Five (New) Dividend Growth Stocks On My Watch List

lookingYou’d think with ownership stakes in 51 different companies, I’d be pretty content with just adding to those stakes and increasing my positions.

However, as I’ve discussed a few times, the universe of high-quality dividend growth stocks is certainly greater than just ~50 companies. As such, I’m not interested in artificially limiting myself or placing a ceiling on how many stocks I may or may not own. And on that note, there are a number of great companies I continue to track in the interest of eventually investing in.

Though I see a few companies in the Freedom Fund that are fairly valued or better, there’s a chance that my next purchase will be a new stock due to the fact that most of the very few stocks that I think are attractively valued in my own portfolio are already mostly maxed out in terms of allocation.

So I thought I’d take the time today to share just a few of my better ideas that I’m currently looking at for upcoming fresh capital.

United Parcel Service, Inc. (UPS)

Perhaps one of the most well-known companies in the world, this is a stock that has alluded me for a while now. Though I’m not real excited by the growth generated by the company over the last decade, I can’t see any scenario where UPS isn’t alive and well over the next 10 years and beyond. Their geographical exposure is enviable and they’re about as entrenched as a company can be. The continued rise in e-commerce means shipment volume should continue to increase over the long term, which is volume that UPS is well-placed to capture a good chunk of.

The stock trades for a P/E ratio of 31.26, which expanded after fourth quarter results were released at the beginning of the month. Nonetheless, the company appears more or less fairly valued around $100 here. Offering a yield of 2.85%, a five-year dividend growth rate of 8.3% and solid fundamentals across the board, this company and its stock is right up my alley. The dividend growth streak, at only five consecutive years, is a little light, but I expect that to be a bit more impressive over time.

Archer Daniels Midland Company (ADM)

This is another stock that has alluded me for some time now, but I may change that within the next few weeks or months, warranting capital, stock valuation, and competing opportunities. Archer Daniels is one of the largest agricultural firms on the planet, with major businesses in food agricultural commodities processing and the manufacturing of certain foods and fuels. Trends like the planet’s demand for food and feed bode well for the company and its offerings, which is somewhat countered by the possibility that the renewable fuel standard will be changed in a way that will negatively affect ADM over the long term.

The stock’s P/E ratio of 13.9 is attractive in this market, though the yield of 2.34% leaves a bit to be desired. But the company’s dividend growth pedigree is unquestioned, as the company just recently increased its dividend by 16.7%, which is the 40th consecutive year in which ADM has increased its dividend. A low payout ratio of just 32.6% seems to ensure continued raises for the foreseeable future. This stock has a really great combination of yield and growth, though with more focus on the latter.

T. Rowe Price Group Inc. (TROW)

T. Rowe Price offers global investment and asset management services. A really underrated stock, they’ve posted excellent results as a business (and returns as a stock) over the last decade. Revenue has more than doubled over that time frame and EPS has almost tripled. The company’s position in financial services sector with over $700 billion in assets under management is enviable and should provide continued revenue and profit for years to come. Furthermore, the company sports excellent fundamentals across the board.

TROW is trading hands for a P/E ratio of 18.55, which is a bit below its five-year average. The stock appears slightly undervalued here, all considered. Though the yield of 2.13% isn’t particularly compelling, the five-year dividend growth rate of 12% compensates for that. And a fairly low payout ratio, at just 39.6%, indicates to me that it’s unlikely that TROW will stop growing its dividend at a rather robust rate looking forward. After all, the company has managed to hand out dividend raises for the past 27 consecutive years.

Praxair, Inc. (PX)

Praxair is a leader in the global industrial gases industry. This company would complement my investment in Air Products & Chemicals, Inc. (APD) really well due to their stronger concentration on gases. Providing gases is extremely lucrative because a constant and reliable supply of the product is necessary for a variety of processes across a variety of industries. And PX benefits from being able to sign long-term contracts that provide an ability to index certain input costs to inflation, and these contracts provide great revenue visibility.

The stock’s P/E ratio of 22.25 is more or less in line with their five-year average, although the yield, at 2.24%, is a bit higher than its average over that period. A 22-year streak of dividend increases is very attractive, as is the five-year dividend growth rate of 10.2%. The payout ratio is moderate and I see no reason why the dividend (along with the business and its profits) won’t continue to grow. The business model and PX’s fundamentals offer a lot to like here.

Microsoft Corporation (MSFT)

Though I’m not a fan of technology companies, I’m interested in a strategy whereby I strategically invest across three to five high-quality blue-chip tech companies in small amounts to mitigate risk while also allowing some exposure to the tech industry. Microsoft seems to fit the mold for me with a proven business model licensing its extremely successful and robust software, a lengthy history of growing the top and bottom lines, and a penchant for rewarding shareholders with increasing dividends.

The P/E ratio of 17.59 seems a bit high after a weak quarter which prompted the stock to sell off a bit, but MSFT appears to be more or less fairly valued from what I can see. The yield, at 2.85%, is attractive for this stock and the industry, and the company has been increasing its dividend for the past 12 consecutive years. Meanwhile, the payout ratio is moderate and the company continues to produce prodigious amounts of cash flow. Not my top pick right now, but I think there are some really good qualities here including the over $90 billion in cash, equivalents, and short-term investments on the balance sheet.

Conclusion

So these are a few companies that may be competing for my capital over the coming months. I don’t think any of the aforementioned stocks are a steal right now, but I certainly don’t mind paying fair price for a high-quality business. And I think that all of the above businesses are high in quality, to varying degrees. Furthermore, I have room in my portfolio for all five, based on my current exposure and allocation.

I continue to think that there’s some value in select energy stocks, but I also remain cautious about increasing my exposure to that sector. As such, my watch list reflects my current interests right now. If I weren’t already as heavily invested in energy, I might be a bit more aggressive there. However, you’ll also notice that I’ve invested rather substantial fresh capital in that sector over the last six months, even though I hadn’t planned to. Value is value, and a value-oriented investor like myself sometimes gets a little excited, but I also have to manage risk and allocation correctly by remaining vigilant and prudent.

Full Disclosure: Long APD.

What do you think of my watch list right now? What’s on your watch list? Anything you’re excited about buying? 

Thanks for reading.

Photo Credit: bplanet/FreeDigitalPhotos.net

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137 Comments

  1. Nice list, Jason.

    Of the listed stocks, I have been watching MSFT a little. I have zero tech exposure and would like to add just a little. They seem to be doing some things right. I should have bought a little at the end of January when it dipped close to $40. I wasn’t paying attention and it slipped right past me. Ideally, I’d like to buy at $41 or below. The dividend seems secure enough. My buy price isn’t a bargain IMO, but it seems reasonable.

    Steve

  2. Hey DM,

    Nice list of stocks there- despite their lower current yields, their quick growth will hopefully continue to make up for that. I wanted to ask which of the energy stocks would you be considering the most at this time if you didn’t have such full positions in energy already?

    Also, do you think it’s too late for a 60 year old to start being a DGI? If not, what advice in terms of stock choices would you recommend?

    Thanks for everything you do!

  3. Steve,

    Yeah, I noticed that drop for MSFT as well, which is partially what prompted me to put it up here. I don’t really have the capital for it right now, but I’d like to really investigate it a bit more thoroughly before I invest. There’s a lot of moving parts there, like with most tech companies. But they’re producing a lot of cash flow and the balance sheet is flawless.

    Happy shopping! 🙂

    Cheers.

