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, and  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!

Rob

Hey I’m Rob, creator of Passive Canadian Income.

In 2011 me and my wife had almost $60,000 in debt and a negative $7,000 Net Worth. Through hard work and financial education we paid all that off. Now we are focusing on increasing our Passive Income Streams to make the money work for us. Feel Free to Follow along the Journey by clicking the Social Media links below or subscribing to get notified of new posts on the sidebar.