Dividend Stock Watch list – June 2019

dividend stock watch list

Dividend Stock Watch list – June 2019

Hey everyone

Its time once again to start thinking about where we are going to deploy some funds this month.

As I mentioned in last month’s dividend stock watch list, I’m going to focus on our 4 lowest sectors each month. This way we stay nice and diversified and don’t have a sector dominating the entire portfolio.

Our portfolio hasn’t changed to much in the last month, so our lowest sectors are still Basic Materials, Communications, Industrial’s and Healthcare with a really close (few hundred bucks higher) 5th sector – Consumer cyclical.

Nutrien has rebounded a bit since last month and the teleco’s continue to run up in value……. So I’m gonna pass on them unless something really changes.

Cyclical Stocks

If I were to go with the consumer cyclical sector it would be between adding to our position in Disney or starting a new position in Magna.

Disney

I have loved having a position in Disney and with only 20 shares I would love to up that position before their streaming service becomes live. I think they are still relatively cheap with a p/e ratio of 15.3 times earnings and they have a tonne of potential for growth in the future. Disney also tends to have a very wide moat, but have a very low dividend yield of 1.29%. Their dividend growth has been low lately too, this is to be expected though with all the moves they have been making. It is a position that I really enjoy holding though, as I watch the avengers series and debate a trip to Disney’s parks next year.




Magna

Magna would be a new position for me. I have debated this position for awhile and May (one of my longtime followers of the blog. Thanks btw!) recently was asking me my thoughts about them.

I have a couple friends who work for Magna and enjoy the company. They have been raising their dividend the last 9 years and have a 10 year dividend growth rate of 15.4%. This is fantastic and at under 60 bucks a share they are near a 52 week low and sport a 5.4 p/e ratio. The starting yield if you were to buy today would be 3.33%. Not bad at all!

This has been one of the most shareholder friendly companies I have followed that I know of. Magna has made great use of their capital and reduced their outstanding share count dramatically.

The cyclical nature of the car business has kept this stock price down, lots of people think we are at the top of the automotive cycle. I could see that, but there is the move to self driving cars and more electric cars in the future. Innovation keeps coming and Magna has positioned itself nicely in these regards.

Industrials

The industrial sector has started to create some nice entry points. I’m specifically looking at Caterpillar and 3m. I’ll pass on Cat at the moment as I think it has more room to fall, but 3m continues to tickle my fancy.

3M

A dividend king! With a nice price, mmmmmm……. They should call it 6m at these prices, zing! (See what I did there?) I started a tiny position in them not to long ago at 190. I thought they were at a good price there, here we are around $164 and with a 3.5% starting yield. This one is extremely tempting, especially when my goal for the year was to start/ pump up positions in either 3m, jnj or pepsi.

From what you read on forums and in the community people are starting to grab some shares, while some say it will continue to drop. They got some legal issues that they are going to need to deal with and fix the issues with the environment, but this may be one of the bluest blue chips out there. They currently sport a pe ratio of 17.5 times which screams buy for this king.

Recently Jason Fieber aka Mrfree at 33 had a post on them as his weekly undervalued dividend growth stock showing how undervalued he believes they currently are, I agree!

Healthcare

Last but definitely not least the healthcare sector. This is a sector that should be way up there in my portfolio. The baby boomers are getting older (as we all are) and this sector should perform very well moving forward.

Abbvie

I currently hold 34 shares of Abbvie and would also love to increase those numbers. As Matthew Mcconaughey would say in Wolf on Wall Street – “Those Are Rookie Numbers, You Got To Pump Those Numbers Up”

This is a great company with a lot of drugs in the pipeline and close to approval. Currently they make a tonne of their income from Humira which is starting to lose its patent protection and gain some new competition. Management expected this and has a bunch of faith in their new drugs. I got faith as well since their clinical studies have been moving along nicely.

Their current p/e ratio is a little high at 21.8 times but their dividend yield of 5.55% is enticing. Especially since they pay in the 2nd month of the quarter which has always been my lowest paying months.

We all know we should never chase yields though. I have been burnt a couple times doing this and have done my best to learn from those mistakes. I think Abbvie’s dividend is safe, andΒ  if one of their major drugs gets approval expect those hefty dividend raises to continue to come.

Conclusion

In summary our dividend stock watch list for June 2019 consists of 4 great stocks.

