May 2017 Stock Considerations

Can you believe it? May is is knocking on our door and it’s time, once again, to outline my potential stock picks for the new month. Looking forward I feel compelled to mention some of my recent ‘old favorites’ as well as mentioning some new picks that might deserve a spot in my portfolio too. I’ll get to those in a minute.

 

Looking back at my some of my purchases last month certain names I did not plan on picking up seemed too tempting to pass up because of a sudden, steep decline in share prices. You know the names, W.W. Grainger, Inc. (GWW), Cardinal Health, Inc. (CAH) and Bemis Company, Inc. (BMS) come to mind. This just goes to show that Mr. Market may always serve up some stock sales that were not anticipated. With that being said, let’s review my May stock considerations.

 

As I mentioned above, I am continuing to look at some of my ‘old favorites’ as their stock prices still remain low, relatively speaking, and are offering better values and yields when compared to levels seen just a few months ago.

 

First up is a name I bought a few months ago and am considering once again, Johnson Controls International plc (JCI). JCI is a solid long term dividend paying industrial that has been lagging a bit post it’s Adient plc (ADNT) spin off and continues to look decent to me at current levels.

 

Similarly, several other dividend stalwarts seem to have been falling on harder times as of late as their stock prices declined considerably driving their yields to attractive levels once again. Those names include, in no particular order, Hormel Foods Corporation (HRL) and General Mills, Inc. (GIS). Seeing HRL with a yield around 2% and GIS well over 3% continues to entice me. Bemis Company, Inc. (BMS) is another consideration after its big price drop last week.

 

Now, on to my new potential picks for the month of May.

 

First, I am considering initiating a new position in QUALCOMM Incorporated (QCOM). Some of you may be surprised at this potential add to my portfolio as it is a tech stock and would be my very first. At current levels QCOM is looking compelling to me with a very juicy yield of 4.24% and a dividend that still appears to have room for current coverage and future growth based on current cash flow figures. The stock is also looking better from a valuation standpoint at current prices and is a name I will definitely be watching in May.

 

The second new stock I am considering for my portfolio is a low growth utility but still looks compelling from a dividend perspective, PPL Corporation (PPL). As with QCOM, PPL offers a very juicy yield of 4.14% and maintains a sustainable payout ratio while trading at better valuations in recent times.

 

What do you think about my stock picks going into May? Are any of the names above on your potential buy list too? I would really love to read an opinion about QCOM and PPL specifically and know if they have a spot in your portfolio. Please let me know below.

 

Disclosure: Long GWW, CAH, JCI, ADNT, HRL, GIS, BMS

54 thoughts on “May 2017 Stock Considerations

    • Hi Passivecanadianincome,

      Every stock I mentioned are long term dividend payers and raisers. You can’t expect to know stats for every single stock out there as I’m not familiar with many of the Canadian names either. Just one of the benefits of blogging and sharing our collective knowledge. GIS is looking better and better each day. I think we’ll be seeing more GIS buys among our peers in the coming days. Thank you for commenting.

    • Hi FV,

      Always love to share my ‘road map’ for the new month of potential buys. It focuses my attention on just a handful of stocks I’m liking and makes it easier to pull the trigger. Thank you for stopping by and commenting.

    • Hi STD,

      ABBV had a nice move in recent days. That’s a name which continues to deliver, especially from a dividend standpoint. GWW continues to look weak as does GIS. Even with a “toppy” market there are still quite a few good relative buys that can be made. Thank you for sharing your thoughts.

    • Hi Jay,

      It seems like many of us are focusing on similar names this month. QCOM, GIS and GWW seem to be making the rounds the most. There are always some good buys out there even in a relatively expensive market. As always, I appreciate your comment.

  1. Ciao DH,
    QCOM is on my radar too, pretty much like CAH (but I haven’t pulled the trigger there). Don’t know much about Bemis, I’ll do some research on them, from the first info it seems to be a packaging company, could be interesting…
    Thanks for sharing and ciao!
    Stal

    • Hi Stalflare,

      QCOM, CAH, GWW and others are popular especially after weak earning reports. These are all solid companies with sustainable dividends which is why many of us are considering these same names. BMS is as boring as they come. Packaging and other related products are necessities and though the dividend growth rate for this stock is not stellar it has been a very reliable long term dividend payer and raiser. After its recent price decline it’s sporting a much more attractive yield. Thank you for commenting.

