November 2017 Stock Considerations

Boy, one thing is certain… No one could have predicted that we’d be seeing the stock market at all time record highs one full year after the U.S. elections. In fact, if memory serves correct, there was a lot of uncertainty about the future of America as two polar candidates aimed to take the helm of this great ship. Reading blog posts I recall many selling some or all of their portfolio holdings in the months leading up to the November elections waiting for the inevitable correction to occur. Yes, we’ll see big market declines in the future but I can assure you that we’ll all be blindsided when it comes. Just look at how many international, political, financial and social threats that have cropped up over the last twelve months. And where are we market-wise… all time record highs. You can’t make this stuff up. On paper there have been dozens of issues that could have derailed this market but nothing has slowed its momentum. The left leaning anti-Trump movement is still in full swing (just imagine if they actually worked with the president to get a lot of his agenda easily passed… we’d be a lot further along), the far right continues to make its message clear and by all accounts we’re still riding high. Sure, the headlines continually read doom and gloom about all the things that could derail this market. Certain, technical readings look scary, the bull market is “long in the tooth,” it was a long term “jobless recovery,” etc. In other words I hear, “Blah, blah, blah and I think blah, blah.” Tune it out. Your portfolio value will go up and it will go down. If your aim is building an ever growing passive income stream tune it all out.

 

With that being said, it’s clear that not every stock has participated in this bull run, especially in the last year or so. That’s where I’ll look for my next potential buy. As Warren Buffett once stated, “The best thing that happens to us is when a great company gets into temporary trouble… We want to buy them when they’re on the operating table.” Clearly there are many companies on the operating table today. For November I will be considering Hormel Foods Corporation (HRL) and General Mills, Inc. (GIS) once again, each trading slightly above their 52 week lows and still sport safe relatively high yields. Seeing HRL yielding over 2% is a historically high yield for that stock.

 

Another stock that is looking ever more attractive, despite calls for a dividend cut is General Electric Company (GE). Talk about a company that’s on the operating table. It’s hard to ignore GE in the teens.

 

A couple health REITs are still looking attractive to me as well. Names like HCP, Inc. (HCP) and LTC Properties, Inc. (LTC) have seen significant declines in September and October and are looking a lot more attractive these days when compared to recent months.

 

Don’t fear the operating table. More often than not dividend stalwarts come out stronger given enough time. In recent years we have seen the likes of McDonald’s Corporation (MCD) being ‘operated’ on as expert calls about the fast food giant would have made you believe that it was all over for MCD. Look at fashion staple V.F. Corporation (VFC) performance since January of this year. Quotes like, “fashion is fickle,” and threats from Amazon entering the space would have made you believe VFC was D.O.A. Once again, VFC is not a fashion company. It is a ‘fashion staple’ company. There is a difference.

 

Of course, sometimes companies die on the operating table but I still believe one shouldn’t fear investing in ‘operating table’ stocks. They do tend to provide the best returns.

 

What do you think about my potential stock buys for the month of November? Are you considering any of these names for your own portfolio next month? Please let me know below.

 

Disclosure: Long HRL, GIS, GE, HCP, LTC, MCD, VFC

44 thoughts on “November 2017 Stock Considerations

    • Hi John,

      That’s not a bad place to focus your new funds this month. Like you, HRL is top on my list for potential buys this month. We are definitely in good company as many others are looking to buy or have already bought HRL as of late. Thank you for stopping by and commenting.

  1. I own many of those and I could probably lower my cost basis with them all since they just keep going lower. HRL, GIS, HCP, LTC, and GE. I am nervous with GE though. They have a good track record, and make sure to pay their dividend. However, the increases have kind of been at a standstill. I would love to average down since they are a great company with solid foundation, but I think my capital may be more useful from a growth perspective elsewhere. I am also looking at T at current prices. Hasn’t been this low in years. Even though I don’t just chase yield, it is hard to ignore theirs. Looking forward to seeing what you pick up next.

    • Hi DD,

      Sometimes being able average down on solid, long time dividend payers is a gift we often pass up for fear of buying when others are selling. I guess it’s human nature to want to follow the herd and buy when others are buying and sell when others are selling. I’ll gladly consider GIS, HRL and others at current levels. Sure, they could drop further but I know that I was still able to buy at a good price, value and yield. The same can be said for GE. I totally agree that the stock looks quite shaky these days but I would be willing to add to my position at current levels. I’m still watching the market but as you already know I will be making a November buy no matter what. Thank you for sharing your thoughts.

