My Stock Watch List For May 2015

lookingSurprised? 

I had a little extra time on my hands before jetting off to Omaha to see Warren Buffett in person, so I figured I’d make use of it.

I didn’t think I’d be able to put another post out before the end of the month, but I just have so many ideas in my head at all times. And one of those ideas right now is attractively valued dividend growth stocks for next month’s round of buying. I’m always on the hunt with my BB gun in tow, and May should be no different.

What you’ll see below are some targets I’m looking at for the month of May. I think they all offer quality, value, and growth… to varying degrees. And this watch list is obviously customized to my specific needs and portfolio, so you might be looking at totally different stocks. But I think there’s a lot to like here and a great place to start additional research if you see something you like.

As always, I tend to telegraph my purchases beforehand, leaving little to surprise. So the odds are good that I’ll end up purchasing one or more stocks from the list below during the month of May. I anticipate having enough capital for at least one stock, but it’s quite possible, depending on how things go, that I’ll be able to make two or three purchases. I still have some free trades stored up with my Scottrade account, so I may make use of those.

Let’s see what kind of opportunities we might have!

Union Pacific Corporation (UNP)

This is a stock I’ve been eyeing for some time now, as it also made an appearance on last month’s watch list. And there’s a good reason for that: it’s an outstanding business. With amazing built-in competitive advantages, I’d love to be able to build a position in this company. The stock is down more than 10% YTD, which seems to be an opportunity here. This stock would make a great complementary investment to my holding in Norfolk Southern Corp. (NSC). Railroads are truly one of my favorite business models, so I’d like to eventually get my hands on a few different high-quality railroads, diversifying across geography and shipping mixes.

UNP has increased its dividend for the past nine consecutive years. But even more impressive is the dividend growth – the five-year dividend growth rate is an astounding 27.3%. Meanwhile, the current yield of 2.06% is more than 30 basis points higher than the five-year average. The P/E ratio of 18.23 indicates the stock is roughly fairly valued here, but that’s a discount to the broader market even while the company has grown at an outstanding rate over the last decade. UNP is currently at the top of my list.

W.P. Carey Inc. (WPC)

I initiated a position in WPC last month and the stock is now about 3.5% lower. I tend to look to average down on a stock after it’s fallen at least 5%, but I think WPC is already quite attractively valued here. This real estate investment trust’s quality is very clear, with a great track record of growth, excellent diversification across countries and industries, and great metrics in terms of tenant management and occupancy rates.

The stock currently yields 5.88%, which is certainly appealing in this low-rate environment. Meanwhile, you get a 10-year dividend growth rate of 7.5% on top of that, with a growth rate that’s actually accelerating. And though it’s not a household name, WPC has actually increased its dividend for the past 18 consecutive years. The P/FFO is 14.20 right now, which I think offers a lot of value. I recently performed a dividend discount model analysis and concluded that the stock could be worth up to $99/share. Just a lot to like here. And since I initiated a rather small position in the company, I have some room here to double it in the short term while still allowing myself some room for further opportunities down the road.

Apple Inc. (AAPL)

Apple was one of two tech stocks I bought last month – the other being Microsoft Corporation (MSFT). Both had excellent quarters, but MSFT’s stock has shot up past the price at which I’d be willing to pay. So that leaves AAPL still available for me. I have a very small position here, but I’m definitely willing to increase it. Revenue for FQ2 was up more than 27% year-over-year, which is incredible when you look at the base from which it increased – and revenue beat expectations by $2 billion. Don’t hear of something like that everyday. They also increased the dividend by 11% and upped the buyback authorization by $50 billion to $140 billion total. Lastly, growth in China is particularly encouraging, with China revenue up 71% YOY.

I valued AAPL just last month and concluded it’s roughly fairly valued right now. But I’m never opposed to paying a fair price for a great business; it’s only overpaying that I admonish. The only issue is that I valued the stock with 15% dividend growth for the first ten years; this most recent increase is below that. Nonetheless, this is a great business that I think is roughly worth its asking price right now. Furthermore the P/E ratio of 15.90 is actually lower now than it was last month after the blowout quarter. The new yield of 1.62% isn’t much to write home about, but the dividend is growing fairly aggressively.

