May 2018 Stock Considerations

I can’t believe it is time, once again, to post my potential stock buy(s) for the upcoming month. Not to sound too cliché, but where has the time gone? Time waits for no one so might as well make the most of it and invest in the stock market and stay invested during the highs and inevitable lows.

 

Looking back at the last few months of 2018 we have been gifted the opportunities to buy into some very solid dividend paying stocks that for the longest time seemed untouchable. Many great names in the staples, real estate and even health and industrial plays all went on sale offering us more attractive prices, values and more importantly yields across the board. Looking forward to the month of May I have decided to “balance” my dividend income and purchase a stock that is not among my largest holdings. As we all know, it is tempting to average down on positions when given the chance, however, that may lead to excessive buying into a particular stock/sector and eventually you’ll find yourself overweight in certain positions. While I don’t plan to utilize my dividends for quite some time, when I finally do, I do not want to rely on just a handful of stocks for the majority of my income. Ideally, I’d like it to be as equally spread out as possible. We all see our own income inequalities when we report our monthly passive income. More often than not, a handful of stocks generate the bulk of our income and I think that can be dangerous especially when your reliance on dividend income to live will come to pass. With that being said, let’s take a look at my May potential buy(s) from some of the smaller positions in my portfolio.

 

Starting with the staples I am considering adding to my Colgate-Palmolive Company (CL) and The Clorox Company (CLX). Both of these dividend stalwarts have been hammered in 2018 and are sporting relatively high yields as stock prices declined. Forward PE looks a lot more enticing for CLX at this point.

 

Sticking with the staples I am also looking to add to The Procter & Gamble Company (PG) and PepsiCo, Inc. (PEP). As with my two earlier picks, PG and PEP both have had a difficult 2018 with lower stock prices driving up yield while bringing PEs back down a bit.

 

So there you have it. My picks for May. All in the staples space and all relatively small positions in my portfolio I am looking to bulk up and slowly equalize my dividend distributions. What do you think about my potential buy(s)? Are you considering names in the staples sector as well? What do you think about my desire to even out my dividend income among my holdings? Please let me know below.

 

Disclosure: Long CL, CLX, PG, PEP

33 Comments

  1. I’m looking at PG and PEP as well! PG dropped a lot since my purchase a few weeks ago. PEP would be a new position for me.

    1. Hi MR,

      If you are willing to weather the near and mid term uncertainty and ugliness then it looks like any of those companies could be great long term holds in a DGI portfolio. I’m long both.

  2. It is gona be PEP and PM for me tomorow. So many good company to choose from!

    1. Hi Oku9,

      Well said. I like those pick ups. Buy on weakness is what I like to do as well.

  3. I am really liking PG at these prices. Also looking at KMB. T also just had a nice dip yielding over 6% now, but I already added some of that. Thanks for sharing your list of considerations.

    1. Hi DD,

      Both are great potential buys for any long term DGI portfolio. It’s amazing how much interest there is in the staples space now that prices have come down along with valuations too and, of course, a jump in yields. It’s been my go to sector for a few months now. Can’t forget the REITs and utilities either.

  4. Everyone is into PG these days 🙂 With dip to as low as 72$ its a rare opurtunity 🙂 Sad I boughr PG for 82$ and have no free capital now 🙁

    1. Hi P2035,

      I think over the long haul the few dollars difference shouldn’t make much of a difference to you. As long as those dividends keep getting paid out and the companies you are invested in can weather any near and mid term weakness you should be alright.

  5. Keith,

    The consumer staples sector is starting to look real good. To be fair the valuation of the broader market is getting better, which is nice to add in some extra income at acceptable levels.

    – Gremlin

    1. Hi DG,

      The accidental high yielding stocks of the staples are looking very attractive. Many of them are now paying 3% to well over 4% because of price declines. I think it’s been the go to sector among our DGI peers for a few months now, and for good reason. We haven’t seen these levels in a long time.

  6. These are solid companies you are considering. I‘ve PEP on my list, bought some stocks early in 2018 and want to increase my position.
    Colgate and KraftHeinz also caught my eye. Altria and PMI as well. It makes sense in my view to pile up some consumer staple positions, that sector looks attractive.
    Cheers

    1. Hi FS,

      Staples are the flavor of the day with so many of them beaten down so hard we are presented with a lot of great buying opportunities. Every stock you mention in your comment I wouldn’t mind adding to. Of course, we don’t have unlimited capital.

