August 2019 Stock Considerations

After a pretty strong July it looks like panic is setting in as we start August. No worries… as dividend growth investors we can’t focus on the near term as daily, weekly and monthly price fluctuations and sentiment is nearly impossible to gauge. All we can do is look for solid companies with good fundamentals that have the ability to navigate and adapt to current economic situations. With that being said, let’s take a look at my August stock considerations.

First, I am looking at Altria Group, Inc. (MO) once again. What can I say… I still like the stock under $50. The juicy yield well north of 6% is still well covered and the negative sentiment around the stock has not abated which still might give those wishing to go long the stock some time to make up their mind and pick up some shares. I believe MO’s entry into the cannabis and vaping space will, in the long run, pay off as traditional tobacco usage continues to decline.

Next, I am looking to add a potential new name to my portfolio, Leggett & Platt, Incorporated (LEG). This company has been around for well over 100 years manufacturing furniture and other related components. This stock has been growing dividends for almost five decades and though this is definitely not a growth stock it does offer a compelling yield north of 4% with an acceptable payout ratio of 72%. Ever since the stock dropped below $40 it has steadily appeared on my radar. The stock still may be a bit overvalued at current levels with a PEG of 3.06 (ideally I’d like a PEG at 2 or below) but I still might be compelled to nibble in August.

Finally, I am looking towards another potential new position in my portfolio, LyondellBasell Industries N.V. (LYB) a manufacturer of chemicals, polymers, plastics and also crude oil refiner. While this company does not have the dividend raise track record of LEG it does offer dividend investors seeking income a sizable yield north of 5% with a low payout ratio of just 36%. At current prices the stock appears to be more favorably valued than LEG with a PEG of 1.86.

A short and sweet list for August with two new names I never considered before. What do you think about my potential stock buys for the month of August? Are you considering any of these names for your own portfolio? Please let me know below.

Disclosure: Long MO

9 thoughts on “August 2019 Stock Considerations”

  1. MO still looks interesting as always down at <$50. MMM is starting to look attractive too if we get some further downside to around $160 I'm probably picking up some more shares. I don't like the business for the long term, but as a value play I think KR looks good. IRM looks like an interesting higher yielding prospect with nearly an 8% yield but ridiculous customer retention. LYB looks like a potential candidate to research more with a high yield, low payout ratio and relatively cheap on the value side. Thanks for bringing that one up.
    JC recently posted…Dividend Increase | Norfolk SouthernMy Profile

    • Hi JC,

      The market has sure been on a wild ride in August which only means one thing… some stocks are on sale. There are quite a few high yielding names we can pick from not least of which is unloved MO. My MO is a large position which is why I may look to a new position like LYB. I never looked at IRM though I have read some pretty good articles about the company. Let’s see what the rest of August brings.

  2. Hey DivHut, LEG does sound interesting – definitely doesn’t look like much of a growth company, and not super cheap, but broker forecasts have 2019 EBITDA growing around 20% from last year if you believe it.

    Would you trade off a higher PEG ratio for a large, stable business that’s been around 100+ years? Often find its hard to get a good combination of growth and price for these stalwards (although with a forecast EPS growth of 8% next year, and PE of around 17x, its closer to 2x on my numbers).

    Good luck either way – don’t think you can go too wrong with any of those 3.

    Cheers, Frankie
    Frankie @ Fully Franked Finance recently posted…Fully Franked F’hilanthropy Challenge – Alcohol-Free Streak (And ASX Alcohol Stocks I’m Abstaining From)My Profile

    • Hi FFF,

      LEG will not put up crazy numbers but it does have a long history of stable, predictable and reliable growth and to me that is worth a lot, especially with a pretty juicy current yield. No shortage of high yielding picks this month, that’s for sure.

    • Hi DD,

      LYB looks like my go to stock for August. Seems to be fairly valued and it will further diversify my portfolio not to mention it has a pretty nice yield that appears to be safe. Thanks for commenting.

    • Hi MDD,

      The market has been on a wild ride this month. No shortage of good stock picks out there with some impressive yields too. I seem to like LYB more than LEG in terms of value. We’ll see how the rest of August pans out.


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