  4. Tabula,

    Thanks for the support and for dropping by. 🙂

    That’s a good question there regarding energy stocks, but my recent activity will probably answer that for you. OKE and NOV are a couple of my most recent purchases in energy, and the valuations seem to be pretty attractive to me.

    I don’t necessarily think it’s too late if you’re 60, though your approach and goals will have to be far different from my own. I would probably focus on yield a lot more if I were in that situation and I would have to put together goals that are a bit more oriented on today rather than the future. Furthermore, I’d also probably plan on my portfolio providing just a portion of my overall retirement income, with SS (and any other sources you may have, including a pension) possibly providing the majority. You still have a long life ahead of you based on current lifespan information, but I would be aiming for more income rather than more growth, while still focusing on quality and minimizing risk as much as possible.

    Best wishes!

  5. All excellent companies, DM. I own ADM from that list and am very happy with its performance over the past couple of years. I have been looking at UPS for a while and just published a dividend stock analysis today – and the stock appears undervalued by a lot. No wonder, all the investment firms and hedge funds are loading up on the company.

    PX (and APD) is something that I dont really understand. I dont know how the industrial gases industry works and which company specializes in what. So, theres a gap in understanding there that needs to be addressed before I make a decision.

    Thanks for sharing your watchlist
    R2R

  6. A few names there I’v never heard of/considered to hold. MSFT seems pretty solid as a tech giant and they seem to be getting a hang of touch/tablet technology and the OS’s that go with them. Curious to see what you go with in your next buy 🙂

  7. R2R,

    Hard to be unhappy with ADM. The company’s growth over the last eight or nine years isn’t really there, but I’m giving the company the benefit of the doubt due to the business model and low payout ratio. However, they’ll be adversely affected by the proposal regarding ethanol.

    I just came across your UPS analysis. How timely. 🙂

    I’m not sure I agree with the valuation there. I’m probably closer to Morningstar and the $100 mark on UPS. Though, it appears you used an 8% long-term growth rate, which is in excess of UPS’s EPS growth rate and at the tippy top of what they’ve delivered in terms of dividend growth. I’d prefer a margin of safety there, which would put it closer to $100. Just my take!

    Thanks for dropping by.

    Best regards.

  8. DW,

    Well, I hope you found some value here. 🙂

    MSFT is probably a bit lower on the watch list, hence why I mentioned it last. But I think there are a lot of qualities there to like. And they’ve actually done really well over the last decade. Furthermore, their cash flow is off the charts. I’m a little leery of tech, but I wouldn’t mind really small positions scattered across a few high-quality companies to give me my 2.5% or so desired weighting to tech. We’ll see how it goes! 🙂

    Take care.

  9. I was just thinking about TROW and UPS today for possible investments. I wouldnt mind a bit more exposure to financials and UPS should continue to grow as the USPS will prob continue to scale back. ADM is a great play on the ag industry. Im still interested in adding some more NOV but im cautious about the energy sector because a lot of my investments as well as my incone are tied to the E&P side. Id also like to own OHI and or VTR at some point but need to revisit their valuations. Thanks for the updated list and I wonder which ones of these will be joing your Freedom Fund next. Happy shopping!

  10. I’ve been big on tech companies with lots of cash and yield. MSFT, AAPL, and IBM. Concerned with IBM though.

    Off topic but any thoughts on BRK dumping all of XOM/COP and picking up on one of your positions, DE? Thanks.

  11. Hi DM, I have owned ADM since 2005 at a cost basis of about $24. Been a good hold, but it seems a little high here. Although the earnings portion of their P/E has been on a tear lately, ADM is really cyclical, and a lot of times a low P/E is a fake-out as earnings top. (also, minor homonym typo eluded, not alluded).

    I just bought some more JNJ when it hit 97.50 and ALB at a local dip to 48. I am looking to pick up some more industrials, so I have been following DOV, CMI, and AIT for my buy watchlist. All seem like fairly valued long term dividend growers at these levels. NEED MORE CASH. . . I hope they stay lower the next few months so I can buy on the cheap.

    Keep up the good fight, I always like to see what you are interested in so I can check them out myself for evaluation in my portfolio additions!

  12. JC,

    Yeah, I can imagine you’re probably a bit leery of energy there since your income is also tied to the industry. I would share your hesitation if that were me.

    UPS has a high payout ratio because the dividend has been growing faster than earnings. The growth for UPS isn’t all that outstanding, but I’m thinking about where this company might be in 10 or 20 years. The future is bright.

    Thanks for stopping by. Hope all remains well over there!

    Best regards.

  13. Yolo,

    It’s funny you mention Deere. I had a few readers comment that Buffett dropped Deere last quarter and questioned as to whether I’d drop it too. Turns out he was confidentially loading up on it. Funny how that works. And also goes to show why we shouldn’t follow what others are doing (or what it appears they’re doing), even Buffett.

    I’m writing an article right now on his recent moves. He’s been a net seller in energy for some time now, so the recent excess volatility probably gave him a good reason to be more aggressive with the selling. I can only imagine he sees a more protracted pullback in oil and/or better opportunities ahead. I personally think that some of the supermajors, like XOM, aren’t really all that great of a value right now. Really all depends on how oil plays out, however.

    Cheers!

  14. Daniel,

    Nice cost basis there on ADM. I can’t imagine you’re unhappy with that. 🙂

    I agree that ADM isn’t particularly cheap here. Seems roughly fairly valued from what I can see. Though, few really high-quality stocks that I track are much of a steal right now.

    Like your moves in the industrials. That’s an area I remain very interested in myself. If I would have listed six stocks, ALB would have been that sixth stock. MMM and DOV are also interesting. EMR appears attractively valued, though I’m not sure if I want any more or not. Still thinking about that.

    So many stocks, so little capital. I hear you on the need for more cash. It’s funny that even though the market is at all-time highs, I can’t come up with enough cash to buy more stocks. I can’t imagine how excited I’d be with a 20% or so drop. I’d probably have to sell a kidney or something. We have two, right? 🙂

    Best wishes!

  15. DM,

    I really admire your goals and strategy. Your noble crusade to educate the masses on dividend investing is very valuable. I have been a dividend investor for 20 years and find it dividends to be peaceful and freedom fulfilling. My only counsel to you is that you are spread to thin and are to diverse. I am not sure your 20th best investment idea can be as good as your 5th. My advice would be to simplify and increase weighting on your top 10 stocks. Your yield will increase and time management will decrease.

  16. SE,

    Thanks for the advice. I agree that, for most people, 50+ stocks is too much. I say not that not because it’s too diversified, but rather just because it could be overwhelming for some people. I certainly don’t agree it’s too diverse, as a plain vanilla S&P 500 index fund is going to have you spread out across 500 stocks…and that’s the market.

    That said, I actually wrote an article about this a while back which explains my methodology:

    https://www.dividendmantra.com/2014/11/is-managing-a-large-dividend-growth-stock-portfolio-time-consuming/

    I linked to that older post at the beginning of this article, but that explains that I don’t necessarily believe one’s first or tenth investment will be better than their 20th or 50th. Some of my earliest investments were XOM, KO, and VZ. All great companies, but I don’t necessarily think that UPS, for instance, is in a league of lower quality.

    In the end, one has to do what’s best for them. As long as what you’re doing is meeting your goals and you’re okay with the process, then you’re probably doing the right thing.

    Best wishes.