  7. Understand your diversification objective Keith. I’ve been considering adding to MO and PM, but have held back because they are larger positions. I own three of the staples you mention, the exception being CL. I owned CL a few years back and the combination of lower yield and slower dividend growth led me to sell and invest in some of the other staples like PG, CLX, KMB and UL. Tom

    1. Hi DD,

      While it’s nice to keep buying and adding to a handful of great stocks, as a dividend investor that will one day rely on that dividend income, I want to make sure it’s as diversified and equal as possible. I really don’t want to put all my eggs in just a few baskets. Still, there is plenty of room for me to buy some beaten staples. Thank you for commenting.

  8. Excellent picks DH! I already purchased PEP and PG last month and there are still top contenders to buy more shares. T has also made my top 3. Thanks for the post DH! 🙂

    1. Hi MDD,

      So many great staples to choose from these days. Seems like many are liking PEP, PG and others. Of course, you can’t forget the beaten REITs and utilities too. Of course, more choices than dollars makes for a tough investment decision.

  9. HUT –

    Very strong selections, think about those names you just mentioned. You can’t go wrong with aristocrats. I love the PEP and PG, PEP more than PG.

    -Lanny

    1. Hi DD,

      I agree. It’s tough to go wrong with any of the stocks mentioned. Of course, there’s never a guarantee with any investment but I’ll take my chances on a stock that has consistently paid out and raised dividends for multiple decades in a row.

  10. Very solid choices, as ever Divhut. Very nice picks. Thanks for the post.

    I completely agree that time flies so quickly. This year has been crazy for me too.

    1. Hi TPS,

      Time flies by so make the most of it buy staying invested in the market. It’s time that is the ally of every DGI out there.

  11. Many consumer staples have been getting hammered since the middle of April. I haven’t been following too closely so maybe it’s “interest rate” related or something. Whatever the reason it’s ugly for the short term, but for those with a long term outlook this could be a good opportunity. Looking forward to see what you pick up.

    1. Hi JC,

      Ugliness = a beautiful time to invest. At least that’s how I see it. Every year or so a sector or two gets really hammered for whatever reason. The key is to nibble on these sectors/stocks when everyone is dumping. Of course, it’s no guarantee that a turnaround will occur but more often than not old guard companies learn to adapt and change to different business climates, whether we have a strong dollar or weak, high interest rates or low, strong GDP growth or weak, etc. I’ll continue to look at the staples as long as they remain weak.

  12. Hi DivHut,
    Thanks for the list, I love all of the companies and would like to have them in my portfolio. Currently, I only own PG from the above, would like to add to CL or CLX, if I had to choose.
    -BI

    1. Hi BI,

      While CL and CLX are not the most exciting stocks out there, they are consistent performers over the long haul. I’ll be quite pleased holding on to my positions for decades to come while watching the market bounce all over the place.

  13. We’re in China negociating a trade deal right now, if it plays out well, a lot of stocks will march right back to where they were and more. 🙂 I’ll keep my eyes out for CL and PG too 🙂

    1. Hi vivivanne,

      CL and PG have been very popular picks for several months now. 2018 has proven to be a very tough year for the staples, REITs and utilities. A lot of good buying opportunities out there.

    1. Hi PIG,

      Seems like the staples have been the favorite picks for many of our DGI peers, and for good reason. It’s been a long time since we have seen these levels for many of these stocks.

  14. Hey DH,

    we are absolutely on the same page here. I like PG and PEP, both are on top of my “buy-list”. After the price decline they offer good value in my opinion. And the 15% dividend hike of PEP pushed the yield to about 3,7%. It hasn’t been in these regions for a long time. For me the question is not if i purchase these two, but how much fresh capital is at hand…

    Greets
    DividendSolutions

    1. Hi DS,

      Seeing many of these staples with yields pushed up to historical levels makes any dividend growth investor excited. PEP, PG, CLX, and many other staples are still on my watch list for June. The whole sector is severely beaten.

  15. Hi, I am looking to buy PEP and PG as well. I am only in a few biotech stocks at the moment ($ONCS and $AMRN). I also have a small long-term position in $CTRL. Definitely going to look into CL and CLX.

    1. Hi UP,

      For me it has been all about the staples for the last few months. I still like PEP, CLX, PG among others in the space.

  16. […] With three weeks of May in the rear view mirror it is time, once again, to highlight my recent stock purchase. As market volatility remains the flavor of the day we are being presented with some pretty good buying opportunities if you can stomach these wild swings. Of course, if you have a long term horizon for your investment plan then over time these wild gyrations will be smoothed out and these daily ups and downs should not be much cause for concern. Keep investing, stay diversified and try not to get shaken out of the market when things really do dive. I always state that I make my monthly buys no matter what’s going on in the market or the world for that matter and this month is no exception. With that being said let’s take a look at my May stock buy. Sticking to my May 2018 Stock Considerations: […]

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