Thursday, March 19, 2020

CORONAVIRUS STOCK OPPORTUNITIES


Over the past couple of weeks, we have seen an unprecedented shake up on Wall Street.  Whole sectors, like restaurants and airlines, implode.   The world changed when the decade began.  Completely.

This is the cleaning product isle at a Target in Seattle.  Need I say more?

The next isle with the toilet paper was also empty.


There is a huge sense of panic that resulted in enormous swings.  Up 25 one moment, down 30 the next.  Kind of like my college football team, the Washington State Cougars...

I am on the side of holding on and riding this thing out.  If I had sold once it cratered, my paper losses would become real cash loss.  Future buying power would be 20% lower than before.  I'd rather keep my current cost basis. 

But not all is bleak.  There are some opportunities out there that are sort of immune to the pandemic.  
When the market crashed, many investors cashed out and went into hiding, opening up some opportunities 

 So I've been looking at companies that have minimal impact from this pandemic, as well as some that seem to be able to take the body blows of this instant recession. 


AT&T (T)

Since the new fad activity here is social distancing, people are hunkering down, going online, and binge watching. 

AT&T has taken a hit and dropped to the $31 dollar range.  Their current dividend rate is a whopping 6.33% at the time of this writing.  I would not be surprised if the stock hits 29 or 28 soon and then begin a slow climb back.

The debit is a bit high.  But they are not going anywhere.

People are still using their phones. Most likely more than ever to stay in touch.  I feel that T is a great opportunity.  Once I have some more money to invest, I think I will pick up a few shares


HORMEL FOODS (HRL)

With nothing open  (I'm in Seattle), people are avoiding restaurants and staying home with the groceries they hoarded.  This is where Hormel can be a great opportunity.

One thing that will help them ride this out is the fact that they have low debt.

Not a big dividend at 1.93%, but they are a Dividend Aristocrat.  It will be be a good place to start up a position and let them raise that dividend like they have for many years.


KIMBERLY CLARK (KMB)

A major player in Consumer Staples, KMB is in a good position to rake in the dough while America hoards 25 years of toilet paper.   They make Cottonelle, Wondersoft, Viva towels, Scott towels, and Kleenex.   Their dividend is currently at 3.19%


PROCTOR & GAMBLE (PG)

Another Consumer Staple giant.  The maker of Tide, Cheer, Downy, Bounce, Charmin, Bounty towels, Gillette, Comet, Cascade, Crest, Ivory, Old Spice, and many others.

The thing to do is stay home and clean everything like crazy.  Proctor and Gamble is in just about every home in the first world.

The numbers are not the best for them, but is about the safest company out there.


Stay safe everyone, and remember to wash your hands and quit touching your face!


Thursday, March 5, 2020

MARCH 2020 WATCH LIST


With the extremely fluctuating markets over the past 10 days, I decided to revisit my watch list.

I'm always looking for good value and to add a company to my stash to add more stability to my portfolio.   The more companies you have, the safer it is overall. 

With 97 companies in the portfolio, if one  goes down the tubes, I have merely lost small percentage of my portfolio.  Having all your eggs in one basket is opening up yourself to potential catastrophe. 

Imagine having only 10 companies and see one go tits up?  10% of your portfolio is gone.   Having 97 companies and not allowing any one of them to be disproportionally owned, I'd only lose about 1% of one goes to hell.

My watch list is a list of companies I do not yet own.   I actually keep tabs on the ones I already own and will also add to them if it becomes a great value. 

I look for 6 basic things a company needs to have to make my list:

  1. Good dividend yield.  I prefer to beat inflation. The green cell means it is over 3.5%
  2. A Payout ratio that allows growth (under 60%)
  3. Solid dividend increases.  I like looking at a 5 year average.
  4. A price to earnings (P/E) under the S&P average of 22.
  5. Earnings Per Share Growth over 5%
  6. PEG ratio around 1.
Not all of these companies are 5 for 5.  Look at LYB.  It still makes my list because its' a solid company with a long track record of adding to its dividend.


The one I rally am digging this month is John Deere (DE).  I am a bit weary of Royal Caribbean Cruises due to the virus, but I'l  keep an eye on it.  ...That's why this is a "watch" list...

