September Stock Considerations

A new month is upon us which means it’s time to take a look at the market in general, our portfolios and cash on hand to invest and make our September stock selection(s). August was an interesting month for me in terms of my stock picks as it was the first time in about seven years that I initiated new positions in my stock portfolio. Those new positions included, The Bank of Nova Scotia (BNS), The Toronto-Dominion Bank (TD) and Royal Bank of Canada (RY). Three large Canadian banks that have very long dividend histories, attractive yield and in my opinion a solid financial footing relative to most American banks.

 

For the regular followers of DivHut you have seen me add, almost exclusively, financial sector stocks to my portfolio for the last several months. Popular names in the space included AFLAC Inc. (AFL), The Chubb Corporation (CB) and Wells Fargo & Company (WFC). It’s no surprise that I find the financial sector to be one of the best in terms of relative value in the stock market today. We all know how expensive most stocks are relative to historical averages but this is the hand Mr. Market has dealt and we must continue to search for “relative” bargains each month. That being said, my September stock considerations are going to mostly be in the financial sector.

 

As in previous months I might add to my existing shares of TD, BNS, RY, AFL, CB and WFC. Some new financial stocks I am considering are Bank of Montreal (BMO) with a current yield of 3.90% and Canadian Imperial Bank of Commerce (CM) with a current yield of 4.00%. Ever since my article titled, “Canadian Century Club Dividend Stocks” was penned I have been very turned on to the large Canadian banks.

 

Staying with the financial sector I am also considering for my ROTH account a new position in the following health care REIT stocks.

 

I am considering HCP, Inc. (HCP) with a juicy yield of 5.20%, Ventas, Inc. (VTR) with a yield of 4.50%, Omega Healthcare Investors Inc. (OHI) with its high yield of 5.60%, LTC Properties Inc. (LTC) yielding 5.30% and National Health Investors Inc. (NHI) yielding 5.10%. Clearly, the attractiveness of these REITs are twofold, high current yield and potential growth in an investment theme that suggests a larger elderly population in the U.S. in the coming decades. I realize that these names may not be the most aggressive dividend growers but they all do offer very high current yields with a high potential for capital appreciation.

 

To be honest, I would love to potentially add some stocks outside the financial sector as well but I’ll have to see how my investment funds will play out for the month. Looking outside the financial sector some names that are popping up on my radar include, McDonald’s Corp. (NYSE: MCD) with its nice yield of 3.40% and more attractive share price compared to previous months, General Mills, Inc. (NYSE: GIS) with its yield of 3.20%, Kraft Foods Group, Inc. (NasdaqGS: KRFT) yielding 3.80%, General Electric Company (NYSE: GE) yielding 3.50% and potential new position Unilever plc (UL) yielding 3.50%.

 

I realize that my shopping list is quite long this month and as the saying goes, so many great dividend paying companies to invest in, so little capital. Of course, these are just investment ideas as Mr. Market has a way of sometimes making an investment decision for you in a stock you might not have otherwise considered. Regarding my portfolio allocation I am still on the lighter side with regard to financial stocks and quite heavy in the consumer space. That fact alone might greatly influence my September buying decision as I look to balance my portfolio a bit with greater financial exposure.

 

What stocks are on your shopping list for September? Are any of the names I am considering on your list as well? Please let me know below.

 

Disclosure: Long AFL, CB, WFC, TD, BNS, RY, MCD, GIS, KRFT, GE

50 thoughts on “September Stock Considerations

    • Hi David,

      You have to like the Canadian banks for their resilience throughout the financial turmoil of five years ago and their long and rich dividend histories. Thank you for stopping by and commenting.

    • Hi PIP,

      Thanks for sharing your plans for the coming month. CB is a great long term hold in my opinion and has been in my portfolio for seven years. As far as insurance companies I’m only invested in CB and AFL. I was looking at ORI but I’m not ready to consider buying into it just yet. Are you too heavy in the REIT space now?

      • I don’t feel that I’m all that heavy into REITs but I have some decent exposure. My total REIT exposure is around 5-5.5% of my taxable account portfolio and I’d be willing to push it up to 10% given the right conditions. I think we need some interest rate scare to knock them down 5% or so to give some better values, at least in my opinion. I am looking to add OHI to the mix though in the REIT space.
        JC @ Passive-Income-Pursuit.com recently posted…How To Get Someone Started: Part 2My Profile

        • Hi PIP,

          Thanks for giving me your insight into the REIT space. I do agree a nice drop would be nice for me to initiate a position in this sector. I don’t think it will be interest rate hikes that spook the market though. If I do add REITs it will be in my ROTH account to be more tax efficient.