Diageo PLC (DEO)

This is probably a dark horse for this month, but it’s a stock I’ve long wanted to get my hands on. Though recent results haven’t been fantastic with declining volume and flat revenue growth, this is the world’s leading producer of branded alcoholic beverages. Brands like Johnnie Walker, Smirnoff, Crown Royal, and Captain Morgan are just a sampling of what DEO offers. This is a long-term investment in a company that is experiencing what will likely be short-term issues (including currency effects). I’m betting the world won’t stop drinking the branded beverages DEO produces, which I think allows for odds that favor me.

The stock isn’t particularly cheap, however. The P/E is roughly 21 right now. But the yield of 2.99% is about as high as it’s been over the last five years and DEO has increased its dividend for five consecutive years (in dollar terms). The five-year dividend growth rate is a respectable 8.3%, especially in relation to the yield. It’s not my favorite stock right at this moment, but I do hope to initiate a position at some point. I’m definitely keeping my my eye on DEO.

Archer Daniels Midland Company (ADM)

This stock made my watch list for March, but I just still haven’t found the right mixture of capital and opportunity to pick this one up. ADM is one of the world’s largest agricultural commodity processors, and, like DEO, the odds are on the long-term investor’s side here as the world will very likely continue to eat and require ADM’s services. This is an industry that I’m not exposed to yet, and I can’t think of a better company to start things off with. The only thing I worry about here is that ADM provides a commoditized product with very little pricing power. But their long-term track record is evidence that they continue to do well over long periods of time.

ADM has increased its dividend for the past 40 consecutive years. That speaks for itself, but if you need more proof of quality – the 10-year dividend growth rate is 12.3%. Combining that with an entry yield of 2.29% and you can see why there’s a lot to like here. The stock appears attractively valued right now with a P/E ratio of 14.25. This is one of the few stocks with 40 or more years of dividend growth that I’d like to own but don’t yet.

Conclusion

So that’s where my attention is currently at. I’m seeing some opportunities to not only increase the size of recently initiated stakes in WPC and AAPL, but also a very real chance to initiate a position in one of the other companies listed above. It’ll really just depend on how much capital I have available over the coming weeks.

I can see myself doubling AAPL with another small transaction, which would possibly leave enough capital left for two other stock purchases. UNP and WPC are most appealing to me right now in that regard.

Could be another exciting month. So stay tuned!

Full Disclosure: Long NSC, WPC, AAPL, and MSFT.

What’s on your watch list? See any compelling opportunities out there?

Thanks for reading.

Photo Credit: bplanet/FreeDigitalPhotos.net

Note: Affiliate link included. 

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127 Comments

  1. DM,
    With the huge Apple buyback and interesting pipeline (watch, TV strategy, car), I’d probably buy more if it wasn’t already the largest holding of mine. I also like ADM of this group, but just haven’t made the purchase yet in favor of other companies. I don’t have much agriculture exposure and I like that from a diversification viewpoint.

    Have a great trip to the BRK meeting. The Woodstock of Capitalism!
    -RBD

  2. WPC and AAPL are on my watchlist as well. It’s hard not to love the income that AAPL produces, and WPC pays in the Jan, Apr, etc quarterly months which I would like to pick up… I know I shouldnt worry so much about those things, but a smooth month to month dividend tally is something that I like and WPC is looking attractive so why not. OHI just had a big fall today and the past month or so, so that could be one to buy as well.

    Good luck in Omaha and congrats on the marriage!!

  3. DM,
    Great list! I hope to own all someday!

    DEO does a lot of business in emerging markets so currency effects have been a drag on earnings (currency is a problem for UK companies too). While that hurts in the short term, the growing middle classes in these economies will add huge numbers of customers with the means to be Diageo customers. I’m young and can wait for that to materialize; I’ve been buying as much as I can muster in the $108-$114 range.

  4. I like both UNP and ADM and will need to do sone more homework on WPC. Actually I might do some full analyses on both UNP and ADM in May. Theres so many companies Id love to buy but theres not anywhere near enough capital. Im liking XOM after the increase and was surprised that CVX held theirs steady. Enjoy the BRK meeting.

