After a very strong July and August it looks like panic is setting in as we start September with a nice swoon. 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 September stock considerations.
First up in the health/biotech space I’m looking to add to my Gilead Sciences, Inc. (GILD). It was one of my potential picks way back in December 2018 and January 2019 and was my sole buy in February last year as prices continued to remain weak and yields, which are still well covered, are around historical highs just above 4%. Clearly, GILD has been stuck in neutral for about a year and half but has been able to generate a nice passive income stream in the meantime. One of the perks of dividend investing.
Next, I am looking at financial/insurance play Aflac Incorporated (AFL). AFL has been a dividend stalwart for many decades and sports a yield just north of 3% and a low payout ratio of 27.50% along with a low forward PE of 8.24 and looks fairly undervalued at current levels.
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 around 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.
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 16.92. In the same sector Consolidated Edison, Inc. (ED) is looking interesting to me as well. Like SO, not particularly cheap but trading at a forward PE 16.10 with a moderately high payout ratio of 75.25% which is reasonable for the utility sector.
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 under 4% the stock seems to be trading at decent value with a forward PE of 14.1 even though the stock is near all time highs.
There you have it. A short list for the month of September. What do you think about my stock considerations? Are you buying any of these names too? Please let me know below.
Disclosure: Long MO, GILD, SO, AVGO, AFL, ED