September 2020 Stock Considerations

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

11 thoughts on “September 2020 Stock Considerations”

    • Hi Passivecanadianincome,

      AFL is looking interesting at these levels. Low PE and a relative high yield for the stock. We’ll see how the month plays out. Looks like the market swoon is continuing this month as prices fall back down a bit. Thanks for sharing your potential pick.

      Reply
    • Hi DP,

      AVGO has really jumped a lot from its March lows and though it is still relatively high the numbers show that it could be close to fair or even under value. As always, appreciate the comment.

      Reply
    • Hi desidividend,

      Nice to see we are looking at the same names going forward. I think many are waiting for another major swoon like we had in March before jumping in the market again.

      Reply
  1. Hey Keith,

    None of these in my portfolio, but I’ve spent a fair amount of time looking at GILD and MO. Both sit on really juicy yields.

    In terms of the future for cannabis, I think there’s plenty of runway. It’ll come down to who is able to execute a strategy without paying too much for acquisitions. Plenty of companies have been burned by this point with paying up for exuberance (particularly when Canada was on the path to legalization).

    Take care,
    Ryan
    Get Rich Brothers recently posted…August 2020 Portfolio Update – The DisconnectMy Profile

    Reply
    • Hi GRB,

      It definitely will be interesting to see how the cannabis/vaping industry unfolds over the coming years. No doubt there was huge hype in cannabis about two years ago. Despite all the negativity MO continues to deliver from a dividend standpoint. Thanks for commenting.

      Reply
  2. Thanks for the tips here Divhut!

    I entered AFLAC today at $35.70. I don’t usually go for dividend stocks but at these levels it seems worth it. 8.93 PE and div at 3.13% at close today.

    Reply

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