess it’s a testament to the long term stability of that name that gives it an overwhelmingly positive review. Regarding CAT, it seems that a general global slowdown has impacted the stock in the near term. Knowing that CAT is a very cyclical stock one should know that there will always be opportunities to buy when slowdowns occur. This may just be one of those times. As always, I appreciate your comment.

  13. JNJ around or below $100 definitely looks good. I have been recently adding JNJ as part of my weekly purchases around this range and this week I also looked at JNJ’s numbers a bit more closely to determine the fair value price on the stock. I am hoping to add more if the stock continues to be at or below $100. CAT is another stock that seems to be very popular with the dividend investors lately. I don’t hold any position in the stock, but would like to research it further.
    Dividend Growth Journey recently posted…Three $100 stocks – Part 2 – JNJMy Profile

    • Hi DGJ,

      Thanks for sharing your take on JNJ and CAT. As you mentioned, both have been making the rounds among the dividend bloggers and for good reason. After falling from recent highs better valuations, prices and yield are presenting themselves. I plan to keep both JNJ and CAT for a long, long time in my portfolio and would love to add more to my holdings but only if the numbers make sense. For now I am still eyeing the Canadian banks. Thanks for stopping by and commenting.

    • Hi BSR,

      The Canadian banks are at the forefront of my March stock considerations with JNJ and CAT a close second. We’ll see how the rest of March unfolds. After the nice sell off we got recently better buys are looking more plentiful. Thank you for stopping by and commenting.

  14. Interesting. I agree that I would love to expand my healthcare holdings, but the only decent deal I see is MDT and (possibly SYK). I am also interested in ABC and MCK in the space. I removed CAT from my watchlist due to it being too cyclical for my tastes. Companies on my personal watchlist/purchase-more-of list include BEN, XOM, CVX, NOV, MON, WBA, and GWW.

    • Hi DD,

      For now the large Canadian banks seem like my first choice in March as they are still depressed from their summertime highs. For now the health space still looks expensive but I guess there will always be a premium attached to many great health care businesses. From your list of stocks that you are considering I like GWW. It has gone up so much in the last five years and I feel that I missed owning a larger piece of that great dividend paying business. Thank you for sharing your thoughts.

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