  17. Hey DM, I can’t believe you manage to keep surprising me haha! I’ve got a total of 70 companies I’m tracking currently, and you managed to find five that I’m not! Well, I guess the list just got a bit longer 🙂

    Having said that, since I found your site in December, I’ve started on my own DGI journey. I’ve now got positions in T, BP, JNJ, UL, BBL, PM, ESV, KMI, and a prospect buy in PSEC (that’s really just to have the monthly payouts soothe my ADD brain). My total estimated annual dividend income stands at $381.40, and I just want to say thank you for inspiring and teaching me on this road to financial freedom. I know that finding this at 24 is going to change my entire future for the better, and I am so thankful for that.

    Keep up the awesome work, and I wish you the very best!

    IrishBrian

  18. I’ve been slowly building a position on MSFT since their latest dip on Loyal3. I like their balance sheet, dividend growth and their diversification of their portfolio. Also they are one of three companies to have a AAA Credit rating according to S&P (JNJ and XOM are the others). Plus, it would be very hard for many businesses to switch to a new Office platform. I work for JNJ and we all use Windows 7 and their Office Products. I can’t imagine ever when JNJ would switch out to another platform. It would truly be troublesome. I can probably say the same for many businesses/companies out there. i’m pretty sure MSFT will still be profitable 10-15 years out, however they are in tech and things change fast, so I think a small position in MSFT for me is ideal.

    I’m with you that I don’t want to be tech heavy but tech is definitely here to stay and I think not getting a piece of that tech pie would be a slight mistake. I think for now, I’m sticking with my 3 blue chip tech stocks: IBM, APPL and MSFT.

  19. Jason, thanks for sharing about these potential new additions. My watchlist actually went down by 8 stocks this month, so I have less to research. I’m really surprised you don’t already own ADM, it seems like it’s right up your alley.

  20. Hey DM,
    I currently have no tech companies in my portfolio, but MSFT doesn’t seem like too bad an idea! Increased dividends for 12 years and $90 billion in cash, what’s not to love !
    Good luck with your next investment whatever it may be 😀

  21. Well, I must definitely agree with 3 out of those 5 choices since I’ve bought them all this year! ADM, TROW and MSFT are the three that I bought and still think they are a buy. MSFT has fallen in price since I bought it, ADM I just bought last week and TROW has not had much growth since my purchase. I have also been looking into shipping companies and UPS was on my watchlist for a while but for whatever reason I passed up on purchasing it. I have never looked at praxair so thank you for bringing that to my attention.

    Looking forward to seeing you put some more capital to work!

  22. I have been buying MSFT for over a year – $50 a month through LOYAL3. I wanted some exposure to the Tech industry and there really are not too many options. I have built up a nice little position in that time without worrying about it.

  23. I’m an owner of UPS and MSFT over here, kind of wish UPS would replace their CEO that’s two straight holiday shopping seasons they didn’t execute as well as they could. Just bought into LVS and their 4.5% yield last week, very excited about that opportunity. Nice to be on the other side of the blackjack table, haha.

  24. Generally a solid list. I am long MSFT, and UPS and PX are both on my own watchlist. I wasn’t as much of a fan of TROW as I was of BLK, so I own BLK instead. The only other investment manager I would like is BEN, due to the more appealing earnings growth rate in my eyes. I also recently reviewed INGR, a competitor to ADM, and I agree that ADM looks better, but I don’t think it’s for me.

  25. DM,
    ADM had a nice dip recently pointed out to me by R2R. Since then I’ve watched it recover. Agriculture is an industry that I am not very exposed to at the moment, so I like that one.

    I nibbled on a little bit of MSFT recently (just $100 no-fee buy). Earnings weren’t that bad and the cash on hand should deliver the dividends for years. However, I’m overweight on technology, so I won’t be investing heavily in it. I do think their position in global software is still strong.
    -RBD

  26. Good choices on the finding some good value to invest in. I liked UPS when it was 78 a few years back and never pulled the trigger. Oh the regrets, If and when it goes to 200 a share do you foresee a stock split? I still like GE, EMR, AFL, and BDX as options to add too. I feel if your not at least into it with 200 shares, its not that risky.

  27. Good List. I am long TROW and MSFT. Also long INTC and AAPL in tech. AAPL has been very good to me and should be upping its dividend in the spring. I will need to trim AAPL soon, its way over-weighted in my portfolio.
    Looking to add UPS and ADM.

  28. DM,

    I bought shares of Microsoft back in 2013, along with Cisco and Intel, and they have had great dividend growth. The price shot wait up, but has dropped about $8 in the last month or so. I really like this pick the best of your five. It is hard to imagine Microsoft not being able to make a dividend payment, they are the poster child of a cash cow machine.

    PX was also on my radar a few months back, but for some reason I haven’t picked up any shares yet. I may have to revisit it.

    MDP

  29. I am a new reader of your blog and was hoping you or a reader could help me. I come from an index-fund oriented philosophy, and was wondering if one could/should hold dividend paying stocks as well as index funds. Or is it best to have one or the other?

  30. Nice list, Jason.

    I bought my first shares of PX late January. I’m pretty happy with that. Steady business with high returns on capital. I may add more on dips. I wouldn’t be surprised to see you join the merry crowd of PX shareholders 🙂

    I’d really need to get over my dislike of Windows and take a closer look at Microsoft. It’s still a dominant company in business software.

    I’ve also look at T. Rowe Price but forgot to add it to my watch list on Seeking Alpha. It’s a compelling case to do some more research.

    For someone operating from the Eurozone, US stocks have run up quite significantly due to the stronger dollar. I’m gonna selectively buy US stocks but I have to be more selective on the stocks and price.

    Br

    Jarmo

  31. Absolutely no rush to buy these stocks. Low dividends coupled with tired stories like Microsoft. Just my 2 cents, but I think your picks like OKE and UL are much more compelling. We are really in uncharted territory here in the world and stock market valuations.

  32. i think that 51 stocks is a very very small amount and that you are in store for very high volatility in the future. another blog I enjoy is ” a wealth of common sense” check out this article http://awealthofcommonsense.com/one-way-beat-market/.

    Such a small concentrated portfolio will certainly differentiate your returns from the market however the long term odds are assuredly against you for beating the market.

    You would probably be better off investing in a vanguard income fund so that you would receive decent dividend yield and be far more diversified.. Though you would not have as much to write about then.

    Thoughts?

  33. IrishBrian,

    Sorry to add more work to your plate! 🙂

    You’re in a great spot over there. I can only wish I would have started at 24. Even if many of your investments end up mediocre (which is highly unlikely), the vast amount of time you have to watch those stocks compound gives you an incredible advantage over most people.

    Appreciate all the support. Stick with it!

    Best regards.

  34. Peter,

    I’m in the same boat. I’d rather not make any large bets on any tech companies, as I just don’t feel comfortable with my level of expertise in that area or how fast tech can change. However, I also don’t want to miss out on any potential blockbuster products/services that can provide cash flow for decades (like Windows). So I wouldn’t mind investing, say, $2,000 or so in 3-5 high-quality tech companies that appear to have competitive advantages. I think IBM is a great buy right now, but I really refuse to invest any more money because it’s so difficult to forecast things in that industry and I’d prefer to place small bets. So we’ll see how it goes. MSFT isn’t at the top of my list right now, but it is pretty interesting.

    That balance sheet could be a gift or a curse. Depends on how they use the cash. MSFT, from what I know, doesn’t have the best track record when it comes to spending money on acquisitions.

    Cheers!

  35. M,

    Yeah, ADM is one I’ve missed out on. It’s funny that even though I own a stake in more than 50 companies, there are quite a few I’ve really missed out on. Just goes to show how many truly great dividend growths stocks there are out there. 🙂

    Nothing wrong with less to research. Allows you to focus in on what you really want to add to the portfolio.

