October 2016 Stock Considerations

Here we are, entering the final quarter of 2016. It kind of scares me to write that as I look back at the last nine months of the year and wonder at how fast it all flew by. Baby DivHut celebrated his first birthday earlier this year, we took a nice long road trip in the summer up the west coast visiting three states, and as fall starts to make itself felt with each passing week, I can already anticipate the sun setting on 2016. Of course, as we all try and make the most of every day by working hard for others or for ourselves we all share the common goal of generating an ever increasing passive income stream via dividends, options, rental properties, blog income and more. With a new month upon us it’s time, once again, for me to look at my portfolio holdings and watch lists and figure out where I’d like to deploy my fresh capital in October.

 

Looking back at the month of September, I had made eight separate buys in seven different companies which included two new names added to my portfolio. Those stocks included newcomers Cardinal Health, Inc. (CAH) and T. Rowe Price Group, Inc. (TROW) and old favorites, General Mills, Inc. (GIS), The Coca-Cola Company (KO), McDonald’s Corp. (MCD), V.F. Corporation (VFC) and Wells Fargo & Company (WFC). Though each of my buys could be considered nibbles at best, as each buy was on the small side, collectively I put $2,381.27 to work in my taxable account for the month. Not a bad total to help continue pumping dividends my way. Looking ahead, I would like to continue to put fresh capital to work in some of my smaller holdings to further even out my dividend income stream.

 

The first name I am considering for an October buy is Johnson Controls International plc (JCI). This is an old name in my portfolio that has been with me since 2007 and with a recent merger completed last month (more on that in my next dividend income report) with Tyco International plc (TYC) I am looking add some shares to the newly formed company. JCI is a company divided into three distinct segments including HVAC and building efficiencies, battery technology and automotive interiors. As a result of the merger with TYC, JCI will combine its HVAC and building efficiencies and battery technology units with TYC and jettison its automotive interiors segment as a spin off called Adient (ADNT). For the most part I love stock spin offs as it tends to unlock value in both the parent and child company over time. To date, I have kept every spin off in my portfolio.

 

Another consideration of mine in October is to continue to nibble on T. Rowe Price Group, Inc. (TROW). Valuations and yields for this stock continue to look attractive in an otherwise expensive market. In the same financial vein, I am also considering an American bank that has been quite popular among the DGI community as of late, but not in the media, Wells Fargo & Company (WFC). This stock continues to get dragged down which only offers us better buying opportunities and higher yields.

 

Of course, I usually end these “considerations” posts with the caveat that Mr. Market makes all the rules and names that are not mentioned above may suddenly become attractive to accumulate. I still would like to add to my consumer staples and health sector stocks but am having trouble finding any decent value at this time.

 

What are some of the stocks you are considering for your October purchases? Are any of the above names on your monthly watch list? Please let me know below.

 

Disclosure: Long CAH, TROW, GIS, KO, MCD, VFC, WFC, JCI.

38 thoughts on “October 2016 Stock Considerations

    • Hi R2R,

      This month I plan to add to my existing holdings unless there is some amazing sell off that would entice me to initiate a new position. For now, it looks like JCI is in the running for an October buy. Curious to know what you think of JCI going forward after the merger with TYC and expected spin off later this month. As always, I appreciate your comment.

    • Hi StD,

      I never liked media companies and never once considered VIAB for that reason. There are just some sectors I do not want to invest in for the long term as I see their industries as being very fickle. I think you are not alone in dumping VIAB after the dividend cut. I like EMR a lot long term. It’s another very old holding of mine since 2007 and it will be interesting to see how it will perform going forward after it recently sold its network power business for $4 billion. With all that new cash I think EMR may go on a buying spree to build up its own top line revenue stream. Thank you for commenting.

  1. I have look at JCI in a while but the company looked solid when I did. Too bad the stock didn’t. I think Nike and Starbucks look decent here as growthier plays. VIsa is around fair value but the yield is tiny. WFC should still be fine over the long run, but man if they could go at least a couple hours without being mentioned I’m sure the BoD would be happy.

    • Hi JC,

      JCI is a very solid company with a pretty good dividend history as well. It will be interesting to see how it plays out going forward after its merger with TYC and how its spin off ADNT will perform as well. I have no intentions to sell my JCI stock nor the spin off once it occurs. I agree that SBUX and NKE are looking a lot more attractive in recent weeks as I continue to have SBUX on my watch list but not quite ready to pull the trigger yet. I think in October I’ll be sticking with adding to my current holdings instead of initiating a new position. Thank you for stopping by and commenting.

  2. DivHut –

    Nice mentions, love that WFC has taken a beating, which we all know they should be fine in the long-term + you are able to capture it at a great yield! Keep a close eye on the ex-dates, as with TROW, you should have ample amount of time – just in case if you’d like to see it lower. Again, though, buy at your price : ) Nice list!