  5. Diageo is right up there on my watchlist as well. In the UK it has recently seen its share price under consistent downwards pressure. Now it is back in what I consider good value territory.

    I just opened a position with another drinks maker (soft drinks), Britvic. So I am not sure if I have the funds to actually add to my Diageo holding.

    We will see. It could be my equivalent of ADM for now. Limited funds and opportunity!

  6. RBD,

    I can imagine you’re quite content over there if AAPL is your largest holding. 🙂

    ADM is definitely interesting from a diversification standpoint. There’s a few stocks in the agricultural space to consider, but ADM is pretty unique from a number of aspects. The only thing I worry about is their lack of pricing power, but it’s not like I don’t have a fair amount of exposure to companies that offer commoditized products.

    Cheers!

  7. ADD,

    OHI is definitely one I’m cautiously watching as well. I’m just trying to stay cognizant of the Aviv acquisition and how that ultimately plays out. Meanwhile, I’m a very happy shareholder. 🙂

    Appreciate all the support. Excited to share the details of the trip when I get back!

    Best regards.

  8. Chris,

    I’m with you. I hope to own all one day as well! 🙂

    DEO is interesting. They’ve experienced some currency effects, like all multinational companies. But the volume numbers are a bit concerning. Nonetheless, I think these are short-term problems presenting what could be a long-term opportunity. I’m not super crazy about the stock here, but I do love the business and its brands. It’ll be in the portfolio at some point or another. It could very well be this month.

    Thanks for stopping by and sharing!

    Take care.

  9. JC,

    Would love to see the analyses on UNP and ADM. I actually wrote an undervalued piece on UNP for Daily Trade Alert – should go live this weekend. Focuses mostly on the fundamental side. But the valuation is compelling.

    Yeah, the CVX dividend news is disappointing. But this is something I’ve been talking about for a while now, about my lack of interest in the supermajors. FCF has been really rough the last couple of years for CVX, even worse than the last downturn. Those big projects they’ve taken on are expensive, and I guess something has to give. But I am surprised to not see a token increase because they have the wherewithal to take it on. Coupled with the buyback suspension, this is pretty unfortunate.

    Thanks for dropping in!

    Best wishes.

  10. TDD,

    I hear you. So many stocks, so little capital. 🙂

    Haven’t heard of Britvic. Sounds interesting, though. Best of luck with the investment!

    Cheers.

  11. UNP is prob the best long term investment out there – I have been lucky and accumulated good chunk pre split levels and will continue to buy in my DSSP program , anyhow great list of stocks , have fun in Omaha

  12. I really like DEO for your portfolio. This is a recession (I won’t use the word “proof”) resilient company that will bring some additional “other” currency diversification to your portfolio. BTI would be another cool British addition, but I see you have substantial tobacco exposure already.

    Happy investing!
    finanacialsubstantial

  13. I was way off base, predicting that XOM and CVX would both give juicy raises as a show of strength. They have so little debt, they can easily afford it. To me it seems like these companies are under-leveraged, but then again maybe that sort of conservative management is what has allowed them to pay dividends for generations.

    If there was a “leveraged XOM and CVX” ETF I might buy it. Just an ETF that borrows money to invest 150% of its assets in a 50-50 mix of XOM and CVX.

  14. Interesting list, as always. I always like hearing what other people are watching or considering for purchase. Thanks for sharing.

    I think UNP is just about fair value, and AAPL and ADM are good buys; analyzed ADM myself a few weeks ago. WPC and DEO are overvalued to me. Of your five, I would like AAPL and UNP the most. I am curious, is there a reason you prefer DEO over Brown-Forman (BF/B), besides the dividend?

    For me, I’m taking more of a growth bent, with my two primary considerations being Precision Castparts (PCP) and Chicago Bridge & Iron (CBI). I also am interested in Chubb (CB), but the announcement that Wells Fargo (WFC) indicating a shift of focus to its insurance business makes me want to hold off so I don’t have too much of a concentration in insurance companies.

  15. I suspect CVX will indeed keep their dividend growth streak alive with a raise next quarter or Q4. I doubt they would give it up so easily.

  16. DEO is one of my newest positions and have been nibbling over the past few months. I love their stable of brands and think they have good long term future growth prospects. Brown Forman is another one I really like and would love to own but the valuation is always just a bit rich for me.