  2. Excellent tips & ideas! This is my first visit to your blog. As a Canadian investor, you introduced some new-to-me names I’ll begin to monitor. That’s of great value to me — many thanks!

    • Hi Dave,

      Welcome to DivHut. I hope you find it useful. I always say that one of the biggest benefits of blogging is the sharing of our collective ideas. As you may not be familiar with many of the U.S. stocks mentioned I too find myself introduced to new Canadian stocks when I read about them among the various Canadian blogs I follow. Look forward to more of your comments.

  3. Despite a different approach (DGI vs option) we look at similar stock. I have a postion in QCOM and I look at GIS as well.

    It is great to see ho DGI and options can inspire each other. I will look at the others as well.

    • Hi AT,

      Often potential stock picks and options go hand in hand. I tend to look at stocks that have recently sold off which usually correlates to a higher volatility when it comes to options pricing. Both QCOM and GIS, among others, are making the radar screens of many of our fellow bloggers for that reason. Thank you for sharing your thoughts.

    • Hi BHL,

      These stocks are all coming to the attention of our fellow bloggers for good reason. Most recently sold off big which is giving us better values and higher yields. Thank you for stopping by and commenting.

    • Hi TCF,

      I always enjoy writing these ‘road map’ posts as it takes away some of the guesswork about where I want to deploy my fresh capital. So far May has started out by offering us many different investment choices. Thank you for commenting.

    • Hi dividendgeek,

      QCOM might be my surprise pick for the month as I do not hold any tech stocks but at current levels it does look very compelling. As always, I appreciate your comment.

  4. DHut,

    Good list. I am interested in a few of those, especially CAH, QCOM, HRL, and GIS. I would add SJM (Smuckers) to that list, but the stock needs to drop a little more before its an attractive valuation.

    Thanks for the list, good luck this month!

    – Gremlin
    Dividend Gremlin recently posted…Bye Loyal 3My Profile

    • Hi DG,

      All good names that many of us are considering and/or buying in recent days. It’s pretty amazing to find quite a few good relative deals out there in a market that’s perceived to be very expensive. While I know of SJM, I never considered that name for my long term portfolio. Thank you for sharing your thoughts.

    • Hi DP,

      QCOM and PPL would be new positions in my portfolio if I buy. One is a tech and one is a utility. High beta and low beta. Both are offering pretty compelling yields and decent values as of late which is why I am considering them for the first time. Like you, I also wish HRL had a higher current yield but what they don’t offer you today they more than make up for with their very high dividend growth rate. You can’t have both over the long term. Thank you for stopping by and commenting.

    • Hi DI,

      You, and many others, are considering or have already bought QCOM. It’s tough to ignore that stock at current levels especially with that yield that still appears to be very safe. As always, I appreciate your comment.

  5. Can’t go wrong with any of the staples. Just want to keep allocation in order so your still diversified. QCOM has been looking better and better lately. I have had that on my watch list for several months as well but haven’t got around to buying it yet. CAH dip happened and I used my free capital to jump on that. No bad way to go with any of the above mentioned stocks. Looking forward to seeing this month’s purchases.
    Dividend Daze recently posted…How to Develop a Market Strategy and Choose an Online Trading Platform – Part 2My Profile

    • Hi DD,

      The staples will always be my largest sector in my portfolio. It really allows me to sleep well at night and while the stocks in the space may not be known for stellar growth, their dependability and dividend consistency keeps me coming back for more. Nice pick up with CAH. Many of us bought into that name after that big drop we witnessed. QCOM is another interesting name at these levels. It’s all about risk/reward and as the stock continues to drift lower that risk/reward ratio looks more enticing, especially with a 4%+ yield. Thank you for commenting.