    -Lanny
    Dividend Diplomats recently posted…Bert’s 3rd Quarter Goals ReviewMy Profile

    • Hi DD,

      It will be interesting to see how October unfolds. Last month was the first time in a while that we have seen some crazy volatility with many new opportunities to invest presented to us. WFC is one, TROW is another, but have you seen VFC’s stock price recently? That solid dividend payer has dropped about ten points in the last month. Looks like there’s no shortage of really good investment opportunities this month. If nothing else, I’ll continue to nibble on my positions and if we see some really scary days I may even start to gorge on stocks. As always, I appreciate your comment.

  3. DH,

    I like those financials, I think both are attractive purchase points. WFC’s pain will pass – and the ultimate irony of the situation brought out by the scandal and CEO’s congressional grilling will be that savvy buyers will simply just take advantage of the weakness. In this case the smart and rich will get richer. I don’t know a lot about JCI’s internal workings, but I do know about their products from experience. They do have excellent products though, and that is what should speak the most truth.

    – Gremlin
    Dividend Gremlin recently posted…Recent Buys Part 2, Sept. 2016My Profile

    • Hi DG,

      It looks like quite a few solid financial names are selling at discounts these days. Are we getting an early Xmas gift with lower WFC prices? Perhaps. I tend to agree with you that in time the WFC debacle will pass. People have short memories. After all, people died from Jack in the Box (JACK) food after an E. coli outbreak in 1993. Look at how that stock performed over the last 20 years. No one died or got sick with WFC, not that I’m condoning what happened at all. It’s just that once things are removed from the sensationalized media, things seem to calm down. I’m curious to see how my JCI will perform going forward after this merger as well as the new stock spin off ADNT coming in about a month. Thank you for stopping by and commenting.

    • Hi FC,

      I know Enbridge is quite popular among many of our fellow dividend bloggers as I have seen that name in quite a few portfolios. I still like TD and other large Canadian banks but felt it was time to put the brakes on new purchases as those positions have already become a good size in my ROTH account and have really roared back from their earlier 2016 lows. Of course, should those names drop in price I’ll be adding, but not at current levels. Thank you for sharing your potential buys for October.

  4. Interesting choices, all look like very attractive companies. JCI is new to me, so looking forward to your dividend income report. We bought WFC recently, right before they slumped down. We might average down on this one. We also keep an eye out for Starbucks and Nike, both seems to be attractively valued.

    • Hi Divnomics,

      I think many of our fellow dividend bloggers are looking into WFC as prices continue to get beaten down offering us much better values and yields. If funny how when times are tough for a particular stock everyone seems to butcher it, when that is the best possible time to buy into a company that still has a positive future prospect. I think most investors are happier to buy when stocks have already risen in value and everything appears to be rosy. I wouldn’t fret too much about buying into WFC right before the drop. If your time line is a decade or more away your WFC purchase should serve you well. SBUX and NKE are looking more enticing these days too. Thank you for sharing your thoughts.

    • Hi MrSLM,

      As I mentioned, I nibbled on both KO and MCD last month. Honestly, I would love to buy into many more consumer staples and health stocks these days but I’m not ready to pay up for such crazy valuations for little to no growth companies. In the meantime, I’m left with better prices, value and yields in WFC for obvious reasons, along with a few other names that I’d like to boost my current stake. As always, I appreciate your comment.

    • Hi OH,

      It looks like many financial names are trading at pretty good values and yields. Of course, WFC comes to mind right away but so does TROW and even TRV which I have on my watch list. Like you, I’m also watching GILD and AMGN but not ready to buy just yet. As I commented below, it will be interesting to see how a combined JCI/TYC will perform along with the new spin off ADNT. Not sure why I don’t see JCI in other dividend portfolios. Thank you for stopping by and commenting.

    • Hi FerdiS,

      We have all seen WFC make the rounds in recent weeks among our fellow dividend bloggers as prices continue to be depressed and yields are becoming too juicy to ignore. I’m still in nibble mode in terms of stock acquisitions but if we see a severe market decline I may have to gorge. JCI is a good name to consider for a long term dividend growth portfolio. As I mentioned I have held it since 2007 and going forward it will be interesting to see how a combined JCI/TYC will perform along with the new spin off ADNT. Thank you for sharing your thoughts.

  5. Nice list Keith – you mention quite a few I haven’t heard of before. It’s always nice to pick stocks up on a discount, so perhaps now is the time for WFC?

    In Australia, all of the telecommunication companies are taking a bit of a beating at the moment (there has been a lot of consolidation over the last few years, now the big remaining players don’t have much else to buy, so future growth an expectations are now limited). If we dip our toes in the market whilst they’re still depressed prices, we may buy one or 2 of those.

