The final month of the year is nearly upon us (what a ride these last couple of months have been too) and it is time to look at what companies I will be watching for a possible addition to my dividend portfolio.
During the month of November, I was able to snap up some shares of one company from my primary watch list (Exxon Mobile) and one company that was noted in my additional stocks to watch (Prudential Financial).
I was also able to take advantage of a nice discount on a stock that I had not mentioned (Target Corporation).
Hopefully December will bring more buying opportunities, and here are a few I will be watching:
Founded in 1956, Williams-Sonoma is a specialty retailer with a primary focus on products for the home. They operate under a multitude of brand names, including Williams Sonoma, Williams Sonoma Home, Pottery Barn, Pottery Barn Kids as well as PBteen, and West Elm.
They have a 13-year track record of increasing their dividends and recent years have seen a 5-6%+ annual increase.
The stock price took a pretty good beating around mid-November when they announced earnings. They beat EPS estimates by $0.01 and missed revenue estimates by a narrow $10M. However, their comparable sales only rose 3.1% versus a consensus estimate of 4.0% and the market did not react kindly.
During their earnings call, they explained that the comp sales miss was due to unexpected delays in product receipts as a result of congestion out of China with many importers accelerating their shipments ahead of tariffs. Despite that miss, earnings per share still grew by 13.1% for the quarter and that was at the high end of their guidance range.
With the price decline, Williams-Sonoma has seen their dividend yield bump up over 3.0% and is roughly 13% above their 5-year average yield of 2.68%. Their P/E ratio is well below their 5-year average as well, and those two points combined indicate that the stock may be undervalued.
I’ll be looking to buy at a price below $55.00/share.
As I shared a link to my recent purchase above, I won’t rehash a lot of information on Target here.
I have wanted to add to my position in Target for some time, but was not anticipating I would see an attractive price for awhile. However, I was pleasantly surprised and grabbed some shares below $68.00/share and am looking to possibly add more should the price come back down below $70.00/share.
Their current dividend yield is slightly above their 5-year average while the P/E is below the 5-year average. I’d like to see that yield closer to 3.75% before I add more, so we will see if it happens to come back down a bit.
BlackRock is another company that I recently added to my dividend portfolio and I would like to continue adding more if the price is right.
While their current dividend yield of 2.93% is nearly 20% above their 5-year average, I would feel more comfortable seeing it closer to the 3.12% level where I bought my initial shares. However, that may be a case of being greedy as even at the current level I believe BlackRock represents a good value.
If I remain patient though, I may see that price close to $400.00/share as it has bounced around a bit over the last couple of weeks.
After making a couple of purchases in recent months, I have been happy with my current portfolio weighting in Altria and really had not been considering adding more shares.
However, the stock price has been near 52-week lows primarily due to concerns surrounding the FDA possibly looking to ban menthol cigarettes. The market turned south on Altria as a result; however, I believe there is a lot of runway ahead if that even does come to fruition and as a result this may be a chance to grab more shares at a discount.
Their current dividend yield of 5.82% is awfully appetizing and well above their 5-year average that is closer to 4.0% yield.
However, if I am going to go overweight on this position, I’d like to see the stock price closer to $53.00/share to nab that extra juicy 6.0% dividend yield.
Here is another company that doesn’t need much introduction across the DGI community, and has been bantered back and forth whether the 6.0%+ yield is worth the lack of growth.
I don’t mind having a few positions in my portfolio that deliver a hefty dividend yield at the cost of a nice growth rate, and AT&T has fit that bill for me. With this being another position that is slightly overweight in my portfolio, I have been resisting an additional purchase.
Many people are concerned with their debt levels, and I won’t disagree at all as it is an astronomical amount of debt. At the same time, I am not sure those same concerns take into account that AT&T has forecast that they will have $25B in free cash flow during 2019. The company is a cash machine, and I believe they can begin to service that debt without sacrificing the dividend.
Should we see that current yield of 6.51% inch back closer to a ridiculous 7.0% dividend yield, I will have to take at least a small nibble and add some more.
The last two months have presented a nice selection of buying opportunities and I am hopeful we will see more in December. The key is to remain patient and wait for the target price.
I am looking to close out the year as strong as possible and do my best to meet–or even better, surpass–my revised goal of reaching $5,500 in projected annual dividend income. Hopefully some of the above stocks will provide quality entry points and help me get there, but if not there are always other opportunities as well.
What are you watching as the year draws to a close?