What a wild ride August has put us through. The month has shown us that no place was safe to hide as the Dow, S&P, NASDAQ and practically all commodities swooned violently and recovered somewhat before closing out on the 31st. The seeming financial contagion has seen its roots take hold across Asia as China’s Shanghai Composite Index fell a whopping 12.49% while Hong Kong’s Hang Seng ended the month down 11.94% and the Nikkei declined 8.23%. Of course, European markets performed poorly as well, and the American markets saw its biggest monthly decline since 2010. What does all this mean for a long term dividend investor? Sale! After such a poor performing August multiple stocks across various sectors are looking a lot more attractive. Many industrial names are suddenly sporting much better valuations as well as yield along with a few consumer staple names that are starting to make my consideration list for September.
August was a light month for new buys in my portfolio as only one purchase was made the whole month. I’m looking to buy more in September, especially if the market continues to provide opportunities for me to average down on some quality dividend payers I already own.
With that being said, let’s take a look at my September stock considerations.
First on my list is Caterpillar Inc. (CAT). A dividend stalwart that needs no introduction, CAT has fallen dramatically out of favor as troubles in China and the energy sector weigh on this cyclical giant. With a current dividend yield sitting around 4% this industrial name is hard to ignore.
In similar vein, another industrial giant that has been taken to the wood chipper and has caught my eye is Emerson Electric Co. (EMR). Another dividend “giant” with aristocrat status, EMR is sitting near 52 week lows and also sports a relatively high dividend yield approaching 4%.
Sticking with the industrial theme, Dover Corporation (DOV) is another September consideration of mine. A company with a very long history of dividend raises is no doubt feeling a bit of pinch because of lower oil prices as demand for their oil and gas services are weakening in the near term. While not the highest yielding of the bunch, DOV looks a lot more attractive in recent months as valuation is coming more in line with present cash flow.
In the consumer goods space Archer-Daniels-Midland Company (ADM) is making my radar screen as well. Another dividend aristocrat which is currently sporting a PE of 12.3 which is well below its five year average of 15.4 has a current yield of 2.41%. Of course, current commodity price headwinds persist for this name but with the current market swoon ADM prices have become a lot more attractive.
As usual, no month of potential stock picks would be complete without the mention of my three favorite Canadian bank stocks, The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS) and Royal Bank of Canada (RY). It seems that all five of the large Canadian banks have seen substantial declines in August driving the current yield for all three of these stocks to well over 4%, a yield which is hard to ignore especially since it’s well covered by present cash flow. Of course, I always qualify these stock considerations with the premise that Mr. Market may have other plans for my portfolio but more often than not I stick with my list each month.
What do you think about my September stock considerations? Are any of the names mentioned on your potential buy list as well? Please let me know below.
Disclosure: Long CAT, EMR, DOV, ADM, TD, BNS, RY