  2. Great list. I’ve already bought HRL. No3 looking at CAH, WBA and T. The latter t9 expand my position… can’t really decide between CAH and WBA though. Ex div is coming for WBA but the numbers look to be in favor of CAH. What do you think?

    • Hi MR,

      You and many others have been picking up some HRL as of late. Can’t blame you. It’s a great company selling at somewhat of a discount these days. I’m still liking it this month and it seems to be my go to pick so far. I do like CAH a lot especially since it has been pretty weak recently. Seems like others are looking at that name too. Thank you for stopping by and commenting.

    • Hi DP,

      While I remain fully invested most of the time I do have some cash always available to invest from my monthly income savings. It’s that money that gets put to use every month. One of the advantages of being a dividend growth investor is the fact that you can set to automatically reinvest dividends so even without any fresh capital being available you know that your dividends are being put to work right away and can take advantage of price declines in that way. As always, I appreciate your comment.

  3. DivHut, Interested to see, like you, what is going to happen to GE’s dividend. I have been a long time holder dating back to the pre-financial crisis days. It hasn’t been one of my success stories, that’s for sure. That is why diversification among dividend stocks is so important as you already know. I have been thinking about adding to my poistion in AT&T, but have not pulled the trigger. It’s another stock that has not participated in the recent run since the election. Tom
    Tom @ Dividends Diversify recently posted…Get Your Motor Runnin’My Profile

    • Hi DD,

      Like you, I have been holding GE pre-financial crisis and did not consider selling back then nor am I considering selling it now. In fact, it’s starting to look very compelling again with or without a dividend cut occurring. We both know that you can’t only pick winners in a stock portfolio which is why we hold a mix of stocks and diversify our passive income streams. T has been a popular name as of late too. I don’t like the space long term which is why my portfolio is one of the few dividend portfolios out there without T or VZ. Thank you for stopping by and commenting.

    • Hi singledadmoney,

      There are many solid choices for the month of November to consider. No doubt the market rally has not lifted every stock with the tide. HCP has been suffering for a while. Their issues go back prior to the QCP spin off they did but a leaner HCP looks like a good long term consideration. I like the health REITs the most long term. Thank you for sharing your thoughts.

  4. DivHut,

    After having read this post I think you and I are very like minded individuals. With excitement around the valuation of GE and the potential long term returns with or without a dividend cut is certainly a contrarian view as of late. Certainly, there is reason for frustration with the performance of GE over the past decade, however, the company isn’t going away and I am willing to grow my position at the recent valuations.
    However, I also like many of the other names you’ve mentioned would like to build positions in them as well (with the exception of perhaps MCD, just never been a fan of the food as a consumer or industry as an owner). The only name I am unfamiliar with is LTC.

    Lastly, the first part of your post reminded me of the recent memo by Howard Marks of Oaktree Capital titled “Here They Go Again…Again.” If you haven’t read it take a look. It is about the same length as Buffett’s annual letters. I hadn’t been aware of Mark’s letters until this specific memo was referenced in a blog I came across (I can’t remember who it was the referenced it).

    Best of luck!

    PIV

    • Hi PIV,

      Always nice to hear from a like minded long term dividend investor. No doubt GE has its near term issues and I agree that given enough time they will be able to ‘right the ship’ with or without the dreaded dividend cut. It’s during these days of weaker performance that could potentially yield the best results going forward. I mentioned MCD in the post as a recent example of a company that has lost its way and was left for dead by all the experts touting how millennial traffic to MCD was nonexistent and that MCD was essentially an ‘old guard’ fast food chain that wasn’t with the changing times. Well, that ship has been righted in a big way and I think GE can do the same. LTC is a small health REIT that pays monthly distributions. I hold it along with the big three health REITs HCP, HCN and VTR.

      You know the saying, “There’s nothing new under the sun,” and the Howard Marks memo of Oaktree Capital titled “Here They Go Again…Again,” seems to prove that point. Just tune it all out and keep on investing through good and bad times. Thank you for stopping by and commenting.

  5. Hi DivHut,
    nice list! I like all of them except GE. Interesting to see your interest in GE as you’re the “gold standard” of a “safety first” Dividend Growth Investor for me. The same note goes for your last TEVA buy. It’s nice to see that you’re also willing to admit some more risk when an opportunity arise.

    But from your list I like HRL and GIS the most. Would really like to see them at 2.5% and 4% yield.

