October 2017 Stock Considerations

Can you believe it? October 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 mention some REIT picks which I haven’t bought in a while. I’ll get to those in a minute.

 

It’s no surprise that I’m singing the same tune again as we approach a new month. The market is continuing to grind ever higher and shake off every possible political, financial, social, global and weather related wrench thrown at it. Seems like ‘old hat’ rehashing this same sentiment but it just goes to show that no one can predict where the market is headed in the near term (days, weeks and months) and as long term dividend growth investors it’s best to simply stay in the market, keep adding additional funds regularly and collect those ever higher dividend payouts. I understand that it’s compelling to sit on the sidelines as indexes reach higher and higher milestones and build up a cash position but what does that accomplish when our primary goal is to build up our passive income stream? No one knows what tomorrow will bring and it’s folly to think that anyone will be able to pinpoint the “best” time to invest. After all, when would one feel compelled to jump in the market again? After a 10% decline, 20%, 30%? Instead of guessing, look for solid, well valued companies paying out sustainable dividends and enjoy the ride. With that being said, let’s review some stocks I’m considering for the month of October.

 

First up is a name I bought last month 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 very good to me at current levels even though the stock is up about 10% from its recent low reached in late August.

 

I am also continuing to look at Hormel Foods Corporation (HRL) and General Mills, Inc. (GIS) 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.

 

And now for some picks in the real estate sector. It’s been a while since I added to any of my health REITs in my IRA and September has not been kind to the sector. It seems that economic projections are looking up and with the markets moving in lock step with higher GDP estimates and a tax reform bill on the table, the Fed fears of potential interest rate raises are back in play. Whenever the markets get a hint of a potential interest rate raise the REITs get smacked. Of course, with the health REITs other factors are in play too such as oversupply in the market. With that being said, I am considering adding to my HCP, Inc. (HCP) and LTC Properties, Inc. (LTC) holdings as both have seen significant declines in September and are looking a lot more attractive these days.

 

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

 

Disclosure: Long JCI, ADNT, HRL, GIS, HCP, LTC

43 thoughts on “October 2017 Stock Considerations

  1. I am watching GIS and HCP right now too. Wondering if GIS will hit $ 50 after next earnings announcement. Great Company that will be around for a long time. They seem to be working on stronger products and cutting costs.

    • Hi JM,

      GIS still looks quite weak with GE also looking very attractive. I agree that GIS is a great company that has the potential to enjoy a nice turnaround in the coming months and years. Just look at what MCD pulled off the last three years or so when everyone wrote them off for dead. With interest rate hikes coming down the line the REITs have also been hammered. HCP and other large REITs have dropped a lot the last month. Thank you for commenting.

    • Hi DD,

      With the market continuing to push all time highs there are still quite a few gems out there selling at much better prices and higher yields. The REITs have all looked weaker as looming interest rate hikes put pressure on pricing in the space. For now, it looks like I’m leaning towards GIS or HRL. Thank you for stopping by and commenting.

  2. DHut,

    I am a big proponent of the consumer staples stocks right now (HRL, ADM, GIS, SJM, etc.). They present long term stability; and stepping back to look at the broader market one can see we have not had a crash / recession / correction now for a really long time. Those kind of stocks are excellent anchors during turbulent times.

    – Gremlin
    Dividend Gremlin recently posted…Big ChangesMy Profile

    • Hi DG,

      No need to convince me about the resilience of well known consumer staples. It’s my favorite sector to park long term cash and when the tide shifts in the market, though stock prices may drop, those dividends should continue to come in which is why I continue to like several names in the space with HRL and GIS taking top billing for me. As always, I appreciate your comment.

  3. Hut –

    Definitely also have my eyes on GIS, HRL & HCP. Interesting Shakeups from the Amazon->Whole Foods movement and the impact on the consumer goods. Are more people going to “craft” brands now? Margins getting squeezed by Amazon? Very interesting… shouldn’t they be used to the squeeze from Walmart?

