August 2020 Stock Considerations

Headlines, headlines everywhere! August has definitely not been a boring month that’s for sure. Gold and silver and bitcoin continue to march higher. The Oracle dips his toe into gold mining. More vapor money to be created. Apple and Tesla rocking along. Kodak gone but not forgotten. You get the point. Craziness will always make the headlines as sensationalism always gets the views. Meanwhile, I will continue to make my monthly buys at market highs and market lows, dollar cost averaging into all my positions.

This month, like every other month preceding I am planning on making a buy. Share by share building up my passive income stream dividend by dividend, staying diversified to mitigate any of my stinkers (BP, GE, KHC, WFC, YUMC, KTB, to name a few) I hold and just watching the world roll by. With that being said, let’s take a look at my August stock considerations.

Like last month, I am looking at Altria Group, Inc. (MO) once again. What can I say… I still like the stock well under $45. The juicy yield north of 8% is still covered and the negative sentiment around the stock has not abated. 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 at adding to my LyondellBasell Industries N.V. (LYB). With a very generous yield north of 6% and a well covered dividend (moderate payout ratio of 69%) this industrial play is still trading at close to fair value with a forward PE of 14.7.

Another stock I am looking to buy is The Southern Company (SO). While admittedly a bit expensive at current levels it does sport a nice yield that is covered (payout ratio of 82% which is not unusual for a utility) and offers a lot of stability that a utility is known for and a decent forward PE of 17.4.

Finally, I am looking at Broadcom Inc. (AVGO) as I am still looking to boost my tech exposure which is still a small part of my overall portfolio. With AVGO yielding close to 4% the stock seems to be trading at decent value with a forward PE of 13.5 even though the stock is near all time highs.

There you have it. A short list for the month of August. What do you think about my stock considerations? Are you buying any of these names too? Please let me know below.

Disclosure: Long MO, LYB, SO, AVGO

12 thoughts on “August 2020 Stock Considerations”

    • Hi DD,

      I definitely went with the higher yielding names for August. Nice balance to my MSFT and AAPL buys over the last several months. Nice video… I agree… a tie. Why not own both?

      Reply
  1. I like the look of SO myself but don’t have any positions as of yet. If you look at the 52 week spread, it looks to be in a nice range but, even as you stated, and as others are looking at it, its considered overvalued. What am I missing?
    Per Share:
    Earnings $3.05
    Sales $19.12
    Book value $26.20
    Cash flow $6.32
    Valuation:
    Price/Earnings 17.18
    Price/Sales 2.73
    Price/Book 1.99
    Price/Cash flow 9.08

    Reply
    • Hi whiskey,

      I agree. Forward PE looks reasonable at 16.98, price to book under 2. Covered dividend. Sometimes a PEG over 2 can be a red flag but for a utility it’s acceptable. I like it at these levels. Not the best value but looks fair to me.

      Reply
    • Hi Divcome,

      I have been sticking to my plan for well over a decade and have already been through 2008/09 which is why I buy every month at highs and lows and dollar cost average. AAPL really ran away in recent weeks. I still plan to buy more but not at current levels.

      Reply

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