    Cheers
    -DivRider
    DivRider recently posted…Dividend Income Update – October 2017My Profile

    • Hi DR,

      I don’t know if I’d call myself the “gold standard of safety” as I clearly do enjoy adding a little ‘spice’ to my portfolio every now and then. I have invested in some questionable stocks in the past and sometimes am willing to buy into troubled companies if I believe there is a light at the end of the tunnel. That goes for GE today and TEVA too. The beauty of having a large diversified portfolio is that no single stock, should it go to zero, can sink the ship or destroy the income it produces. That being said, HRL is my top pick for the month. I’m happy seeing HRL at 2%+. GIS at 4% would be great too but I don’t see that happening barring some crazy news related to the stock. As always, I appreciate your comment.

    • Hi MDD,

      I have to admit that HRL is my number one pick for the month of November especially if prices remain depressed going forward. As you stated, a lot can happen in a month where stocks you consider rise sharply and others you never looked at suddenly appear compelling. HRL yielding over 2% is interesting to me 🙂 Thank you for sharing your thoughts.

    • Hi DD,

      I like HCP post spin off a lot more, especially when it’s under $30 a share. It has climbed a little bit late last week but still looks attractive. Most of the health REITs have been performing quite poorly as of late and while GE, GIS, CAH, HRL, T and the like are getting most of the attention I think the REITs deserve a look too. As always, I appreciate your comment.

    • Hi Passivecanadianincome,

      Nice addition with CVS. I have been reading others pulling the trigger on that stock. I’m still not interested in that space though I admit the stock is looking a lot more compelling these days. As I have been saying, there’s no shortage of great stocks to choose from even with the market at all time highs. Thank you for sharing your thoughts.

  6. I like your list, especially HRL. HRL is a fantastic company. Sadly I’m down 20% on my holdings, and I don’t have too much capital right now. I love the company and wish I could buy more to bring down my average cost basis.

    On the bright side they should be raising their dividend this month!

    • Hi CD,

      You aren’t alone in liking HRL this month. Seems to be one of the more popular picks these days even with all the negative near term headlines surrounding the stock. I have all my stocks set to reinvest dividends automatically so even if I can’t afford to average down on my position I know that every three months my dividends will do it for me. Whatever you can do to keep that snowball growing. HRL still has plenty of room to keep raising its dividend for the foreseeable future. Thank you for stopping by and commenting.

    • Hi ED,

      No doubt HRL has been very popular as of late. Seems like most long term dividend investors have been picking up that stock with a yield north of 2%. For those with a little more taste for “adventure” GE might make sense. I still think the stock will do well over time. It’s a ship that definitely needs to be righted. It can be done. Thank you for commenting.

    • Hi dividendgeek,

      Nice work adding some GE. You aren’t alone in picking some up and I think that buying when others are crapping all over the stock might make good sense down the road. Usually the best time to buy a stock is when no one else wants it. Like you, I am considering GE as a potential average down. No shortage of good names out there. Thank you for stopping by and commenting.

    • Hi DG,

      I’m still on the fence about GE, and GIS or HRL appear to be much higher on my list of potential November buys. While they both are suffering near term headwinds it seems like they have less drama surrounding the stock when compared to GE. Thank you for sharing your thoughts.

    • Hi IH,

      Glad you like this list. There are quite a few solid, well known dividend payers that have been left behind in this rally. I guess if one wants a solid dividend GIS and HRL might make sense. For those willing to be a little risky there’s always GE 🙂 It will be interesting to see how the month unfolds. As always, I appreciate your comment.

  7. Hey DH,

    your thoughts about Mr.Market and the all the factors which “push and pull” are right on the money. No one can predict the market and we’ll get hit blindsided some day…to be honest, i hadn’t thought that this bull market keeps going and going without a significant healthy correction… but you’re right: tune it out, look for opportunities and build a portfolio which focuses on an ever growing income stream.

    Concerning the stocks on your list i really like VFC which i own 55 shares of and think of adding to my position. – HCP and LTC Properties are some solid Reits in my opinion, but i don’t own any of them.
    GE – tough question, they are looking cheap right now, but i’ll stay away. If a dividend cut is around the corner, and is executed, they’ll fall some more…

    Greets from Germany,
    DividendSolutions

    • Hi DS,

      All you can really do as along term investor is tune out all the noise, stick to you game plan, don’t get shaken out of the market, stay diversified and enjoy the ride because that’s what investing is really all about. The ups and downs that always happen. If you look back at the last eight years or so of headlines you will find a constant stream of negative news being pushed down our throats. I’m not saying that it’s always good times. Every economic cycle goes through boom and bust cycles it’s just that you have to stay in the game to profit and grow from it, not stay on the sidelines.