    -Lanny

    • Hi DD,

      AMZN continues to make great headlines for the financial media to pounce upon. Personally, I think a lot of it is overblown hype. So there’s a new player in town. This isn’t the first time consumer brands nor retail outlets had to deal with a new threat. Could things get squeezed? Could margins suffer? Sure. But I am confident that these companies will find a way to adapt, adjust and grow over the long haul. I’m sticking with my consumer staples and continue to watch the REIT massacre as interest rate hike fears take hold. There are many great plays out there even with the market at all time highs. Keep on buying!

  4. DivHut,
    Long GIS like you and have been watching it tumble over the last year making the yield more attractive. I need to dig in on this stock and sector a bit before I’m ready to commit additional funds. Changing consumer trends and slow adaptation to these changes seem to be holding the stock back. I’m not sure if that is perception or reality. I usually give big successful branded companies like GIS the benefit of the doubt that they will figure it out eventually and get back on track.

    I had a small position in HCP and was burned by the dividend cut. Sold it and likely won’t go back.

    I will probably add to my Wisconsin Energy Group (WEC) holding today. I think it’s a little overvalued, but I am dollar cost averaging in over a number of purchases.

    Good luck with your next buy. Totally agree with your underlying premise, gotta get in and stay in to collect our dividends no matter what the market is doing.

    Have a great weekend,
    Tom
    Tom @ Dividends Diversify recently posted…U.S. Utility Sector: Should You Invest Now?My Profile

    • Hi DD,

      Like you, I also give ‘big successful branded companies like GIS the benefit of the doubt,’ as they have witnessed many headwinds over their long histories and more often than not have been able to adapt and shift to changing consumer tastes and trends. The REITs are looking compelling these days. I can understand feeling burned by HCP but sometimes dividend cuts need to occur to ensure greater chances of success over the long haul. The new, leaner HCP definitely has a better chance of doing well today than just a couple years ago. I’ll continue to hold and add as REIT prices remain depressed. Stay in the game 🙂 Thank you for commenting.

    • Hi MR,

      Nice GIS pick up. It’s still on my short list for the month of October. Hard to argue with a yield getting close to 4% that’s still safe. Keep nibbling and buying when you can. Thank you for stopping by and commenting.

    • Hi Passivecanadianincome,

      The consumer staples are my largest holdings too and I’m OK with that. I’ll gladly continue to add to solid known dividend payers in the sector and enjoy those higher and safe yields as prices have come tumbling down. GIS and HRL are still on my October short list for potential buys. I like CAH still. I wouldn’t mind adding more to my holding but will wait for lower pricing. There is some near term fear surrounding the stock as AMZN contemplates getting into their turf. Thank you for sharing your thoughts.

    • Hi MDD,

      It looks like GIS and HRL are on the minds of many of our investing peers. It’s for good reason. Both stocks are sporting pretty high yields and are still very safe. I still have not made my October buy and with two plus weeks to go it looks like GIS might be my pick. We’ll see. As always, I appreciate your comment.

    • Hi DD,

      All three names you mention are offering some pretty compelling reasons to buy. GIS and HRL continue to offer relatively high historic yields and are deemed safe based on current cash flow. HCP and other REITs are also looking quite weak with impending interest rate hikes. No doubt, there are quite a few good choices to park your money these days even with the market at all time highs. Thank you for commenting.

    • Hi ED,

      Like you HRL is still on my short list for a potential buy in October. I also like LTC a lot but would wait for slightly better pricing before adding to my holding. I’d take the chance on the new, leaner, post spin off HCP for the long term at these levels. CAH is looking good too and with the AMZN pharma threat looming many stocks in the space like ABC, MCK and more are tumbling. With two plus weeks to go in October it looks like I’m leaning towards a consumer staple play. Thank you for sharing your thoughts.

    • Hi Jay,

      I agree. I think we’ll see many more market highs in the near term. It will take some left field catalyst to take us down that dark dreaded path we have all been waiting for. In the meantime, it’s business as usual and I’ll continue to make my monthly buys and slowly build up my passive income stream. People have been calling for a correction for several years. Clearly, no one can predict with accuracy anything in the near term. I predict the DOW will reach 30K or 15K. It’s all meaningless. As always, I appreciate your comment.