    Look forward to seeing your write up on your Berkshire trip!

    cheers, AA

  17. Anna G,

    You’ve done well! UNP is a really fantastic business. I just love those competitive advantages. 🙂

    Hope to join you as a shareholder here sooner rather than later. Just hoping the price doesn’t change significantly over the coming weeks.

    Thanks for stopping by!

    Cheers.

  18. All great companies, DM. I dont know much about WPC, but the others – I cant find any fault in picking up shares one of these days. Looking forward to see which one you’ll pick.

    R2R

  19. FV,

    Wonderful businesses I like both stocks quite a bit. Hope to get an opportunity (and some cash) to buy them here at some point in the near future. 🙂

    Enjoy those dividends!

    Take care.

  20. financialsubstanaial,

    Indeed! DEO (and other sin stocks) held up incredibly well during the financial crisis. Those kinds of products just stay in demand no matter what, with good odds that people will want to buy their products even more when times are tough. Gotta like that. 🙂

    Best regards!

  21. Grant,

    Yeah, it’s disappointing. It’s also surprising, but not completely shocking. I was expecting a token raise, perhaps similar to what XOM did. But XOM’s cash flow is in much better condition. I hope to see a dividend increase by the end of the year, though. We’ll see how it goes!

    Cheers.

  22. DD,

    As far as DEO versus BF.B it’s not even close for me. The valuation and yield are far more compelling for DEO, with both sporting similar fundamentals. In addition, I prefer its brand lineup. And I wouldn’t discount the dividend when you’re comparing similar stocks where one’s yield is almost twice as high as the other.

    CB is a great insurer. That’s an industry I’d love to have more exposure to. Building Chateau Freedom one brick at a time! 🙂

    Thanks for dropping by.

    Take care.

  23. Patrick,

    I hope so. Cash flow is poor and perhaps management is more concerned than they let on. But they have the flexibility to increase the payout. Let’s hope we see something next quarter.

    Cheers!

  24. AA,

    I’m with you. I love that brand lineup. I don’t think DEO is a steal right now, but I also wouldn’t mind initiating a position here and seeing where things go. Depends on how much capital I have over the coming weeks. Just don’t have cash for them all. 🙂

    Best regards!

  25. R2R,

    All really solid businesses. And all really different. Something for everyone! 🙂

    We’ll see how it goes over the next month. I’m leaning toward UNP and WPC, with perhaps a small addition to AAPL. We’ll see what kind of capital I have access to and what the market’s offering.

    Best wishes.

  26. Nice list, two of your picks, UNP, and DEO our on my watchlist to buy this month. My others right now are OHI, CMI, ACE and RTN. I will probably go with OHI and CMI, for value at this point.

    OHI is looking like a steal with “rate rise” uncertainties and confusion about their recent dividends and acquisition. I hope it keeps falling for a while so I can fill up on the cheap.

    While DEO is not cheap on a P/E basis, a lot of that is due to depressed earnings that are an effect of the currency effects, as others have mentioned. You have to think this is only temporary and will correct itself in the future, however, that’s not to say DEO will not get even CHEAPER in the short term.

    Check out ACE too, I have a long term holding in it, and it has steadily grown like clockwork, but has been starting to drop lately, probably on rate concerns. ACE is one of the largest and most respected insurance companies in the world with diversified segments in Property & Casualty, Accident & Health, Life, and Reinsurance, and an A++ AM Best rating. It has raised dividends for 22 years straight, currently sports a 2.41% yield with a 38.1% payout ratio and a forward P/E of 11.5. The stock’s DGR track record is also quite outstanding with a 5yr DGR of 17.4% and a 10yr DGR of 12.3%. Overall, just an outstanding long term holding that is very rare to catch on a dip. I am hoping it drops further over the next month as I accumulate more capital!

  27. Daniel,

    Nice choices up there!

    I like OHI quite a bit as well. The valuation and yield is very similar to that of WPC, though I have more room for WPC and I’m still waiting to see how the acquisition plays out for OHI.

    DEO’s earnings are definitely depressed. The last couple of financial reports have noted the currency effects, though volume declines are a bit disappointing as well. That said, like I mentioned, I think there’s a long-term opportunity here due to short-term problems. They have an enduring business model with great brands. Not really concerned about that.

