After publishing my August results in terms of dividend income and growth figures, I decided to write down my watchlist for September. Many stocks appear to be overvalued at the moment, especially when you consider their most recent growth rates of revenues and earnings. But if you look closer, then you’re always able to discover some high-quality businesses trading at attractive valuation numbers. Here’s my shortlist:
Johnson & Johnson (JNJ): this one needs no introduction in the dividend investing community. Although the P/E seems to be on the high side, the forward P/E of 15 looks very attractive. Buying this beauty for a price below $130 immediately gives you a nice dividend yield to start with: 3%. Their latest dividend increase was 5.6% and I think management is targeting for such a dividend growth rate in the near future. There’s nothing wrong with that, while cruising through the next economic recession. Besides, they’ve increased their dividends for 56 years in a row; with this company in our portfolios, we’ll sleep well at night. I’ve always considered my portfolio as incomplete without JNJ. Adding this wonderful business to my nest with eggs means some extra dividend income in “my lower income” months. That would be nice.
Simon Property Group (SPG): another REIT? Yes, but one of the best, just like Realty Income (O). I don’t think a retail apocalypse is at hand. Look where Target (T) and Walmart (WMT) are trading at the moment in comparison to, let’s say, two years ago. I’m confident SPG will continue to do just fine in this low-interest environment and during the looming recession. They have a strong balance sheet and will also be able to refinance some of their debt if interest rates stay low. The extra cash could be used to ramp up their share buyback program. SPG also has a credit rating of A or likewise from other credit rating agencies. Their most recent dividend increase was 2.5%. SPG has a streak of 9 years increasing their dividend. This quality name trades at a high 5.5% dividend yield at the moment. Initiating a position in this company increases the amount of money I receive in the months with my highest dividend income.
Other candidates would be Abbvie (ABBV), Altria (MO) and Exxon Mobil (XOM). This would mean increasing my position, which doesn’t feel like the right thing to do as I consider these positions already full positions. Especially relative to other positions in my portfolio. I’m also checking out the big Canadian banks. Talking about steady compounders.
What are you up to? Which names are you looking at? And are you planning to add to or initiate a new position?
Please let me know.