Another new month is finally upon us which means it is time for us to take stock of our dividend portfolios and decide where we would like to deploy our fresh capital. For those that have been following DivHut for a while you already know that I have been adding a lot of fresh capital towards my three large Canadian bank holdings, The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS) and Royal Bank of Canada (RY) for many months and April was no different as I completed a BNS buy. However, as the Canadian banks stormed ahead for most of March and April I found the banks to be less of a deal and was looking to expand my portfolio in other directions which led towards five smaller purchases being made last week in the health REIT sector with Health Care REIT, Inc. (HCN), HCP, Inc. (HCP) and Ventas, Inc. (VTR) all being added to my IRA along with newcomers Dover Corporation (DOV) and Archer-Daniels-Midland Company (ADM) added to my taxable account. To be completely honest, I’m not really looking to add any new names to any of my portfolios this month. With five new names added I will most likely be looking to see if there is an opportunity to average down my cost in any of these new holdings or buy into other positions already in my accounts. Typically, I won’t average down a position unless there is a 5% or more decline in my average buy price. With that being said, let’s take a look at some of my May stock considerations.
As mentioned above my first choices will most likely be one or more of the stocks recently purchased last month which include, BNS, HCN, HCP, VTR, DOV and ADM. However, there are other names that have been catching my eye for a while but I simply haven’t pulled the trigger yet. The name that fits this category most is Johnson & Johnson (JNJ). JNJ has been with me since the beginning and is currently yielding a decent 2.80% 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 16.3. Recent weakness in share price has made JNJ a popular pick among many of the dividend bloggers last month as the stock price hit the $100 mark and piqued the interest of many long term investors, myself included. With JNJ hovering around this $100 mark for quite some time and with a decent value it may be a good time for me to finally add to this name.
Another long time holding of mine that I would consider adding to in May is Emerson Electric Co. (EMR). This industrial machine sports a decent current PE of 18.9 which is not necessarily a bargain but is still lower than its five year average PE with a better looking forward PE of just 15.0. Of course, a safe current yield of 3.30% doesn’t hurt either.
Finally, I am also revisiting another long time industrial holding of mine Caterpillar Inc. (CAT). This stock had a pretty good run last month rising from the high $70s to the high $80s currently and still sports a pretty compelling PE of 14.9 which is well below its five year average. Of course, we all know the boom and bust cyclical nature of an industrial name like CAT and therein lay some potential short term risk. But, like with EMR, CAT does offer a pretty nice current yield of 3.30% which is safe and can lessen some of near term price swoons should they occur.
What do you think about my stock considerations for the month of May? Are any of the names mentioned above on your watch list for the month as well? Please let me know below.
On a side note, Mrs. DivHut and I officially opened up a custodial account for baby DivHut and if all goes to plan his first dividend purchases will be made in May. Stocks we are considering for baby DivHut are familiar names that he’s already a consumer of, Similac (ABT), Head to Toe body wash (JNJ) and Pampers (PG).
Disclosure: Long TD, BNS, RY, DOV, ADM, HCN, HCP, VTR, JNJ, EMR, CAT, ABT, PG