    I’ll definitely check out ACE. I haven’t really looked at it before. I follow a few insurers, but I could add that to the mix. I hope to expand my insurance exposure significantly over the next year or two. Just need more cash!

    Hope ACE drops for you so that you have an opportunity to snag up some more. 🙂

    Cheers!

  28. Don’t really see much out there worth buying right now. I almost pulled the trigger on UPS before it shot up a little on earnings. Maybe HOG? I hope HSY keeps dropping, I’d like some of that.

  29. After your write up, I am actually planning to buy me some WPC. I was also debating on whether to pick up some GE or RDS-B, but couldn’t decide on either (lack of potential growth for GE as well as high debt, an apparent dividend cut on RDS-B if I’m reading Yahoo Finance correctly. Any opinion on these two companies?) so I figured now would be a great time to pick up some JNJ. My fourth purchase of them, and a 7% dividend increase is just the time to do it. I’m also looking to initiate a small position in MUR.

    DEO was on my radar for awhile too, but better companies just kept popping up so I never got around to buying it. LIke you always say, so many stocks, so little capital.

    Enjoy your trip to Omaha.

    Sincerely,
    ARB–Angry Retail Banker

  30. blahblah903,

    I still see some places to put capital to work (as evidenced by the list), but there certainly aren’t many “steals” out there. Fortunately, a long-term investor doesn’t really need such, as routinely building up and reinvesting the cash flow should allow you to reach your goals.

    UPS is an enigma. Love the business, but the fundamentals keep tripping me up. Just not really seeing what I want to see there.

    Cheers!

  31. ARB,

    Shell hasn’t cut its dividend. The last announced dividend was $0.94 per ADS. The next scheduled announcement is actually tomorrow and they’re due up for an increase. It’ll be interesting to see how that goes after what we saw with CVX.

    I hear you on DEO. Just one of those stocks I haven’t gotten around to yet. And I think that kind of proves what I talk about all the time with having a large portfolio but still missing out on so many great companies. Some feel comfortable running with 10 or 20 stocks or whatever. But that’s really limiting the types of businesses you’re going to profit from. Even with over 50 stocks now there are still a lot of stocks I’d love to own but don’t yet. Just one of those things.

    Best wishes!

  32. I used to play Monopoly as a child all the time, and my goal would always be to own all the railroads. Seems like that part of me hasn’t changed! I just picked up some NSC when it briefly went under $100, and I’ve definitely been eyeing UNP. Gotta collect them all!

    ADM looks good, although I need to do a bit more homework on that. OHI is another one that I might pull the trigger on.

    So many stocks on my shopping list, so little money! You could give me $50k and it still wouldn’t be enough!

  33. Jason,

    Clearly good companies to watch. I wod love to buy the AAPL, but stil have difficulties to buy outside Swiss market due to my fear of te FX. Let see, maybe one day.

    Safe trip to Omaha, enjoy the show be ready to receive tau send of questions from our community! 🙂

    Cheers, RA50

  34. Hey Jason,

    nice watchlist. I already bought ADM and really like it. My next buy in this industry will be ANDE. Extreme volatile but I think a good long-term buy.

    UNP is on my watchlist too and I hope for a dive below 100$.

    I did a little bit of research on WPC and was really confused. The payout ratio is on about 180% and was above 100% at least for the last 3 years, the FCF per Share is -5,12$… Do you have an other research program than gurufocus.com or why are you so excited about this stock?

  35. I’m currently researching beverage stocks, so obviously Diageo are one to watch for me. In £ terms, their dividend growth history is longer as I usually only invest in companies that have 7+ years of rising dividends. I nearly bought Diageo twice in winter when their PE dropped below 20… But other opportunities caught my eye instead.

    Have a wonderful time away with Claudia!

  36. Dear Jason!

    I was so frustrated with the massive tax burden on my Nestlé shares – official yield 3,1% but due to strict swiss tax law* plus my domestic taxes I received about 45% less … and dividend growth this year 2,3% only 🙁

    … that I sold 50% of my Nestlé shares and bought WPC instead.