    • Hi w2r,

      Thanks for sharing your considerations for the coming month. There is definite overlap between our lists. I know MAT and HAS are pretty popular among the dividend bloggers but I never was interested in investing in that sector. From the names you mention I’m probably leaning towards MCD and AFL the most. MCD has a great current yield and growth while AFL has great dividend growth. As I always say, we’ll see what Mr. Market has in store for September. Thank you for stopping by and commenting.

    • Hi LAH,

      Thanks for sharing your consideration of RAVN. I have to say I have never heard of that one. It’s a little too small for my taste in terms of market cap. While my list is quite long I know I’ll be able to buy at most two or three of the names mentioned. I appreciate your comment.

    • Hi DV,

      I have my ROTH account set up at Sharebuilder. Sharebuilder is where I hold all my long term dividend paying stocks. The nice thing about a ROTH, as you know, is that it makes owning REITs, MLPs and even Canadian stocks a lot more tax efficient. Thank you for stopping by and commenting.

  1. Thanks for the insight…always nice to see what other dividend investors are have their eyes on. There are certainly a few mentioned with some juicy yields! I think I will be jumping on the financial stocks train this coming month as our family’s portfolio could use greater exposure in this sector.

    Thanks again for sharing your list…Best Wishes! AFFJ
    A Frugal Family’s Journey recently posted…Recent Buy – (NYSE: VZ)My Profile

    • Hi AFFJ,

      You echo my sentiments exactly about seeing what others plan to buy and actually buy. This is one of my favorite aspects of the financial blogging community. The ideas and sharing of similar and often different thoughts on investing. Like you, my financial exposure is still minimal and I’d like to beef up that section of my portfolio. My biggest sectors are consumer staples and industrial. Thank you for commenting.

    • Hi Tawcan,

      Glad that my potential buy list saw some names that you added to your watch list. I realize that this month I have many names I’d like to choose from and realistically I believe I’ll be adding to my shares I already own instead of initiating new positions. Thanks for stopping by.

    • Hi Seraph,

      Not sure what happened to me this month as I created a very long buy list. Usually I have about three names that I consider but this month saw a lot of the financial names jump out in front of me and I really feel the need to increase my exposure to that sector as I am still light relative to my consumer staples and industrial holdings. I see that you are keen on many financial names as well. Look forward to your update too. Thank you for commenting.

  2. First half of the month will be BAX. The yield could be higher but with the updated SP and M*, the fair value is $11 above what it’s currently trading at. The second half of the month will be interesting

    • Hi TBDI,

      Thanks for sharing your interest in BAX. I know that this stock is quite popular among many of the dividend bloggers and has been popping up on many radars across the web. As you suggest, it will be interesting to see how the market unfolds in September. It seems like everyone is on edge waiting for some mega crash to occur. Thank you for stopping by and commenting.

  3. Keith,
    Have you considered HCN in the healthcare REIT sector? There is a good article at SA that explains why this might be a good alternative. HCN is less dependent on Medicare and Medicaid than some of it’s competition. Note that I am long HCN. http://seekingalpha.com/article/2089123-healthcare-reit-a-great-income-investment-despite-seemingly-mediocre-results

    The financials do still look attractive. I have been considering RY and TD as additions to my portfolio.

    As far as the non-financials that you cite, MCD is trading at it’s 5 year average P/E ratio. KRFT doesn’t have a 5 year P/E according to Morningstar since the spin-off from MDLZ. The other 3 are moderately over priced based on P/E, as follows (P/E; 5 year average P/E): GE (17.8; 15.9), GIS (18.9; 16.0), UL (18.7; 17.9). MDLZ and GE appear to have the best growth prospects of the bunch. I am long all six of the stocks referenced in this paragraph.

    Good luck,
    KeithX

    • Hi KeithX,

      I have looked at HCN as well and am familiar with those articles that state how HCN is less reliant on Medicare and Medicaid. I did not like the PE of the REIT though relative to its peers. Like you I feel the financial sector still offers the best relative values in the market today. There is no question that everything is expensive but when looking at financial stocks it seems that they present the best value in the market today.

      Thanks for sharing your input regarding current and historical PEs for the names mentioned in the article. I’d love to see GE drop to $25 or less before buying more ideally, but sometimes worrying about a dollar or less when investing for decades seems kind of silly. Curious to know if you’ll be adding RY and TD to your portfolio. Thank you for commenting.