    Thanks for dropping by!

    Take care.

  36. CG,

    Thanks for the well wishes. 🙂

    MSFT is indeed pretty interesting. That $90 billion could be a gift or a curse. Depends on how they use it. But it’s a lot of cash. And I like cash!

    Good luck to you as well with your next investment.

    Cheers.

  37. ADD,

    Great minds think alike. 🙂

    I’m perhaps most excited about UPS, even though its fundamentals lag most of the other companies on the list. Their business model is just about as bulletproof as it gets.

    TROW has excellent fundamentals. I’d love to get some exposure to the asset management industry, as I doubt they’re going anywhere. AUM is impressive, which gives them scale.

    We’ll see how it goes. Looking forward to seeing what you buy next as well.

    Best wishes.

  38. John,

    Nice job there. $50 here and there really adds up over time. I share your desire to have a little exposure to tech, but, as you state, there are limited options for blue-chip dividend growth stocks. Apple is another good candidate, but, at $700 billion, I do wonder how much bigger they can really get. Just doubling (which isn’t a major feat for many companies) would put them at $1.4 trillion. Hard to imagine.

    Best regards!

  39. Still evaluating my screen for the month but initially mostly energy companies in the top 25. Like you said how much is to much in energy. Do you diversify or do you invest in bargains focused in one sector?

  40. Randall,

    Interesting opportunity there with LVS. Better an investor than a gambler, that I’m sure of. 🙂

    I agree that UPS is surprisingly disappointing in a few ways, with the holiday performances being one of them. They could definitely improve, but the business model is just so fantastic and easy to understand. It’s really right up my alley, so I’m giving them the benefit of the doubt.

    Hope to join you as a shareholder at some point!

    Thanks for sharing.

    Best wishes.

  41. RBD,

    Thanks for sharing your perspective there. MSFT continues to surprise. I remember reading about how MSFT was going to die off…this was maybe five years ago or so when I was first starting out and Apple was just killing it. But MSFT continues to plod along, grow the business, increase the dividend, and do pretty much everything right. Missed the boat on that one, but I’ve just never felt real comfortable around tech, even the big boys.

    We’ll see how it goes. May end up as a fellow shareholder.

    Cheers!

  42. FV,

    Both are pretty solid companies, from all I can see. Wouldn’t mind owning a chunk of both of them, though a larger chunk of ADM than MSFT. We’ll see how much cash I can round up over the coming months. 🙂

    Take care.

  43. Jason

    Interesting list. I own & like TROW. The durability of the dividend growth is compelling, even if the current yield is not. Historically, TROW has forever commanded a premium price.

    Another company in similar sector that I like even more is Blackrock (BLK). These guys are the 800-lb gorilla in the asset management space, with more than $4.3 TRILLION in AUM. They also have the largest family of ETFs- which most of us dividend growth investors steer wide of- but owning the company that SELLS those has provided a great total return and impressive dividend growth.

    I would strongly urge DGI to take a long, hard, detailed look into BLK. If the stock market is indeed the world’s largest casino, being a part owner in Blackrock is akin to being a part owner in the biggest casino on The Strip. Those minuscule fees they charge clients of their ETF & investment products add up to billions in growing profits which BLK shares with stock holders thru growing dividends.

    I’m not a fan of owning ETFs, but there is no denying popularity of ETFs continues to gain market share, so why not cash in by owning the company that outsells everyone else (including Vanguard) in the space?

    DGI by definition are long term bullish, and that bodes well for Blackrock, regardless of what sector is the latest, next big thing.

    Keep up the terrific writing.

    Michael

  44. DD,

    Those are all solid picks there in the asset management industry. I really like all three. BLK is the gorilla there, which is a benefit and a drawback. Huge scale and visible revenue, though you would have to imagine their relative growth is somewhat bound by their own size. But there’s still a lot of money out there in the world that can be managed, both money already in existence and money not yet created.

    Thanks for stopping by and sharing!

    Cheers.

  45. Uncle EL,

    BDX is one I really missed out on. I remember looking at it when it was in the mid-$70s years ago. I’d love to have a second crack at it. 🙂

    Tough to say when a stock will split. Depends on a lot of factors. Some like to split around $100. Some go on quite a bit further. In the end, it doesn’t really matter to me.

    EMR appears attractively valued here. Not sure if I have more room or not, but it’s a fantastic company.

    Best wishes.

  46. I’m new to your site and have to say it is probably the best blog I’ve come across yet. Excellent job. I’ve devoured these articles over the last few days. Really got me motivated to add quality dividend stocks to our portfolio of mutual funds in 401k and roth ira as well as some real estate. I became aware of PX many years ago through a previous job and remember thinking in 2008 when it was $50 share ” I should be buying this stuff like crazy right now”. Oh well hindsight 20/20. Keep up the good work.

  47. Rob,

    AAPL has been very good to a lot of investors, I imagine. I guess I missed that train a while ago, but I’ve done okay without it. Just never felt comfortable around tech. Even if I would have invested in Apple a while ago, it wouldn’t have been more than a couple thousand or so. Where do you see it going from here? I have a hard time seeing the company doubling or tripling in value like a lot of other companies, along with growing their dividend for decades. Of course, some of that could be said for MSFT as well. I guess we’ll see how it goes. Maybe I’ll be kicking myself for not adding Apple at $127 when it’s $240 and paying out a much larger dividend.

    Cheers!

  48. MDP,

    I agree. Not only is MSFT a cash cow, but they have a ton of cash on the balance sheet. That allows them a ton of flexibility. And it allows them to invest as they see fit, which is much better than me doing it.

    PX is a great company. Their long-term contracts lock in revenue streams for decades. Good stuff.

    Thanks for sharing!

    Best wishes.

  49. Kris,

    One could certainly own both index funds and individual stocks. In fact, I think plenty of investors do, since a lot of tax-advantaged accounts through employers (like a 401(k)) don’t allow one to buy individual stocks. You can really invest however you see fit. Though, most of the major index funds following the entire market or the S&P 500 will give you broad exposure anyhow.

    In the end, you can invest as you see fit. No hard and fast rules when it comes to investing. But however you invest, make sure you’re 100% comfortable with it. Don’t let me or anyone else talk you into doing something you’re not okay with. I’m certainly not here to sell anyone anything.

    Cheers!

  50. Jarmo,

    Thanks for the perspective. I imagine coming from Europe adds a degree of difficulty there. I’m lucky to be operating in the US, where we have this fantastic collection of companies at our fingertips. It’s an amazing advantage that most people don’t take seriously.

    I’m with you there on PX. Really like the business model. Fairly easy to understand, solid fundamentals across the board, long-term contracts, and a product that other businesses can’t do without. Not much to dislike.

    We’ll see how much fresh capital I’m able to come into over the next few months, which will dictate how active I am.

    Cheers!

  51. wtd7576,

    Appreciate the thoughts there. I don’t think any of these stocks are particularly cheap, but I also don’t think any of them are abnormally expensive to a point where they’re uncharted. Of course, if the market – and these stocks – drops by 30%, I’d certainly welcome it. 🙂

    Best regards.

  52. joe,

    Yeah, I’ve answered these questions ad nauseam on the blog. Looks like it’s your first time here. I’d recommend reading some of the older articles.