  6. I’m continue to monitor GIS, and CAH, I initiated a position. GWW looks great right now, but the chart says it may push $180. QCOM is a great one, as many have to buy their copyright, so collect royalty is a great business. Intel is still way behind QCOM as they missed the boat in 2005-2007 when Apple approached them to make tiny chips. But Apple might be in bed with Intel again so the game may change. I’m not familiar with PPL. would you might doing a write-up? 😛
    Vivianne recently posted…Stocks on My Watch – VZ and QCOMMy Profile

    • Hi Vivianne,

      GIS and CAH are both looking pretty weak these days with GIS really continuing its slide. As long as the stock still sports a safe dividend I’ll continue to buy and simply wait. The best times to buy are when things are falling and no one is liking the stock. Remember JNJ in the $60s after those recalls and MCD in the $80s not that long ago because they just “didn’t get it” and served up all the wrong foods that no one wanted. How things change. So now it’s GIS’s turn and others to falter. QCOM is pretty high beta and as you mentioned things can go really well for them over the long haul or go south quickly if AAPL goes with INTC etc. That’s the nature of investing in tech. Maybe I’ll do a round up of PPL and other utilities one day. It’s a decent size utility in the northeastern U.S. and is looking interesting at current levels. As always, I appreciate your comment.

  7. I believe QCOM is great at these levels. I also bought some extra shares for myself in April. CAH could be also great after this sell off. PPL is interesting. Generally the numbers look good, but I don’t really like the increasing number of shares. Not sure what’s the reason behind it.
    From my side I also bought IBM and EAT in April. The latter one is a stock I don’t really see being mentioned by many people. Have you ever looked at it? If yes, what’s your view?
    Roadrunner recently posted…Times Are ChangingMy Profile

    • Hi Roadrunner,

      You and, judging by the comments, many others are liking QCOM at current levels. It has caught my eye for a reason even though I do not hold any tech stocks. PPL is an interesting utility. It’s definitely one of the more stable plays in the space with a very low beta and high current yield. Don’t buy for stellar dividend growth as you won’t get it with that name but getting a sustainable 4%+ current yield doesn’t hurt either. Thanks for sharing your current picks. I never looked at EAT before and off the top of my head I know that Mr. Free At 33 owns it. It doesn’t seem to be a popular pick among our DGI peers. I appreciate your comment.

    • Hi IH,

      Same page indeed. Both GIS and CAH are faltering in recent weeks which is only giving us much better buying opportunities especially when compared to just a few months ago. QCOM is not a stock in my wheelhouse but I am open to investing in that name. I may not hold a single tech stock nor energy stock but that doesn’t mean I’m not open to initiating a position. After all, during my investing career I did own several tech stocks and energy. Of course, this was before I became a dedicated dividend growth investor. Thank you for stopping by and commenting.

    • IH –

      I picked up some GIS yesterday. QCOM has always scared me, to be honest, because I remember my father taking a beating in the early 00’s with a bunch of tech related stocks, including that one if I recall. That doesn’t mean at all that it is a bad pick, but I think I’ve unconsciously just never followed it for that reason. I’ll have to do my homework and check it out. Thanks!

      • Hi Dividism,

        I can totally relate to your QCOM story. It’s usually the case, once bitten, twice shy and with the known volatility of tech and changing industry you really need to be careful how you invest in that space.

  8. Thanks Keith. Interesting take on some great companies with juicy dividend yields. Always looking to add and learn about new companies that are not in my portfolio, and I own neither of them. Thanks for bringing them to my attention. It is awesome how we all share this knowledge with one another.

    Bert
    Dividend Diplomats recently posted…How I Kicked Uncle Sam’s @$$!My Profile

    • Hi DD,

      The beauty of being a blogger is to share our collective knowledge and ideas. Both QCOM and PPL look interesting to me at current levels with QCOM being a lot more popular among our investing peers. I don’t really see PPL often though it does look like a classic steady paying dividend stock. Low beta, low dividend growth but high current yield. Thank you for commenting.