  • Abbvie
  • Magna
  • 3m
  • Disney

Only 1 of the 4 are Canadian stocks which is unfortunate as I’d love to increase our tfsa accounts and also not lose on the currency conversion.

Ultimately though I think this month’s purchase will be south of the border in our RRSP account. Those 3 stocks are really tempting at current valuations and also to further diversify our portfolio, both from a sector point of view and a geographically. The Home bias of investing is very real and we need to do our best to even out that portfolio!

I’m curious as to what your thoughts are this month. What stocks are you watching or picking up lately? Out of these 4 which one would you be buying?

cheers!

14 Responses

  1. Disney is absolutely one of my favourite stocks of all time, and would love to keep adding to this. My wife seems to prefer spending the money on trips to Disneyland rather than on buying more shares however…

    3M is also looking pretty cheap – definitely one on my shortlist, although I’ve been adventuring around the world recently in search of a more globally diversified portfolio. When I return to the US this is one I hope to add to the fund!

    Cheers, Gary
    Global Gary recently posted…Fund Update May 2019 – Fighting to keep aFloatMy Profile

    • Rob says:

      hey Gary

      Love your worldview on the portfolio front, diversification is key.

      3m seems to be the front runner but the price keeps running up these past days.

      This market is messed up, hopefully it doesnt run up to high……

      cheers Gary

  2. John says:

    Hello Rob,

    Good pics. I’m personally a fan of DIS and ABBV. I currently hold some JNJ, but since I purchased it’s underperformed the S&P 500 (go figure).

    Just wondering whether you have the RRSP room to shelter all of these pics? I would love to buy more US equities directly, but I also have a pension, meaning almost no RRSP room. Given that, I find myself preferring US capital gains, rather than relatively high tax dividends, and on that front it seems hard to beat a total market ETF like VTI.

    My most recent purchase was TRP, which has actually risen slightly during the most recent market pullback. This month, I am looking to add slightly to TD, and then to US index ETFs.

    Cheers,

    John

    • Rob says:

      hey John

      Thanks man. Me and the wife unfortunately both don’t have pensions at our work so we have a tonne of room to contribute! JNJ has been under a lot of pressure with all their legal issues as well. I think long term you will do good with them. They are one Id love to start a position in one day. Total market index etfs seem like a good bet for sure. I’m hooked to individual stocks though. haha

      Nice buy with trp they have risen very nicely! Td would be a great buy at these levels too.
      Cheers John!

  3. PCI –

    Love the list and can’t go wrong with either of the companies listed above. Come on, show some love for the US! Joking, joking.

    -Lanny
    Dividend Diplomats recently posted…Shopkick Review – An Easy, Fun Way to Earn Gift Cards While ShoppingMy Profile

    • Rob says:

      haha Thanks Lanny
      The us stocks always get a little love from me. They will get even more if our dollar gets a little stronger!

      cheers man

  4. German says:

    Magna is getting very attractive. I will buy them again if they drop below 55$.

  5. Never heats of Magna before, looks very attractive with such a streak of increases.

    Good list with even beter businesses. ABBV and MMM are my favourites these days!
    dividendcompounder recently posted…The Snowball Keeps Rolling – April 2019 Dividend Growth of 92% YoY $$$My Profile

    • Rob says:

      hey Compound
      Im with you here, Those are my top 2 at the moment. (especially since I have some us dollars sitting in the account from previous dividends.

      3m tends to be creeping up again though……
      cheers

  6. Nice list Rob! I am not familiar with Magna but love the other 3 companies. MMM was actually my latest addition at $165!
    Looking forward to see what you are going to end up buying πŸ™‚
    BI

    • Rob says:

      hey broke

      Nice buy! Wish i grabbed some more at those levels, its rebounded nicely.

      Hopefully it pulls back a bit more.
      cheers!

  7. GYM says:

    Great list! I haven’t heard of Magna either! I was going to buy Disney post 2008/2009 when it was like $30 but never did. Of course I’m kicking myself right now haha.
    GYM recently posted…Liquid Net Worth: Are Liquid Assets a Measure of True Net Worth?My Profile

    • Rob says:

      hey Gym

      surprised you have never heard of Magna, they are a great cdn stock.

      Wow disney at 30 bucks, thats mouthwatering! haha
      cheers

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