    My returns over the last five years have largely mimicked the market, though I am outpacing the S&P 500 on an annualized basis. Not that I care. And my portfolio oscillates less on a day-to-day basis due to the lower beta for many of my holdings. Volatility doesn’t bother me, however. In the end, I’m after a growing stream of income large enough to fund my lifestyle and become financially independent by 40, which I’m ahead of schedule on.

    Keep in mind that index funds aren’t as diversified as they’re made out to be. Even VFIAX has almost 11% of the fund in the top 5 holdings. The last 100 or so holdings are really almost inconsequential in terms of returns because the weighting is so infinitesimal.

    Cheers!

  53. DFG,

    Right. That’s a personal call there. I’d argue that my portfolio – now at 15%+ in energy – is too exposed to that sector. But one could argue the other way. Really depends on how oil plays out and where many of these stocks are over the next five to ten years. I happen to think better bargains could present themselves down the road for some of the major players. And no skin off my back if that doesn’t happen. 🙂

    Cheers!

  54. Hi Jason I saw that Buffet quit his stake in Exxon – does that make you lose faith in your oil stocks, Chevron and Conoco-Philips? Secondly, you are of course as a U.S. citizen exposed towards U.S. stocks.

    I think you should consider some more European stocks, given that the U.S. has rallied so much, and the expectations have been so low for European stocks so long. E.g. pharmaceutical companies Novartis, Roche, Novo Nordisk (insulin producer).

    I read that Soros is shifting out of U.S. stocks recently and towards China and Europe. I am personally considering more stocks in China, e.g. China Biologic, China Mobile and Great Wall Motors.

    – thanks, I am fowllowing your blog every week from Denmark, and as mentioned before to you, considering writing a similar dividend growth blog with an EU focus.

    http://www.bloomberg.com/news/articles/2015-02-17/berkshire-cuts-exxon-mobil-stake-amid-plunge-in-oil-prices

    http://www.bloomberg.com/news/articles/2015-02-17/soros-adds-to-dow-sells-ypf-exits-apple-shares-during-quarter

    best
    Christian

  55. Michael,

    Thanks for your thoughts there. I also happen to like BLK a lot. Their position gives them incredible clout and scale. Though, I do wonder how much more they can grow. $4.3 trillion is a huge number. Pros and cons, like with anything else.

    But I agree with you that the trends regarding the way funds and assets are being packaged bodes well for BLK and others like it. DIY investors like me and you are a rather rare breed. For the rest of the world, these companies should continue to do well over the long haul as they continue to grow AUM and, along with it, fees they collect.

    Appreciate the support!

    Best regards.

  56. Chris,

    Thank you. Really appreciate the kind words. I’m glad you found the blog and enjoy what you’re reading thus far. I do my best to inspire through action, sharing the journey in real time.

    I hear you on hindsight. I was working for a Ford dealership back in late 2008 and early 2009. And I remember people talking about Ford stock hitting $2. I thought to myself that I should just buy a boatload of shares because I couldn’t imagine F going out of business. But that was a scary time and I didn’t know what I was doing. I don’t regret not buying because it would have been a total gamble, but I also learned from that experience to take action.

    Stay in touch!

    Best wishes.

  57. Christian,

    I think independently of others, so what Buffett (or anyone else) is doing has little bearing on my own portfolio. That said, I remember last quarter we thought that he sold out of Deere. Of course, many were questioning why I wasn’t getting out of Deere. Now it comes to be known that he was actually loading up on Deere the whole time, pursuant to a confidentiality agreement. So one has to be careful about following in the footsteps of giants.

    If you’re interested in Buffett’s recent moves, I broke down every single one of them here:

    http://dailytradealert.com/2015/02/18/buffetts-latest-trades-buys-15-stocks-sells-5-stocks/

    It’s possible that Berkshire is forecasting a protracted drop in oil, though it is interesting that they nonetheless added to SU slightly. But Berkshire has been a net seller in energy for some time now, so the recent moves (outside of XOM) aren’t all that surprising. It could just come down to opportunity cost. In addition, the portfolio has been increasingly tilting toward media. So if you’re interested in following Berkshire, that appears to be where they’re going.

    I like many European companies, though I largely stick with UK-domiciled stocks. You’ll notice that I already have quite a few stocks from the UK. It’s rather low-hanging fruit for me due to the lack of foreign taxes. But I may consider expanding a bit beyond those borders. We’ll see. I do like Novo Nordisk quite a bit. Great company there. But I’m also lucky in that there are hundreds of great dividend growth stocks right here in my backyard.

    I’m personally not interested in Chinese stocks at all, but I wish you much luck there.

    Appreciate the support and you following along!

    Best regards.

  58. Hi Jason!

    Thanks for sharing your ideas! All unknown companies to me except for UPS and Microsoft. I’m currently thinking about JNJ. What do you think about the todays price? Would you be a buyer if you didn’t have so much of it already?

  59. Nice list of stocks. I don’t hold any of the 5 list here and may be a good addition to any portfolio. I have been thinking about MSFT for a while now, but with already a high weight in tech stocks (AAPL, HPQ, XLK and GOOG), I am not sure I want to add another one right away. I want to increase my weight in other sectors before I start loading up no tech stocks.

  60. Sampo,

    JNJ is, in my opinion, one of the very best companies in the world. Probably top three. So I would definitely load up on it if I didn’t already own 100 shares. I think it’s roughly fairly valued here at $100. And I can’t see how anyone can go wrong paying a fair price for a company like JNJ, when looking at it over the long haul. 🙂

    Best wishes!

  61. DGJ,

    I hear you there. If I were you with a heavy weighting in tech, I wouldn’t be particularly excited about MSFT either. You’ve already got some big exposure there. I only have IBM as my pure play on tech right now, so I’m in a very different boat.

    Thanks for dropping by. Hope you found some value in the ideas!

    Cheers.

  62. I’m keeping a close eye on Microsoft as well and like where they are headed in the long term. With all the volatility in the markets I’m curious what your thoughts are on low cost index ETFs? Would you consider buying them or are you 100% dividend investing with individual companies?

  63. Nice list. I’ve been looking at MSFT as the current price drop gives a good opportunity to enter.

    What’s your thought between UPS and FedEx? I suppose UPS’ yield is a lot higher than FedEx.

  64. Dan,

    Microsoft continues to surprise to the upside. And their dividend raises keep on coming. It’s made a believer out of me, though I still would only open a small position if I were to invest.

    As far as volatility in the stock market, as I’ve said over and over again, I welcome volatility. The more the merrier. Volatility is the friend of a long-term investor. But to answer your question, no, I have no interest in buying ETFs and paying a lifelong fee to own a basket of stocks I can buy myself or avoid if I want to, while also likely sacrificing growing income.

    Cheers!

  65. Tawcan,

    MSFT hasn’t historically been one of my favorite stocks, and it’s still probably not. But I think there are some solid qualities there, and I’d feel comfortable with having 0.5% or so allocated to it.

    FedEx really isn’t on my radar due to the low yield. Besides that, the five-year dividend growth rates are similar. Looking at the businesses, UPS seems to have greater competitive advantages to me.

    Best regards!

  66. DM,
    I am a fan of MSFT at the current price. I am hoping that the can do something with all that available cash. It’s a great addition to a portfolio without much tech exposure. I will say that AAPL is better, but many people and companies use Microsoft products on a daily basis. Let’s see what happens. I’ll have to look at some of the other companies including UPS. They seem to be doing very well because of Amazon and other online businesses I imagine.