Things are going so up and down that this may be obsolete info by tomorrow.... 
but here it is. 

SYMBOL
Yield
PAYOUT RATIO (under 60%)
5 YEAR DIV INC %
1YR. P/E (under S&P 22.02)
EPS Growth (over 5%)
PEG (1 or under ideal)
AMP
2.69%
29%
10.83%
12.83
-1.69%
1.11
DE
1.86%
29%
6.23%
15.98
61.79%
0.98
LMT
2.39%
44%
9.86%
19.8
24.66%
2.25
LYB
5.58%
44%
8.45%
8.55
-19.88%
2.14
RCL
3.93%
32%
22.87%
12.58
9.45%
1.14
RHI
2.71%
35%
13.56%
15.26
39.56%
2.59
SNA
2.89%
35%
15.3%
12.72
4.55%
1.91
UNP
2.39%
46%
14.17%
21.87
5.8%
2.03

NOTE: THIS IS NOT A RECOMMENDATION TO BUY ANY OF THESE.  THIS IS WHAT I AM CONSIDERING. NOT YOU..  DO YOUR OWN RESEARCH FOR GOD'S SAKE.


Tuesday, March 3, 2020

FEBRUARY 2020 BUYS


Ahh, shopping.  All my life I have loved shopping.   Now that I am semi responsible, I now shop for stocks to buy.  It provides me a source of passive income and a sense of accomplishment knowing I am one day closer to being financially independent. 

February was a strange month.  We started with a major challenge finding stocks of value, to seeing the market tank from Coronavirus fears.   I also made a great looking bacon burger with cheese sauce..




Most all of my buying was in the earlier part of the month, so I did not have much to spend when the bargains were available.  Oh well. 

I spent $1,734 for the shares below.  The purchases added $51.20 to my annual dividend income.  That's a 2.9% return on average.  Along with dividend increases, I gained $171.06 in annual income. 

Here's what I got.....


Ticker
Date
QTY
Price
Total
DIV INC / Yr
YIELD
HD
02/05/20
3
$237.3615
$712.08
$16.32
2.31%
TGT
02/11/20
3
$115.7024
$347.11
$7.92
2.26%
BBBY
02/11/20
1
$14.7161
$14.72
$0.68
4.76%
IPG
02/24/20
4
$23.8969
$95.59
$4.08
4.18%
WU
02/24/20
4
$25.1750
$100.70
$3.60
3.49%
MCBC
02/24/20
10
$10.5400
$105.40
$3.20
2.99%
MS
02/24/20
2
$49.7760
$99.55
$2.80
2.67%
BOH
02/24/20
1
$87.0900
$87.09
$2.68
3.00%
DK
2/28/20
8
$21.5521
$172.42
$9.92
6.09%







TOTALS



$1,734.66
$51.20
2.95%


I mainly focused on making purchases in the companies I spent money at.  That's part of my goal I posted about earlier back in August.  Get back what I spent... I want to make my purchasing power go further...

That's why I got shares in AT&T, Target, Bed Bath and Beyond, and Home Depot.  I will continue this as the year goes on, but will balance it out with other purchases. 

I did start some positions in companies that I have had an eye on for a while:    All grow dividends at a good clip and are undervalued at this time.

IPG (Interpublic Group) is a media is a worldwide advertising and marketing company.  Their dividend is over 4% and raided it by 16% over the past 5 years.  I needed more exposure in this sector.

WU (Western Union) is the well known payment services company.  Their dividend has been rising at a 12.47% clip over the past 5 years and have a 36% payout ratio.  Room to grow.

MCBC (Macatawa Bank Corp) is a 27 branch Michigan Bank that has been growing its dividend at a 31.95% clip over the past 5 years and its payout ratio is still in the low 30% range.  Lots of room to grow!

MS (Morgan Stanley) came on my radar after it took a huge dip when it purchased E-Trade this month.  It became a great bargain and has solid numbers.  Over the past 5 years, it has grown it's dividend 28.47%.  Wow.