      I’m happy I added to my VFC earlier this year when everyone called it a dead stock. I’m not currently looking to add to my VFC but I do plan to keep it long term. The REITs have been doing horrible for several months now and are looking every more attractive. No doubt there are many stocks to choose from as the rally has left many solid names behind. GE still might be worth the dividend cut risk if you are inclined. When stocks are on the ‘operating table’ it’s usually a good time to buy. We’ll see how November unfolds. Thank you for sharing your thoughts.

    • Hi Ming,

      Everyone is waiting for that proverbial shoe to drop and it may or may not come. In the meantime, GE, especially in the teens looks very compelling no matter what happens to that dividend. It will be interesting to see how the year ends for that stock. Thank you for commenting.

  8. Love the list Divhut. HCP and LTC are some great companies. GE is such an interesting case and it is hard to decipher what the heck is going on with the company. Between the sales and the restructurings, I’m very curious to see what form of GE emerges from it all. I’m paying close attention, but that isn’t on the top of my list right now. One day though it easily coulp be.

    Take care,

    Bert
    Dividend Diplomats recently posted…Bert’s October Dividend Income SummaryMy Profile

    • Hi DD,

      It seems like most of us are looking at the same names in November. I considered CAH this month too but left it off my list unless some major decline happens. Who knows when the bleeding will stop for GE. You have to admit that at current levels it’s looking very compelling even with all the near term headwinds associated with the stock. I think if GE remains in the teens we’ll be reading about some buys being made in that stock. You have to admit, the best buying opportunities come at scary times. Thank you for stopping by and commenting.

  9. Good post DivHut. I stayed invested 100% equities during the uncertainty of elections a year ago and reaped the rewards with nearly $200k value gain in one year. That’s worth nearly 5 years of dividends for me. Now, I am not so sure. Even the tax reform was baked in so much that when news came out of 20% Corp tax rate, it didn’t move the markets much. Some sectors are outright nutty and bitcoin bubble is just one symptom. Markets are highly correlated these days and subject to ‘contagion’ effect. There is too much euphoria everywhere – this may be the time to take chips off the table, whether you are an indexer or dividend investor. One year’s worth of dividends can be wiped out in one week or less if volatility returns. I have seen this movie before – in 2000-02 and 2008-09 – and its gut-wrenching. Hope the next correction isn’t so bad.
    Ten Factorial Rocks recently posted…Live It Up in Retirement!My Profile

    • Hi TFR,

      Glad you enjoyed this post. As I mentioned in the article it’s almost impossible to figure out when things will turn south. I still believe the next correction, recession or whatever “bad” thing will happen will come out of left field and totally blindside us. Only in hindsight will everything be clear. The bottom line when it comes to investing is that one must do what they feel comfortable doing. Whether it’s staying fully invested, taking some chips off the table or leaving the casino entirely it’s a personal choice. For my long term investments I’m OK staying in the game even at these euphoric levels. As always, I appreciate your comment.

    • Hi Paul,

      Glad you enjoy this blog. There are quite a few DGI bloggers that hold MLPs. I used to own several a while back but have sold out of all my positions. Thank you for commenting.

  10. I’ve been eyeing HRL myself although via put options. I think I’ll probably sell another or do a buy-write to go on and get some shares in my portfolio. My position in GE is probably about as much as I’d like it to be because the company is definitely in transition mode now. But I agree it’s pretty hard to ignore in the teens and low $20s. MCD and VFC are both excellent case studies for some of the tried and true companies that fall on some hard times. MCD went through a similar slow down in the late 90’s/early 2000’s as well if I remember correctly. But these companies don’t just pack up and leave.
    JC recently posted…Steady As She Goes | Dividend Update – October 2017My Profile

    • Hi JC,

      Any which way to add HRL at these levels is good I think. I agree that GE will look very compelling if it stays around $20 or even dips into the teens. Sometimes it can be tough to buy when everyone else is crapping on a particular stock but that’s usually the best time to initiate or add to a position. I remember when MCD was in the teens around 2003. As you stated, these companies don’t just pack up and leave they find a way to adapt, survive and thrive. As always, I appreciate your comment.

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