  67. I’ve been trying to come up with a simple Excel spreadsheet that I can use to not only track the discounts I’ve received, but also forecast what I will get each month. I’d like to have one year on each sheet. Maybe something like the months across the top and the companies listed down the side. Can you point me toward any good examples? I don’t know if I’m trying to make it too simple or too difficult, but I’m kind of stuck. Thanks.

  68. DM,

    I’m with you. It’ll be interesting to see what they do with that growing cash pile. A special dividend that still leaves them plenty of cash for intelligent acquisitions might be a great way to use some of it.

    UPS should do well with the increasing e-commerce. You have more volume there because more individuals are buying and shipping items, rather than going to stores and buying the goods from one central location. I can’t imagine that UPS isn’t a bigger and more profitable company able to pay out more dividends 10 years from now.

    Cheers!

  69. FFF,

    Nice list there. The Canadian banks also seem like pretty solid values right now, though I’m a bit leery in regards to housing up there and their general economy.

    Looks like we both like MSFT. That stock appears to be pretty popular. Not sure if I’ll go for it or not, but the fundamentals are really solid.

    Thanks for sharing!

    Best wishes.

  70. I can’t believe I typed discounts. That is too funny. I was processing invoices for discounts at work before I typed that. My mind must have still been in work mode. I meant dividends. Sorry for the confusion.

  71. Hi, I realy enjoy your articles. What do you think of Gilead? I know this is the first year that they will be paying a dividend, but the Revenue and EPS growth has been astronomical.

  72. Just a random opinion, but I think Apple still has plenty of growth left. People seem to want to criticize Apple and wonder how much more can they grow since they’re so huge already….well, I don’t know exactly, but I certainly am willing to bet they grow more than Microsoft, Intel, IBM, etc. moving forward. The iWatch should be big, and Apple Pay is going to be huge as well (imo). Their balance sheet is almost comical with $178 billion in cash to use it for whatever they want. They could EASILY double the current dividend for the next 5 years or so and not even break a sweat. That said, I think they are intentionally taking a conservative approach with dividends in order to ensure they can steadily increase 10-15% a year for a loooonggg time. Even if their growth slows, and they transition to becoming a more “Microsoft” like stock, that’s not a bad thing, as they’ll have the cash to drown shareholders in dividends for decades.

    Anyhoo, just one persons opinion. Like you, I don’t want to have too much of my portfolio exposed to tech, but I definitely am betting on Apple 10-15 years from now being a superior investment to any other tech company. Guess we’ll see.

  73. Great listing. I have been looking at UPS and MSFT for a while and I see them having great competitive edge over their competitors. I am just waiting maybe bad news for me to purchase until then I will look more into oil&gas companies as they look very attractive to me at this point.

    Keep cracking!

    BeSmartRich

  74. Lukaivan,

    I’ve heard good things about Gilead, but I haven’t looked into it myself. Once they get three or four years of dividend increases under their belt and demonstrate some consistency, I might take a peek at it. But five years of dividend raises (or very close to it) is kind of my cutoff.

    Cheers!

  75. I can’t wait for the day where I see a buy article that says a purchase of LVS. I bought my third block of it two weeks ago. I’m trying to stay diversified and build a portfolio that is half income and half growth (LVS is the rare stock that looks like it fits both criteria). I am just wrapping up my first initial year of investing and I followed your lead and purchased a block of Disney early in January also. My portfolio has done quite well so far in 2015 .

    In regards to UPS, doesn’t that PE ratio scare you. I haven’t looked at all of its metrics, but anything over 20 has to offer some amazing EPS growth to command that high of a ratio. DIS is at 23, but I know they are absolutely one of a kind as they can produce a billion dollar movie at will, along with their other sources of revenue. The same PE issue with Pepsi is bothering me. I would love to initiate a position, but I don’t really see how they can produce a high level of growth to justify their current ratio of 23. Pepsi needs to get back down to around an 18 PE before I consider an investment or show me something that justifies its current ratio besides being more diversified than Coke.

    I am really concerned about PE ratios as we are 6 years past 2008-09 and I don’t want to see my stocks evaporate in market value when the next recession hits. I feel like my approach of half growth/ half income will make my shield my portfolio as long as I don’t overpay. Chipotle and Tesla are due for bigger drops than the ones they recently experienced.

  76. Doug,

    Appreciate your thoughts and perspective there. I agree that Apple is a high-quality company, and they’ve done incredibly well. Of course, we invest for where a company’s going, not where it’s been, but there’s no doubt that they’ve positioned themselves well with great products and an amazing ecosystem.

    We’ll see how it works out for them. The law of large numbers would indicate that they almost can’t grow as fast moving forward as they have over the last 10 or 20 years, but nothing wrong with sustainable 6% to 7% growth along with growing cash payments, which, really, is what we’re after here.

    Best regards!

  77. BSR,

    The bad news actually already hit MSFT at the end of last month. From 1/26 to 1/28, the stock fell over 12%. Still hasn’t really recovered, though I agree that it’s still not particularly cheap right now. Seems roughly fairly valued to me, like most stocks on this list. A similar drop happened for UPS right around that same time. 🙂

    We’ll see what we get moving forward. Happy shopping!

    Take care.

  78. TayDiggsMoney,

    Glad to hear your portfolio’s off to a solid start this year. DIS is in a great spot. Really exciting. I hope to have an opportunity to add to my position sometime this year. I could see myself quadrupling my position over time. And I’m glad that you’re averaging down on LVS. I know it’s taken a tumble since you initiated your position, but that’s just a better opportunity if you still believe in the company.

    UPS’s P/E ratio doesn’t really bother me. It’s important to look beyond just what the finance sites tell you. T has a similar P/E ratio right now, which is due to adjustments to GAAP EPS.

    I think, overall, the market is a bit stretched here. But if you’re focusing on the income, volatility shouldn’t really bother you anymore. And I think select opportunities remain in the market here and there, with some of them being on this list right now. But I would obviously love to see a correction of 20% or 30%. I’d certainly be further ahead in my journey to financial independence had the market stopped in its track somewhere around 2011. However, a short time horizon of only 10 to 12 years means returns and the stock market in general won’t have as large of an impact on my success as my savings rate will. So it’s important to be mindful of that.

    Best wishes!

  79. As usual, you have zeroed in on some great picks. MSFT is one of my favorite stocks and one of the largest positions in my portfolio. I know it is not as big as AAPL which has been the “in” thing for a while, but I consider MSFT’s embedded place in the business and corporated ecosystem to be a moat for the company. This is a great time to add to it. I have had all the rest of your picks in my watch list for close to a year now except for ADM. Nothing against that company, I just try to stay away from the ag sector in stocks because 99% of my income comes from agriculture.

  80. I like the companies you picked here DM Ive been watching MSFT as well…. question though with stakes in 51 different high quality companies, im willing to bet at least one of them right now is a better buy than any of these 4? Im from a finance background in school and the math suggests that risk aversion becomes pretty much maximized around 30 different stakes (i think?)… why keep adding different ones?

  81. BCS,

    Thanks! Hope you found some value in the post. 🙂

    I hear you there on MSFT. It’s not sexy, but few of the companies I invest in and/or recommend are sexy. Besides, what’s more sexy than collecting increasing cash flow?

    Thanks for dropping by.

    Cheers!

  82. Ben,

    “the math suggests that risk aversion becomes pretty much maximized around 30 different stakes (i think?)”

    You’ll have to tell that to all the people that say you’re taking on too much risk unless you own the S&P 500 or the entire market.