    Yes, it is a completely different kettle of fish, but at the end of the day I want dividends and Nestlé offers slow and steady capital gain and nano dividends.

    So I doublechecked WPCs dividend history, their performance during recession and their financial metrics and …

    Indeed, WP Carey offers a stable, geographically and institutionally diversified business and very attractive, reliable dividends.

    — (Concering DIY store Hellweg (biggest tenant) I would like to add that they are very big in westerly and southerly regions of Germany; in the west you have the Ruhrgebiet (former coal mining area), which is a densely populated area and the south is less populated but definitely affluent. I guess Hellweg is a little player in the German DIY store market but regionally well positioned.) —

    I would never ever in my whole life found this stock!

    So …. BIG THANK YOU VERY MUCH!!!

    Nice trip and many inspirations!

    Thorsten

    _______________
    I know that it is possible to retrieve a little money via some tedious tax forms …. but really …

  37. Hi Jason,
    it is always interesting to read ideas going around about several companies. OK, I´m an Apple share fan, and I will buy some additional in May. I like railroads as well, but I´m not sure if they are too expensive in the moment. I have them on my watchlist, but I don´t think I will buy one of them in the first half of 2015. We will see how they get in the future.

    WPC ist really interesting and I didn´t look on it since you bought it. I like this stock and may be I will open a small position in it the next months. Also interesting is ADM and I´m looking for it some months now. But I don´t think I will have enough money to buy them all.

    DEO is one I was looking as well. But I´m not sure if this is the right time to buy them. The earnings are not strong and I think they are quite high for this at the moment. OK, I like what they produce and for the long term they won´t have too many troubles with their business modell. I feel for this company that it is better to wait some time and get them probably cheaper in the future.There are other companies which are more interesting at the moment.

    In May I will buy a small position AAPL, a position JNJ and a bigger position BBL (they are still so nice cheap :)). After this I have to wait for the next month…

    Have fun on the Berkhire event.

  38. Ouch. I’ve gotta chime in here because I’m one of the couple that questioned your rolling “DM Mutual Fund”—I say that with much jest!! I admire greatly what you do for all of us readers and what you are doing for your own future–why else would I be addicted to your site. I’m just different, maybe. I like things tidy and full. I like to feed the babies when they get hungry, because there’s always going to be a time when one or two sectors are hungry. It’s never if–just the matter of when. I like big, BIG balances in my positions of really great companies and know that if I wanted to know and own them all…I just can’t without paying a fee to a manager. But, that said, I drip and my job isn’t to research and write about stocks–it’s to obtain more shares though the drip, not to compensate or consume. What a great life you have–you get to research, write, and buy this! Long: JNJ, AAPL, PEP, KMI, T, MCD, CVX, XOM, V, HON, ABT, O, NSRGY, USB, ADM, LMT, MMM and watching to soon add HSY and now UNP, because I need that. Have a great time with the Oracle! Have a great time with your wife. Try a Runza, it’s one-of-a-kind and a Nebraska thing. I didn’t say you’d love it–but you will remember it.

  39. Nice list again Jason! I’m also watching AAPL closely and about to iniate a position in WPC using some leverage, since my broker is offering loans at 0,99%. I’m hoping AAPL will come down a bit before striking. Enjoy Omaha!

  40. And it would be great to read your thoughts about stocks you already own and would consider buying if not having a big enough position already. Maybe you could write a post about it someday?

  41. Great list of companies mentioned. I think UNP can be a great buy at these levels. It seems that big oil has taken down many sectors including the railroads, drillers and Canadian banks. It’s amazing how one commodity has hammered so many different sectors. With less oil transported via rails in recent months it seems like a good contrarian play to buy UNP. I also like ADM. I just initiated a small position in that stock this week. I like the long term prospects for this company and the current yield seems quite safe and fairly decent at these levels. Look forward to seeing what makes it into your portfolio in May. Where is 2015 flying off to???

  42. Hello Dividend Mantra, thanks for the post. Have you considered Astra Zeneca (AZN)? It is a major UK healthcare/drug manufacturer and it’s yield is over 5%.
    Thanks.

  43. DM

    Thank you for sharing your thoughts!