BOH (Bank of Hawaii) is another one at a great value with a P/E of 13.  I love everything Hawaiian...

DK (Delek Holdings) is a small cap downstream energy company that pays a huge dividend.  They refine gasoline, has some pipelines, and run 279 convenience stores in Texas and New Mexico.  They sell gas as 7-11 and Alon brand names.  Their P/E was at a bit over 5 and I could not resist.


Sunday, March 1, 2020

FEBRUARY 2020 DIVIDEND INCREASES

Holy cow.  What a month for dividend increases. 

The whole reason I picked the stocks to buy was because of a track record of increasing the dividend.  With each dividend increase, my original investment pays me back at a higher rate. 

Eventually, with ever increasing dividends, you could earn back your original investment annually. 

And with each increased return, the risk lowers.  If you have received over 100% of your original investment in dividends, you have no risk and all gain. 

Last month, I received 19 dividend increases.  That is a full 25% of all of the companies in my portfolio.  These increases add up to an extra $119 in dividends per year. 



TICKER
OLD DIV
NEW DIV
% Gain
old annual
new annual
INCREASE
Yield 
Yield on Purchase
Date
CNP
$0.2875
$0.2900
0.9%
$146.05
$147.32
$1.27
4.35%
3.95%
2/3/20
AFL
$0.2700
$0.2800
3.7%
$95.04
$98.56
$3.52
2.15%
2.46%
2/4/20
MMM
$1.4400
$1.4700
2%
$126.72
$129.36
$2.64
3.76%
3.12%
2/4/20
AVA
$0.3875
$0.4050
4.5%
$144.15
$150.66
$6.51
3.19%
3.79%
2/5/20
OMF
$0.2500
$0.3300
32%
$3.00
$3.96
$0.96
2.93%
2.22%
2/10/20
HE
$0.3200
$0.3300
3.1%
$192.00
$198.00
$6.00
2.74%
4.96%
2/12/20
TROW
$0.7600
$0.9000
18.4%
$142.88
$169.20
$26.32
2.61%
4.25%
2/12/20
CSCO
$0.3500
$0.3600
2.9%
$107.80
$110.88
$3.08
2.88%
2.78%
2/12/20
NWE
$0.5700
$0.6000
4.3%
$140.30
$146.40
$6.10
3.1%
3.71%
2/12/20
UPS
$0.9600
$1.0100
5.2%
$142.08
$149.48
$7.40
3.84%
3.72%
2/13/20
PPL
$0.4125
$0.4150
0.06%
$211.20
$212.48
$1.28
4.56%
5.33%
2/14/20
WMT
$0.5300
$0.5400
1.8%
$43.40
$44.18
$0.78
1.84%
2.75%
2/18/20
KO
$0.4000
$0.4100
2.5%
$148.80
$152.52
$3.72
2.76%
3.77%
2/20/20
HD
$1.3600
$1.5000
10.3%
$81.60
$90.00
$8.40
2.5%
3.88%
2/25/20
DK
$0.3000
$0.3100
3.3%
$3.60
$3.72
$0.12
4.65%
3.67%
2/27/20
CM
$1.4400
$1.4600
1.4%
$253.44
$256.96
$3.52
5.53%
6.38%
2/27/20
ORI
$0.2000
$0.2100
5%
$168.80
$177.24
$8.44
3.94%
4.43%
2/27/20
TD
$0.7400
$0.7900
6.8%
$236.80
$252.80
$16.00
4.31%
6.24%
2/27/20
BBY
$0.5000
$0.5500
10%
$138.00
$151.80
$13.80
2.68%
6.35%
2/27/20














$2525.66
$2645.52
$119.86





The big winner was a 32% gain from OMF as well as a 18.4% increase from T. Rowe Price.  As you can see on the "Yield on Purchase" column, a handful of dividend increase from T. Rowe Price has me earning 4.25% on my cost basis.   That's inflation beating.  Same with Best Buy (BBY). 
That is the whole goal of investing in dividend increasers.

You may notice the OMF had a lower return than the current rate.  That's a result of recently buying this company right before the Coronavirus crash of the previous week.  That will eventually change.

I'm looking forward to seeing what happens in March.