As we near the home stretch of 2016 it seems like Mr. Market wants to give us some better buying opportunities compared to the recent months that have passed. Looking back at the summer doldrums, the market, so far in fall, has been ‘exciting.’ The increased volatility we have been witnessing in the health sector, finance sector and even a bit in the consumer staples sector has all been noteworthy and judging by all the recent buying posts I have been reading it looks like many of us are taking advantage of these near term dips in some otherwise solid dividend paying stocks. With a new month upon us it’s time, once again, for me to look at my portfolio holdings and watch lists and figure out where I’d like to deploy my fresh capital in November.
As I mentioned above, there’s no shortage of sectors nor individual stocks for us to choose from when considering where to invest this month. Looking ahead to November I’m having a relatively easy time figuring out where I would like to invest as many great names have gone on sale.
Let’s start with the obvious sector that’s getting hammered as of late, the health sector. Here, I am considering adding to my current positions of Cardinal Health, Inc. (CAH) and AbbVie Inc. (ABBV). While I realize both have their investment risks, I feel that at current levels they can make great long term additions to any dividend growth portfolio. With healthy double digit raises for both CAH and ABBV announced in 2016 and better prices and values and higher yields these days both names look like good candidates for November buys.
Moving over to the finance sector I am continuing to watch beaten down Wells Fargo & Company (WFC). It looks like this stock will experience more pain in the near and mid term but further down the road I think WFC will come out ahead. As long as that dividend payout ratio is well managed, which it is, and the potential for interest rate hikes in the next year, it becomes hard to ignore a 3%+ yielding dividend machine like WFC. Also, in the finance space I am considering adding to my small position of T. Rowe Price Group, Inc. (TROW). Like many other financial names, TROW has been drifting lower the last couple of months and is now trading with an attractive current yield of 3.37% and moderate payout ratio too. These lower prices for TROW are making it look like a much better value than we saw as recent as August.
For “fun” I’m going to throw out a name that has been on my watch list for a long, long time but never initiated a position, Old Republic International Corporation (ORI). While not a dividend growth machine, this stock is one you hold for its current yield. As with other financial names, this stock has come down quite a bit in just the last few weeks and has a very well managed dividend distribution payout that ensures the dividend can continue to be paid.
Finally, I’m looking at two consumer oriented companies that have fallen out of favor in recent weeks, V.F. Corporation (VFC) and Unilever PLC (UL). VFC is a long time dividend raiser that has seen its stock price come down quite a bit in recent weeks. It boasts a large stable of well known consumer clothing brands that are more than likely in each of our homes. VFC has a five year average yield of 2.25% and today is yielding a healthy 3.10% which illustrates how far the stock has dropped. I have a feeling that as long as the stock yields 3% or more we’ll be seeing a lot of our fellow dividend investors buying into this name. Last, I’m looking at boosting my UL holding. This consumer staple has “quietly” dropped in price from about $49 a share in September to around $41 today. With lower prices comes better values and yields and UL is no exception. With a current yield north of 3% this is another solid stock I’ll be considering in November. I think the magic price of $40 or below will trigger a lot of buying activity in this name.
There you have it. My November stock considerations. As you already know, I usually end these “considerations” posts with the caveat that Mr. Market makes all the rules and names that are not mentioned above may suddenly become attractive to accumulate.
What are some of the stocks you are considering for your November purchases? Are any of the above names on your monthly watch list? Please let me know below.
Disclosure: Long CAH, ABBV, WFC, TROW, VFC, UL