      • Still haven’t done enough research on RY versus TD. RY is trading at a slight discount to the 5 year average P/E, while TD is at a slight premium. A quick look seems to indicate the TD is expected to grow earnings at a faster rate. The dividend yields are comparable, with RY slightly better. The market caps are similar. You see where this is going? You could probably buy either and have a similar result, but I want to dig deeper. Hopefully, I’ll remember to stop buy and let you know if and when I pull the trigger. 😉

        • Hi KeithX,

          Sounds like a plan to me. I always love to hear about what others are buying. Without getting too technical and driving yourself crazy you might want to pick up a little of both and diversify yourself with two strong Canadian banks. Sometimes, as investors we suffer from analysis paralysis and fail to pull the trigger on certain stocks and regret the decision years down the road. I’ll be the first one to admit that buying stocks at all time highs are scary but if you nibble into a position instead of gorge you can always average down. Sometimes we quibble over a dollar or two and miss the big picture of owning a piece of a real business for two or three decades. While I never like to give formal advice as I’m not a professional broker nor investment adviser, I do like to remind people that, in general, we are in this for the long haul and if a stock tanks after you buy it, you can always use your sideline cash to build a stronger lower priced position. Look forward to your update and see what you finally pull the trigger on. Always do your own research. Thank you for commenting.

    • Hi DSF,

      Thanks for sharing your potential buys for the current month. WFC has been with me for a long time and I plan to keep it as one of my very long term holdings. Like you, I also look back and wish I had added significantly more to WFC than I did in the past but I guess all you can really do is look forward. UL would be a new position for me and I might wait for the PE to drop a tad before making a new purchase there. I appreciate you stopping by and commenting.

    • Hi EL,

      Thanks for sharing your potential buys for the month. Looks very similar to my list as I am looking at GE too, a REIT and the large Canadian banks as well. I don’t think it’s coincidence that you and I and many bloggers are looking at many of the same companies and sectors as the financial sector still seems to present the best relative value in the market today. Thank you for commenting.

    • Hi DFG,

      I’m still waiting to pull the trigger on the healthcare REITs but they have made my watch list for various reasons. Foremost is the current yield. Place those REITs in your retirement account and reap even more rewards. The second reason for liking the healthcare REIT space is the general investment theme of an aging population in the U.S. and the need for more “health” facilities, whether looking at senior housing, hospitals, rehab centers and critical care facilities. Thank you for stopping by and commenting.

  4. Hi Divhut

    I would really like to initiate some positions into the Canadian banks but for now I continue to wait putting extra funds to MCD and DE. I already own VTR, O, HCN, and HCP. Eventually I will add again to the REITs but now I continue to focus on companies that have had a multi-week corrections.

    • Hi MSF,

      Thanks for sharing your intentions regarding your next purchases. You are well diversified in the healthcare REIT space I see. The big three in the space look interesting to me as well as some of the smaller names I mentioned. Like you are waiting to initiate positions in the Canadian banks, I too am waiting to start a position in the healthcare REIT space. Thanks for stopping by and commenting.

  5. I’m quite heavy (a little too heavy) in the Healthcare REIT sector with positions in HCP, HCN, UHT, SNH, OHI, and LTC. And I’m in those for the same reason everyone else is looking at them: the aging population and solid yields. I’m keeping my eye on these a lot closer than I would some of the other stalwarts, but all have been performing quite well for me so far.

    I like the Canadian banks as well and have a position in TD, and have been looking at adding a position in BNS. I really like the Canadian banks vs. US banks. On the US side I’ve been looking at a few BDCs for some aggressive plays in those smaller up and coming private companies. MAIN, GDBC, TCAP to point out a few.

    • Hi DH,

      Everyone knows the allure of the healthcare REIT space. Aging population and high current income. You definitely own many names in the space. I’m sure if you hold them long enough you’ll see consolidation in the space as the big three, HCP, HCN and VTR buy up the smaller faster growth players. I’m still on the sidelines in that sector but will be keeping an eye on them going forward. We’ll see if Mr. Market gives me a decent entry point in the healthcare REIT space. As far as the Canadian banks go I think if you stick to the larger banks you’ll do just fine long term. I fully agree that they seem a lot more stable than the U.S. banks. Thank you for commenting.

  6. DivHut,

    That’s a robust shopping list. 🙂

    I’m currently eyeing GE, T, and VZ for the most part. But I recently took a look at UTX and like what I saw.

    I own OHI in the healthcare REIT space, and I’ve been a very happy shareholder. HCP is another one I wouldn’t mind owning.

    I hear you financials. I wouldn’t mind owning another insurer to match up with AFL. Perhaps CB, TRV, or HCC here. We’ll see.