    As far as why I hold such a large portfolio and continue to add, the article linked at the top of this post explains that a bit more. Really comes down to the number of high-quality companies that one can own being much greater than 30, and probably even greater than 100. How many you want to own and/or can follow is really up to you. Some feel most comfortable with 10 holdings. Some feel best with 100. It’s an individual call.

    Best wishes.

  83. I noticed an analyst said today that BAX is going to have issues with the dividend going forward after the split, and may need to borrow for a bit to cover it. I guess we will know more once BAX addresses if the other company will pay a dividend, or if only BAX will, or perhaps they will split it.

    From your list I would go with PX. APD has been really good for me over the years, I trimmed it, and used some of the funds to add to PX. I love the industrials that go under the radar, but just crank out dividend increases each year.

  84. Doug summed it up nicely.
    I started buying Apple just before the split. My cost basis is under $100. While I don’t expect them to grow as fast as in the past. I still see them growing, plus growing the dividend. They are quite the cash generator machine right now.
    My problem, a good one, is that they are a very oversize position now and likely to get more so. For now I am just adding money to other stocks to try and balance that out.
    But at some point I may have to trim back AAPL a bit.
    Jason (or others), do you have a certain level at which you scale back in a position?
    I am enjoying the run up in Apple, But I don’t want to get too greedy.

  85. presone,

    Hmm, I doubt BAX will have any issues. Depends on how the dividend is split, though. If the legacy BAX tries to pay out the entire legacy dividend by itself, that could present a problem. I find it more likely that it’ll be like the ABT/ABBV split where both new entities pay dividends that adds up to at least what it was before. But we’ll see how it goes.

    I’m with you on the industrials. There are a lot of great industrials with 30 or 40 or even 50 years of dividend raises under their belt, and most of them fly under the radar. My radar is tuned to pick up cash, however, so it usually beeps pretty loudly around these stocks. 🙂

    Best wishes.

  86. Rob,

    That’s a good problem to have. We call problems like that first world problems. 🙂

    I don’t trim winners. I let them continue to do business and pay me rising dividends. My strategy is just to buy around those stocks, thus slowly lowering the weighting over time. I’ve done that with PM and JNJ over the years. Takes a while to get things aligned correctly, but I have no desire to own less of a high-quality company. I’d obviously refrain from buying more, but I wouldn’t be particularly interested in selling if the company is still meeting my expectations.

    Cheers.

  87. I just noticed that due to WordPress’ smart quote function, the quotes symbols (” and ‘) get changed, so if you copy and paste the formula you will need to manually change the quotes.

  88. Good stuff, DM. I am considering ADM for my 2016 purchases after I build out my core this year. I wouldn’t be surprised if by the time you were 40 you had positions in 100 companies!

    That’s 400 dividend checks a year, or more than 1 per day. Just on a psychological level, it would be awesome to be getting a check every single day (on average) for the rest of your life!

  89. Jason – Thanks for sharing your list of dividend growth stocks. Of the five mentioned, I like ADM, TROW, and MSFT. I think all three are still attractively prices and so there may be a probably of benefiting from the gain in stock price as well as dividend raises. 🙂

    Nobody has a perfect track record picking winning stocks, but the more compelling reasons one can find on a stock, the greater the chance for success. AFFJ

  90. Mike,

    One check per day! I love it. I’ll have to borrow that line of thinking if/when I eventually own a piece of that many stocks. Even factoring in the odd annual/semi-annual payout, you’d still be averaging more than one per day. How awesome is that? 🙂

    Thanks for adding that.

    Best wishes.

  91. AFFJ,

    Yeah, I think all of them offer something different to like. You’ve got a nice mix of yield, growth, and industries here. A flavor for everyone! 🙂

    Thanks for stopping by. Hope all is well.

    Best regards.

  92. Great List Jason.

    I am also interested in MSFT.

    Also thinking of starting a new position in BAX. Suncor also doesn’t look so bad.

    Regards,
    Tom

  93. Great list Jason, thank you for sharing! I was so close to pulling the trigger on ADM today because I really need more weight in consumer goods stocks, but I ended up adding to BAX of all things. Maybe next time on ADM. I’ve also badly been wanting to pounce on PX, that’s such a great company with outstanding growth. Have a great Thursday!

  94. DM – You are reverting your investment performance back to the mean. It is mathematically more challenging to outperform an index fund the wider you spread your investments. What I am nicely challenging you on is very consistent with what Buffett/Munger preach. Take a look at how concentrated Berkshire’s stock portfolio is today.

  95. I just read through all the comments… apparently I was beating a dead horse haha. Very understandable how many positions you hold is a personal call on how you feel.

    Thanks!

  96. someone may have already posted this. But TROW just announced:

    “T. Rowe Price (TROW +1.3%) ups its quarterly dividend by 18% to $0.52 per share, an annualized yield of about 2.5%. The company also declares a special cash dividend of $2 per share payable on April 23 to owners of record as of April 9.”

  97. Ryan,

    Nice move on BAX. Great company and the spin-off is pretty exciting. It’s trading near my cost basis here, so I probably won’t be adding any due to the size of the position in my own portfolio. But I think we’ll do well with it.

    Keep it rolling over there! 🙂

    Best wishes.

  98. SE,

    “It is mathematically more challenging to outperform an index fund the wider you spread your investments.”

    I’m not attempting to outperform any index funds or anyone at all. If my articles have said anything, it’s that. I’d encourage you to go back and read some of them.

    I’m attempting to build a growing source of passive income that can fund my lifestyle and then some by 40 years old, which I’m ahead of pace on. Whether or not I outperform anyone else is really inconsequential to that.

    Cheers!

  99. Personally I always look for the economic “moat” that Dividend Mantra has talked about in previous articles. The casino companies used to have this moat legislated in. Now I see Indian casinos all over the place. New Hampshire has charity card rooms. Rhode Island has slot machines. Main stream casinos are suffering and will continue to suffer as the legal moat in legalized gambling continues to erode. Not a fan of LVS stock. DM what is your opinion on LVS?

    Thanks,

    Roger H

  100. Roger H,

    Right. Their economic moat here in the US seems to be narrow at best. However, the company generates most of their revenue abroad. Apparently, LVS is one of only two companies with a license to operate in Singapore, with no new licenses allowed to be given until 2018. And they are pretty dominant in Macau as well, where they’re one of six companies allowed to operate. So you’ve got a duopoly and oligopoly in their key markets. That said, there’s certainly the possibility this will change over time and you’re really strongly relying on government regulation in China with this investment, which is not where I’d want to be. Perhaps my biggest issue with this company is the fact that they’ve generated negative free cash flow for seven out of the last 10 years. I’m sure building out had something to do with that (I haven’t looked in-depth), but it goes to show that their ability to generate cash flow isn’t as strong as one might think offhand. Not really a stock for me at this time.

    Best regards!

  101. Hello Jason

    The companies on your watch list are ok, but I guess not your top favorites of your whole portfolio? Why not adding to existing positions, where the valuation is still fair. Personally, I think about to add to my IBM and Wells Fargo positions. IBM with P/E of 10 and Wells Fargo of 13 are both in the range or beneath the average of the last 5 years. Contrary the companies on your watch list show relatively higher valuations, nevertheless not to an extreme. I find it more secure, to buy companies at lower valuations. Or maybe it makes sense to wait for a while with buying and building a larger amount of cash reserves?

    Best regards

    Marco.

  102. Hi Jason,

    What do you think of American Express stock for the long term? Thinking about buying after the recent drop in price.

    Thanks and keep it up!