  9. There are some good names there. I already have enough qcom and am underwater on it. Just planning to hold at this time as I also believe it has a better price future than what the market assigns it. Same story with CAH and GILD, now my long term holds. Regarding HRL, 2% yield means $34.01 price, which it hasn’t hit in May as I checked. Are you waiting for that or have bought it close to 2% yield already?
    Ten Factorial Rocks recently posted…The Dog Years of InvestingMy Profile

    • Hi TFR,

      At least you are getting paid pretty nicely to wait for QCOM to recover. It does look pretty interesting to me even though I am not too excited to invest in the high volatility of tech stocks. When I first bought HRL it was close to 2%. Without splitting hairs anything at 1.95% or higher is close enough for me. Keep holding those quality names if you still believe in their “story.” Believe me, I know about holding big time losers for a long time. That’s the beauty of being a dividend investor though. You can reinvest in your loser stocks at better prices and continually average down. As always, I appreciate your comment.

    • Hi DL,

      Thanks for those suggestions. I love the Canadian banks and already hold TD, BNS and RY. I’d be ready to add to any of them but not at current levels. All good names you mention though. Thank you for sharing your thoughts.

    • Hi HHaWG,

      A lot of the names I’m watching are being watched and/or bought by our fellow investing peers. There’s a lot to like about these names especially at current levels when values and yields are looking a lot more compelling. Look forward to seeing where you deploy your cash. Thank you for commenting.

  10. I agree with you about GIS and started a position yesterday. I started a fund from zero and only have so much new capital to deploy – about one purchase every other month – so happy to add this one as a building block for the future. I’ll be interested to see where you go with your next few purchases – good luck!
    Brian @ Dividism

    • Hi Dividism,

      Being a dividend growth investor is a marathon and not a sprint. Buy what you can, when you can. It’s all about “building blocks” one share, one dividend distribution at a time. I still feel that GIS is facing near term headwinds but feel they will pass eventually. Ah, to go back in time when JNJ was in the $60s with their recall issues and every “analyst” and financial “expert” touted their demise. Or go back about two years or so when MCD was written off for dead and today sits at all time highs. One thing I have learned is that while there are no guarantees of anything, most “old time” dividend paying companies that have been around for many, many decades or a century for that matter, knows how to adapt and shift to changing consumer tastes. It’s a risk I’m willing to take with GIS. Thank you for sharing your thoughts.

  11. HRL is looking decent here although I wanted shares lower so I sold a covered call after buying up 100 shares. If it get’s called away then oh well because the valuation isn’t stellar, but if the call’s out of the money then I get to reduce my cost basis. That’s a win-win. With GIS back in the mid-$50’s it’s starting to look interesting too and might be worth adding a few shares at these levels. I’ve also been looking at QCOM for many of the same reasons you are. That 4% yield is very enticing considering it should continue to grow in mid to upper single digits over time and once the AAPL lawsuit gets settled then I think the overhang on the stock will be lifted. That yield is juicy.
    JC recently posted…Dividend Update Preview – April 2017 [Infographic]My Profile

    • Hi JC,

      I agree that HRL at current levels can only be called decent and not spectacular. As long as the yield stays around +/- 2% I’ll consider adding to this name. Looks like you are working HRL with those options too which is nice to see. It seems like most of us are considering the same names in May with GIS, QCOM and HRL getting most of the attention. We’ve had several days with big drops in individual names (GWW, GIS, ADM, CAH and others) which always prompts some good buying activity among our peers. I think many here are surprised to see me consider QCOM as I hold zero tech stocks but at current levels even that name has grabbed my attention. As always, I appreciate your comment.

    • Hi MH,

      I never considered any automaker for my long term DGI portfolio nor do I plan to, even though the names you mention are seemingly cheap. I think when people look at F or GM and compare it to TSLA one has to not think along standard valuation metrics. These days it’s all about current growth and future growth prospects and old guard auto companies do not have the growth metrics of a TSLA even though they churn out way more vehicles than TSLA does currently. People pay up for growth. Look at AMZN, NFLX and the like. Thank you for sharing your thoughts.

    • Hi Stockles,

      Thanks for sharing your recent pick ups. Like GIS the most even though I know O has been a great performer long term. I’m looking at QCOM because the numbers are making it look very attractive at current levels. No doubt the AAPL lawsuit is contributing to its lackluster share price in recent months. We’ll see if I pull the trigger on that tech name or not. Thank you for commenting.

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