    Tristan
    Dividends Down Under recently posted…Dividend update: September 2016My Profile

    • Hi DDU,

      It will be interesting to see how October trading unfolds and whether or not WFC continues to take a beating. If so, I will probably be tempted to nibble on that name some more. If the Aussie telecoms can continue to operate as a quasi-monopoly, as in most countries, you may be well off to buy into some of those names as prices remain depressed. Even if growth is limited they still may be able to perform as utilities do, offering little growth but very steady passive income streams. As always, I appreciate your comment.

  6. Nice buy list, DH! I myself pulled trigger on WFC as it is getting to nice value. In general though, I’m getting cautious with the market, there has not been a decent pullback since long time, its kind of crazy. On the other end, I get this feeling that as long as rates remain this low, market may keeping going up, ignoring all the normal metrics. Market always does its own thing and has a mind of its own. keep up the nice work.
    Race2Retirement recently posted…Dividend Income Update – September 2016My Profile

    • Hi R2R,

      The market is always irrational. When things pop or drop it’s always a knee jerk reaction even though fundamentally nothing has changed for the business. Should certain stocks be trading at crazy high multiples with little or no growth? No, but they do. Will WFC get hammered in the near term even though their long term business remains unchanged and the prospect of future rate hikes will only make their business more profitable? Probably so, which means it may be a good time to pick up some shares. Without trying to find the ‘perfect’ time to buy or to sell, the one thing we can do is diversify our portfolios and buy good value when we see it. As always, I appreciate your comment.

  7. Great list Divhut. Cheers to Cardinal Health during the month! Isn’t it crazy that 2016 is coming to an end? Man, so many great things happening during the year.

    Like Lanny said, I’m liking Wells Fargo right now. Kinda of reminds me of Target’s credit card scandal, but obviously this one is internally driven versus the third party hack. We will have to see what Mr. Market gives us his October, should be interesting!

    Bert

    • Hi DD,

      CAH seems to have done pretty well in late September. That’s a name I’d like to build on if it goes on sale once again. Don’t remind me of how fast 2016 is flying by. It’s a little sad in a way because I’d like to savor those baby DivHut moments as long as possible. He’s growing too fast. Regarding WFC, I think it will blow over as did the TGT hack and deaths and poisonings from other companies like JACK or CMG recently. In the back of my head I do wonder if this WFC revelation will show up in other American banks as I’m sure they are all under the magnifying glass these days too. If we see something similar pop up from JPM, BAC, USB and the like goodbye confidence in any American bank. Look forward to seeing how October unfolds and see where we all deploy our fresh capital. Thank you for commenting.

  8. I’m starting to like the prices of some of these companies right now. VFC had a pullback lately putting it in a more attractive price point for me. CAH is in a similar spot as well. I’m also starting to consider WFC although I think the risk/reward scenario isn’t quite there yet – I’d like to see it below $40.
    timeinthemarketblog recently posted…September dividend updateMy Profile

    • Hi timeinthemarketblog,

      There’s no doubt that we are getting some pretty good, or at least better, buying opportunities in some very solid traditional dividend paying stocks. I can’t believe how fast VFC fell from its highs not that long ago. I really like that company a lot long term. CAH is still a very new position for me though I would like to build it up from current levels. We’ll see how things pan out this month. WFC is still getting grilled too and near term it could get quite ugly for that name. Thank you for sharing your thoughts.

    • Hi RGB,

      That’s a great way to think about any stock/investment you plan to make… be a partner. All that means is you recognize that you are buying a piece of a real business and go along for the ride for better or worse. Like you, I have a long term outlook of at least ten years when I make my buys. Thank you for stopping by and commenting.

  9. Hi DivHut,

    TROW and CAH are definitely on my watch list.

    In mid term I would rather watch out for McD. Look, they are making lots of business on real estates which they own and credit is cheap – there is a huge downside potential in my opinion… the other issue is when rates will go up…

    As you saw on my website and I do not see it in October 2016 stock considerations also Gilead is worth to be considered or as you proposed AMGN.

    Best regards,
    DividendTIME
    DividendTIME recently posted…TIme to buy – Gilead SciencesMy Profile

    • Hi DT,

      There’s little doubt that these days we have a lot more opportunities to pick up some solid stocks on “relative” sale. Just look at WFC, VFC, GILD as you mentioned, among many others that are trading at much lower prices than just a month ago. Lower prices mean better values and juicer yields for us long term dividend growth investors. Thanks for sharing your opinions about where to potentially deploy fresh capital.

  10. Hi there, nice portfolio, I was wondering which brokerage company do you use? You made a bunch of small purchases and I was wondering if the commission you pay is high.

    • Hi Frank,

      I make all my purchases through CapitalOne Investing (formerly Sharebuilder) and pay a grandfathered commission rate of $2 per trade under a promotion Sharebuilder had for Costco members. My normal trades are $800 and up so as to minimize my commission percentage. Orders that are less than $800 occur from time to time when I have free trades available to me. Many of my recent trades have been free which is why they were smaller. Thank you for commenting.

Leave a Comment

CommentLuv badge