With almost all of October in the rear view mirror it’s time, once again, to look forward towards the next month of potential stock buys. October has seen the market rebound quite nicely on almost all fronts as beaten down industrial names, energy and even many consumer staples gained significant ground in just a matter of a couple weeks. What this means going into November, no one really knows despite what the “experts” will tout. All you can really do as a long term dividend growth investor is be consistent with your buys and search for relative values and good sustainable yield. The market will do whatever the market will do.
November will be the first month in 2015 where I will not have an opportunity to make any additional buys in my ROTH account as I have already contributed the maximum $5,500 allowed for the year. All this means, is that for the first time in well over a year, I will not be able to add to my Canadian bank holdings, The Toronto-Dominion Bank (TD), The Bank of Nova Scotia (BNS) and Royal Bank of Canada (RY). The only investments I’ll have going into those banks will be the dividends received and automatically reinvested. All this means is that for November and December I’ll have my taxable account and IRA account with some roll over money to make my stock buys. With that being said, let’s take a look at my November stock considerations.
Staying within the industrial theme, as I have last month, I am first looking to add to my Emerson Electric Co. (EMR). Though having bounced back quite nicely from its recent lows, EMR still offers a juicy yield just north of 4% with a sustainable payout ratio of 58.2% based on an EPS of 3.23. From a valuation perspective its current PE of 13.0 is well below its five year average of 20.2 suggesting that even with all the near term industrial headwinds in place, EMR can be a solid pick at current prices.
To a lesser extent I am still considering Dover Corporation (DOV). A company with a very long history of dividend raises, that is no doubt feeling a bit of pinch because of lower oil prices as demand for their oil and gas services are weakening in the near term, DOV still looks attractive at current prices. Currently yielding 2.69% with a moderate payout ratio of 45.0% DOV’s dividend still looks to be quite safe with room for future raises. With a current PE of 16.0 DOV is right around its five year average PE but will well below S&P averages.
Next up I’d like to consider adding one or two new names to my portfolio in the biotechnology sector with Amgen Inc. (AMGN) and Gilead Sciences Inc. (GILD) being my go names in the space. Neither company offers an impressive current yield but both offer tremendous potential upside and future dividend growth. Both seem to offer very sustainable dividends based on their respective cash flows which means more than likely 1) dividends will continue to flow and 2) future raises are an option. Of course, I would love to hear an opinion regarding either company and whether or not they are in your current portfolio or at least on your watch list.
Finally, I will consider adding to my positions in the health REIT sector with potential buys in HCP, Inc. (HCP), Welltower, Inc. (HCN) and Ventas, Inc. (VTR) in my IRA. Of course, I always qualify these posts with the statement that Mr. Market may have his own ideas for my potential buys but if the market pretty much stays at current levels I’ll be adding from the names mentioned above.
So there you have it. My November stock considerations are EMR, DOV, AMGN, GILD, HCP, HCN and VTR. What’s on your shopping list for the month of November? Please let me know below.
Disclosure: Long EMR, DOV, HCP, HCN, VTR