September 2018 Stock Considerations

A little late with this post as I like to highlight my potential stock buys in the beginning of the month but sometimes it can be tough deciding where to deploy fresh capital when many stocks are trading at premium prices. Of course, we all know that no matter how high the market rises there will always be a gem in the rough lurking somewhere. With that being said let’s take a look at some of my September stock considerations.

 

I’ll potentially be looking to add to a couple of my health REITs that have been showing some signs of life when compared to their performance in early 2018. These buys will allow me to average down my cost basis while continuing to enjoy some generous yield. It’s been a while since I added to any of my current REIT holdings and HCP, Inc. (HCP) is starting to look OK to me once again. Seeing HCP well below a $30 price could finally compel me to trigger a buy. Also, in the health REIT space I am looking to add to my Sabra Health Care REIT, Inc. (SBRA). The stock has climbed a lot from its lows of 2018 as this skilled nursing REIT play still demonstrates a difficult business environment. Of course, that generous yield, which highlights some of the risk involved with the stock, can justify the risk/reward scenario.

 

Finally, I’ll continue to look at some of the utilities for a potential buy in September. Last month I added to my Dominion Energy, Inc. (D) as the stock continues to look attractive to me sporting a juicy yield of 4.6% with a moderately high payout ratio of 81.1%. It also has a very respectable ten year dividend growth rate of 7.6%. I am also considering adding a new holding to my portfolio, PPL Corporation (PPL). As with D, PPL is another juicy yielding (5.3%) utility with U.K. exposure that offers a sustainable dividend with a payout ratio of 70.0%. While not a stellar dividend grower over time the high current yield makes up for that deficiency. While utilities are rarely exciting investments, they can offer stability and predictability to any dividend income portfolio.

 

What do you think about my potential September buys? Are any of these names on your watch list? Please let me know below.

 

Disclosure: Long HCP, SBRA, D

9 thoughts on “September 2018 Stock Considerations

  1. Keith,

    I like both D (also own it) and PPL. Of the two D probably has better prospects considering the SCANA issue. However, I really like the geographic and national diversity you get with PPL. For that reason I am watching PPL and NGG a lot.

    – Gremlin

  2. I initiated a small position in DLR last week which wasn’t the best value purchase but it’s a reasonable buy. Unfortunately I’m pretty much tapped out for cash while we continue to focus on debt pay down but that should be done hopefully by the end of November if not then December. I need to start getting some utilities into my portfolio because of their generally higher yields and slow, but steady growth. Thanks for sharing some names that look interesting to you.
    JC recently posted…Freedom BuyMy Profile

  3. Hello DivHut,

    I am hopeful we will see more favorable purchase price points for REITs between now and the end of the year. If these declines in REIT valuations materialize, I would like to add to my WPC position in low $60s which is another ~5%+ drop, I would be looking at HCP and a few others as well.

    My latest purchase was BAYRY as the significant value decline in its market cap has been absolutely ridiculous in light of the herbicide fears IMO. With respect to utilities, I’ve kept my eye on both PPL and NGG.

    PIV

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