    Happy shopping! 🙂
    Dividend Mantra recently posted…Freedom Fund Update – September 2014My Profile

    • Hi DM,

      I know I went a little crazy considering all these names for September but as you know the saying, “so many great dividend companies, so little capital.” As you know, that despite the current market highs, there are still some great relative bargains out there. I have been considering the healthcare REIT space for some time but this is the first month I may actually pull the trigger on one of them. Last month when I added TD, BNS and RY was the first time in seven years that I initiated a new position. Clearly, I am very picky when it comes to adding new stocks to my portfolio. We’ll see how September shapes up and what Mr. Market does or does not for us. Look forward to seeing what you pick up too. Thank you for stopping by and commenting.

  7. DivHut,

    Very solid list, you can’t go wrong with any from the company. I own HCP, MCD, and KRFT from your list. I would also love to get into GE, but with MCD’s current valuation it might be too good to pass up. It just dipped below $93 today, so I may have a new purchase coming soon! The reason I picked HCP over the other healthcare REITs you mentioned (and others in the market) was because I wanted a relatively safe play in the industry. I hold one risky REIT, ARCP, so I did not want my REIT portfolio to consist of two riskier REITs. Lanny owns OHI and is very happy with his investments, so I don’t htink you can go wrong with any of the REITs on your list.

    I am with you, I wish I had the capital to invest a large portion in each of the companies on the list. Hopefully I can get to that point one day. But in the meantime, keep up the great work and keep on marching your way towards financial independence!

    Bert, One of the Dividend Diplomats
    Dividend Diplomats recently posted…Lanny’s August Investment ReportMy Profile

    • Hi DD,

      ARCP seems to be in all the dividend growth portfolios I have seen online. It’s no surprise with that current yield but by your admission it is a “riskier” REIT to own. Personally, I’m only interested in the healthcare REITs and while I see HCP and OHI in many portfolios I still am debating about which to ultimately buy. August saw me initiate new positions in TD, BNS and RY and that was the first time in about seven years that I added new stocks to my portfolio so you can see that I don’t initiate new positions easily. I’ll be watching those REITs in the coming weeks and months and time will tell if/when I pull the trigger on these new investments for my portfolio. I appreciate you stopping by and commenting.

  8. You got same problem that i do.. no capital 🙂
    But i’m looking at Kinder Morgan Inc (KMI), Realty Income Corp (O), Verizon Communications (VZ) And Emerge Energy Services (EMES).

    McDonalds is getting hit because of Russia shutting down Mc:s in Russia, maybe the attractive pricing has something to do with this. I have also been looking in the Banking segment but i have had my gaze upon Europe watching Nordea Bank closely Helsinki (NDA1V) Stockholm (NDA-SEK) yield 4.4%.
    cheers
    AnhaInvesting recently posted…Goal Archieved!My Profile

    • Hi AI,

      It’s always important to have some cash on the sidelines for those inevitable drops that give you better buying opportunities. Even in this record high market there still are some great relative values to be found.

      Thanks for sharing your buying considerations. I know VZ and T have been popular recently among the dividend bloggers recently. Regarding MCD it will be interesting to see how the next few months play out for that stock. Ever since its drop from about $103 in late July, it seems that nothing is going right for that company.

      Thanks for sharing your banking ideas as well. I’m not familiar with the two names you mention but that’s what I like about the blogging community. You get exposed to investments ideas and companies you may never have heard of. Thank you for stopping by.

    • Hi MMB,

      Among the financial names I see floating around the investment blogs the most are AFL and WFC. It seems that everyone want a piece of that American bank. I’m curious to know what your opinion will be regarding the large Canadian banks as well. It seems that some combination of TD, BNS, RY, BMO and CM are in many dividend growth portfolios. I appreciate your comment.

    • Hi ILG,

      Thanks for sharing your stock considerations for your next purchase. I pretty much like all your picks and have added to my GE, MCD and KRFT in the past few months. Though I started going heavier into the financial sector as I was light there I still managed to pick up a little consumer staples as well. Thank you for stopping by. It’s been a while 🙂

        • Hi ILG,

          I was in the same boat as you trying to figure out the banking/financial sector which is why for the longest time I only owned WFC then added AFL and CB. To tell you the truth, I don’t like to suffer from analysis paralysis and sometimes you have to do whatever due diligence you can and from there take a “calculated leap.” I’m not saying just buy anything on a whim, rather buy carefully and remember the keyword is “buy.” I have been looking and analyzing UL, RDS, CVX and others for the longest time without pulling the trigger. Looking back, I should have taken my knowledge gleaned from the income reports and just bought. Thanks for sharing your insight.

Leave a Comment

CommentLuv badge