    • Hi D4F,

      Both GIS and HRL are ‘old time’ consumer staple plays that really don’t look all that sexy when compared to AMZN and the like. I agree, that many are chasing the flavor of the day rather than focusing on some of the more solid and proven dividend paying stocks. It was no more than three years ago when MCD was left for dead. An old consumer play that did not appeal to the new generation’s tastes and preferences. Slowly but surely the company has adapted and look where it stands today. I see the same with GIS and HRL. They are slowly adapting to changing consumer tastes and should come out fine down the road. If GIS hits a 4% yield I think you’ll see many of us buying into that stock 🙂 Thank you for commenting.

    • Hi TI,

      Don’t remind me about how fast the year is moving along. Halloween is already in the air, before you know it, Thanksgiving, Christmas and Happy New Year! Time flies by way too quickly. HRL is a dividend king that has been raising dividends at a very nice clip for decades on end. It’s currently out of favor as many other packaged and processed food companies are as well but I think they are changing and adapting to meet current consumer tastes and trends. Reminds me the of the MCD turnaround that started a few years back. I keep all my REITs in my IRA precisely for the income tax reasons you mention. They can still make great long term investments and with impending interest rate hikes on the table they are all suffering in the near term. As always, I appreciate your comment.

    • Hi DP,

      Based on the comments left it seems that most of us are liking GIS and HRL this month. The yields are quite high and still very safe based on current cash flow so why not nibble a bit at these levels. HCP and other REITs are also looking quite weak with impending interest rate hikes on the table. I keep all my REITs in an IRA as taxes on those distributions can be quite high in a regular brokerage account. Thank you for stopping by and commenting.

    • Hi Anonymous,

      Thanks for that bit of information. I am OK with a dividend remaining flat as long as the yield is quite high which is the case with LTC. My portfolio is a mix of lower yielding high dividend growth stocks as well as some higher yielding lower dividend growth stocks. As long as income is being produced I’m OK. Thank you for commenting.

    • Hi DS,

      HCP scarred many holders of their stock but I’ll continue to stick with the name long term. With impending interest rate hike fears in the mix many REITs are selling at much better levels these days and long term I still like the health REIT sector. Thank you for sharing your thoughts.

    • Hi DD,

      Appreciate those kind words. It’s all about making consistent buys in names that are seemingly unloved. JCI, HRL, GIS, HCP and many more definitely fall into that category. Even with the market at all time highs there are quite a few places to park your cash and collect dividends. Thank you for stopping by and commenting.

  5. hi DivHut, I am also considering adding more to my tiny HRL position! I am very new to investing & DGI. please have a look at my portfolio, your opinion is really appreciated

    • Hi Khaled,

      HRL is a well known company selling many branded items that are seemingly out of favor which is partly why the stock price has been suffering as of late. I think they will be able to pull off a nice turnaround as they are making headway by acquiring companies that meet the current consumer tastes and trends. It just takes time. I’ll take a look at your holdings too. Thanks for sharing.

    • Hi GK,

      That’s true that people will always need a place to live. It’s a bit of an oversimplification but I get your point. I like the health REITs the most long term followed by the apartment REITs. I have ESS, MAA, EQR and AVB on my long term watch list but do not hold anything in the space yet. With interest rate hike fears in the midst the REIT sector has been looking a lot more interesting these days. Thank you for commenting.

    • Hi Doug,

      GIS and HRL are the flavors of the day. Seems like everyone is considering or nibbling on those two names as they continue to look depressed. GE is also starting to look compelling too these days. No doubt we have many choices when it comes to individual stocks to consider this month. I’m still leaning towards the consumer staples this month with HCP running third 🙂 We’ll see. As always, I appreciate your comment.

      • Wait till GE announces next week I think a dividend cut is in the works. They seem to be doing the opposite of what they should be doing. Selling off all its core businesses to me GE is appliances but they sold that business sector earlier this year. They need a revolutionary like Welch back at the helm who demanded the best
        Immelt needs to go in my opinion
        Doug recently posted…Sept 17 DividendsMy Profile

        • Hi Doug,

          We’ll see how GE plays out over the coming year. I think all the negative headlines surrounding the stock are a bit overblown. Of course, you know the best time to buy a stock is when it’s struggling and these days GE certainly fits that bill. Thanks for the reply.

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