    Scott

  103. PX and APD are both on my watchlist for that sector, along with ARG, which I am quite lite in.

    MSFT, along with TXN and CSCO are on my tech list as well. Since I work in the industry, and not too many stocks are solid dividend payers, I’m fairly lite in this sector as well. I do have small holdings in ORCL, APPL, IBM, GRMN, and QCOM, a couple of which are holdover ESPP purchases.

    I’m quite heavy in Financials at the moment, and should possibly look to unload a few as early on, I was chasing yield too much. Although I’m heavy due to a couple of HealthCare REITs; and I know it’s technically a Financial sector, I think it should cross into HealthCare a touch as they’re quite correlated..

  104. Hey DM,

    ADM is on my longer list of stocks.
    I like Praxair, because it’s an industry I understand as a chemical engineer. I almost went to work for them. However, their price has historically been too high to meet a P/E 2.5%.

    Thanks,
    WE

  105. Marco,

    Well, it really comes down to diversification and risk management. I think IBM is a great value here, but I’m really okay with what I have invested in the company. If it works out as we expect, then IBM will grow, its share price will expand, and the weighting within my portfolio will grow organically.

    BBL is another one. NOV as well. But at what level is enough? Only one can answer that for themselves, but I’d start to feel uncomfortable with adding more and more, especially if my thesis is incorrect.

    Really a personal call. But there are few, if any, stocks in my portfolio that I am underallocated to right now and are simultaneously great values. WFC is another stock that I’m fully allocated to. And I certainly don’t want to go big on any single bank or the banking sector due to their tendency to cut dividends here and there.

    Cheers!

  106. Scott,

    AXP isn’t really a dividend growth stock as they haven’t shown any kind of penchant for regular dividend raises over the last decade or so, so it’s really not in my wheelhouse. V is growing much faster and is increasing its dividends at a reliable and rapid pace, so that’s my preferred way to play the credit cards. MA would be another fine choice, in my view. The networks are much larger and there’s less risk. The valuations are much higher, but seem to be warranted.

    Best regards!

  107. DH,

    Sounds like some solid stocks over there. APD has done well for me, though I think the stock is pretty far overextended right now. The valuation gap between it and PX seems unwarranted to me.

    I’ll probably end up with a similar approach to you as far as tech plays. Because there aren’t many with lengthy dividend growth records, I’m going to go probably invest lightly in the few with the best fundamentals and some visibility for future growth. I’ll get some exposure to tech, but not to the point to where I’m uncomfortable. Tech changes fast, so I don’t want to be caught with a bad thesis.

    Thanks for dropping by!

    Best wishes.

  108. WE,

    I agree. PX is never really cheap. One of those stocks that always seems to be priced at a premium, yet the stock and the business keep performing. I’ve missed out on a few high-quality businesses because of that – consistent premiums. CL is a great example.

    I’ve learned to buy great businesses at a reasonable price, even if it’s not cheap. And I’ve done well with that. V and DIS are a couple of recent stocks I purchased that weren’t cheap at the time, but continue to do well.

    Thanks for sharing!

    Best wishes.

  109. I have lots of stocks on my radar this month. TD, BNS, BAX, JNJ, oil stocks, but I probably need to stay from oil. I got too highly allocated past couple months going on a buying spree :). I do like MSFT at these levels. Not only that, but the new surface pro 3 is amazing! It’s so amazing that my big company of 75k employees decided to start transitioning out of all their old dell desktops to the surface pro. I believe there will be many other corporations following suit. Mark my words, Microsoft has some great potential growth as you see more and more corporations refreshing their products.

  110. Trevor,

    That’s good news over there for Microsoft. Thanks for sharing that!

    Sounds like some solid stocks on your watch list over there. The Canadian banks are pretty attractive here, though not without major macroeconomic headwinds in the near term. Long-term, they should be fine.

    Best of luck picking the right stock(s). 🙂

    Cheers.

  111. DM,

    Great list of companies. We are very fortunate to be able to have so much information available at our proverbial fingertips. Combine that with your ability to translate it to your readers in a digestible fashion and we are all better off. I own and will continue to accumulate MSFT and UPS. Good luck with your decision and I look forward to reading about what you decide upon. I suspect your 51 positions will grow closer to 100 some day as there are just too many companies doing a great job of producing ever rising earnings streams which lead to more important ever rising dividends for its owners. Keep up the great work Jason.

    Matt

  112. FD,

    Agreed. As I wrote about before, we’re in the Golden Age of Financial Independence right now. It’s great to be alive and doing this in 2015. 🙂

    I suspect I’ll end up owning a lot of companies as well. There are so many fantastic businesses that I don’t yet own a piece of that I want to. And I just don’t place any artificial ceilings on myself.

    Have a great weekend!

    Best wishes.

  113. So Jason,
    how do you get acces to their fair value??? or you just see it it blogs when people talk about?

    I checked your review of Baxter to complete my own analysis, really good

    Regards!

  114. Finanzasmania,

    Thanks! Glad you enjoyed the Baxter analysis. Great company at an attractive valuation here.

    Unfortunately, I can’t really say in regards to M*. I can only recommend to be enterprising.

    Cheers!

  115. Hi DM,

    MSFT is one of those technology stocks that has the feel of a utility, really, the way they set the infrastructure up years ago and just keep charging for use. Bill Gates back in the mix probably bodes well for the company to get the growth engine rolling again as well.

    Take care,
    – Ryan from GRB

  116. Hey DM,
    Nice write up on your watchlist. I was a able to acquire MSFT right after their big dip at 41.56 per share. I cant complain, I love the long term outlook for them especially with that kind of cash at their disposal.

  117. GRB,

    Agreed. The licensing is extremely lucrative. I don’t see why that’ll go away anytime soon. Meanwhile, they’ve been building new businesses in growth categories like cloud. And the cash on the balance sheet gives them the flexibility to pick up bolt-on pieces along the way.

    I wasn’t aware that Bill Gates was really back in the mix. I know he stepped down from Chairman to serve as some kind of advisor to Nadella. But I’m not sure how active he is. From what I understand, most of his time is spent with the Foundation and its philanthropic ventures.

    Thanks for dropping by!

    Best regards.

  118. FI Investor,

    Sounds like a great purchase to me at a pretty solid value. That cash could be a good or a bad thing, depending on how they use it. But I’m keeping my fingers crossed that they maximize shareholder value with it.

    I may join you as a shareholder at some point in the near future. Enjoy those MSFT dividends!

    Cheers.

  119. I finished up a suggestions list last week for my DSR website and rated these stocks as buys: Apple and Hasbro. On Canadian side: Emera, IFC, Telus and Potash. Some are in the same industries of some of your stocks below so I thought might worth sharing! 😉 And I’d be excited about buying any of these!

  120. Mike,

    Sounds like some solid picks across the board. Even with an expensive market, we still have a lot of choices out there. It’s good to be an investor! 🙂

    Thanks for sharing.

    Best wishes.

  121. TROW looks great. Being in the banking industry, I’m skeptical of other financial stocks and always kind of passed it over despite it’s appearance on the aristocrat list . Given its very strong EPS and dividend growth, it easily commands the 19.5 P/E of it’s industry. Apply that to the low end analyst consensus of $4.65 for FY 2015 and you conservatively have a $90 stock.

  122. BenValue,

    Thanks for the thoughts on TROW. I largely agree. I’m not super heavy on financials in general, but TROW (and some other asset management firms) looks pretty good here. I’m very seriously considering adding it to the portfolio. We’ll see how much cash I can scrounge up. 🙂

    Have a great weekend!

    Take care.

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