Being a dividend growth investor I try to always focus on stocks that have a history of rising dividends and make my stock purchases accordingly while at the same time make consistent investments on a monthly basis. Of course, this is easier said than done in today’s market environment where PE’s and other traditional metrics used to value stocks are at or near all time highs. Sometimes, a month or two may pass without any new investments. Over time, this may limit your yearly dividend income as you forfeit compounding time that would naturally raise your dividend income on an annual basis. That being said let’s review my recent trades made in my taxable brokerage account.
First, we have Johnson Controls Inc. (JCI), a consumer goods manufacturer that operates in three distinct business sectors (Building Efficiency, Automotive Experience and Power Solutions). JCI’s building efficiency unit designs, produces, markets, and installs integrated heating, ventilating, and air conditioning systems (HVAC). It’s automotive experience division designs and manufactures interior products and systems for passenger cars and light trucks. If you ever sat in a vehicle, chances are you saw and used a JCI dashboard. Finally, the power solutions segment produces lead-acid automotive batteries and lithium-ion battery technologies for hybrid and electric vehicles. Think all the hype about Tesla’s new battery facility being built. With that being said, JCI is a very good candidate for creating a stock spin off of any one of its divisions.
JCI has a long history of dividend payments going back about 30 years. JCI’s payout ratio is extremely low by any measure at 28.0% which can ensure a dividend payment and even a raise in coming months. Though not a traditional annual dividend grower it does offer a consistent yield now at 2.00%. The PE is a little rich these days at 22.35 but I was light in this sector at only 2.63% of my portfolio and was looking to boost my interest in this space.
Next, I increased my General Mills, Inc. (GIS) holdings in my portfolio. GIS doesn’t really need an introduction as I’m sure everyone has been a consumer of at least some of their many products. GIS has been a long time favorite of mine through thick and thin offering a very generous 3.03% yield and modest payout ratio of 57.1% and with a PE of 19.84 it’s a “relative bargain” in these markets. GIS also has a long history of paying dividends and about a decade of growing dividends. As you can see from my portfolio I do favor consumer staples a lot which is why I added to my GIS position.
Finally, I increased my position in AFLAC Inc. (AFL) this month. AFL is another name that everyone should be familiar with as it is one of the better known supplemental health and life insurance companies out there. AFL is another longtime holding of mine that sports a low PE of 9.74 with a yield of 2.30%. I am generally light in the financial sector within my portfolio, only accounting for 7.42%, and was looking to increase my exposure in that sector. AFL has a very long history of raising dividends going back several decades and with a low payout ratio of only 23.7% one can expect future divided raises from this company.
What do you think of my recent buys for the month of May? Do you have any of these holdings in your portfolio?
Disclosure: Long JCI, GIS, AFL