    UNP, ADM and DEO are in my watch list, but have no room for me, Canadian, to initiate them in our Tax shelters accounts 🙁

    I recently bought CNR (in US CNI) after it pulled back from its high..

    Have a wonderful trip!

    Cheers

  44. It is a sad state of affairs! Just have to be patient for new capital to arrive!

    No, I am not surprised you have not bumped in Britvic yet. It is chiefly a European affair (UK, France and Ireland) and it also licenses PepsiCo’s brands in the UK. However, it is currently in the process of expanding in the US and other places like India with its Robinsons Fruit Shoot brand (which may, or may not, be familiar to you!). Hopefully that goes well!

    Thanks for taking the time to comment. I hope you enjoy your Omaha trip and find it enlightening.

  45. Hard to know where Apple goes in the next 5 years, but of course no one can reliably predict the future. All we can do is place our bets when we think there’s a reasonable probability of winning… whatever each of us defines as “winning”.

    With Apple, I’ll take that bet. Maybe the next iphone is barely an improvement and people are happy with the existing one, but history suggests otherwise. It’s a luxury electronic hardware company, so we’re definitely not talking about food/water here.

    MSFT is also fantastic. I’m a little sad to have seen it jump around 10%, but nothing happens in a vacuum, so it does indicate investors were pleased with progress in the growth areas.

    ADM is interesting. Seems like a solid value play, but I need to dig more why it seems to be at a big discount to market? Maybe it’s just a sector that’s perpetually at a discount to market, like financials.

    Rail is extremely interesting to me. In the 10-20 yr ahead frame, I wonder if any of them would be willing/able to get into personal transportation (i.e. high(er) speed rails)? That could be a big opportunity, and a huge diversification away from cargo, as well as taking share for short flights from the airlines. No indications yet, but both as a passenger and potential shareholder, I think that makes a ton of sense. Especially in the hugely dense legs like Boston/NYC, NYC/D.C., SF/LA, etc, having a high speed rail would cut overall travel time and likely be the same or even lower priced. After riding some of the rails in Europe, I’ll take a 15-30 minute arrival prior to departure on a train rather than 1.5 hrs at an airport. ANyway, that’s a huge tangent.

    NKE is big on my watchlist. I’d like to get down to at least 25x fwd earnings or less. VTR also is close to a reasonable price. A bit expensive, but if I have some capital available, the entry yield isn’t bad considering how well they should do over the long haul.

    Hope you enjoy Omaha! Say hey to Warren for me! 🙂

  46. Hey DM,

    Quick Question: How do you consider what a full position is for you?

    I am building my portfolio like you are, month by month and am having trouble deciding how much to put toward each stock.

    Feel free to link an article if you already discussed.

    Thanks!

    Jonny

  47. I vote for Diageo 🙂 You can’t go wrong with a stable consumer staple, whose branded premium products are sold throughout the globe. Plus, every time you get a Guinness, you contribute to your investments bottom line. Hopefully DEO will be available at cheaper prices at some point – but relative to other “spirits” companies, it look “the cheapest”. The value to a private buyer is probably 25 – 30 times estimated earnings.

    As for UNP -This is the railroad that Buffett has indicated that he likes a lot ( besides BNSF). Your reasons about the competitive advantages are spot on. Anywho, for whatever reason I am hopeful the stock market sells off in the next few months, so those companies you mentioned are available at cheaper prices.

  48. Hi DM,
    what is your opinion about Cal-Maine Foods (CALM)?
    I think it could be a good dividend stock, isn’t it?

  49. I too am surprised by DEO’s recent weakness. Foreign currency markets are wreaking havoc on a lot of companies earnings, so it may be a great time to invest counter cyclically in DEO. They have some amazing brands and a great world wide distribution system, and they’ve certainly earned the right over time to show they have great pricing power.

    They’ve lagged the market pretty bad over the last few years, but if the currency markets reverse course they should see some pretty good growth. I like them and AAPL best….AAPL is just a beast that keeps on impressing me.

    Have fun in Omaha!

  50. Great watchlist! I recently added ADM to my portfolio and have O, NSC, UNP, and DEO on my watchlist as well. I’m still in the baby phase of my portfolio building so plenty of stocks are out for the picking. Its great to see that other value investors are watching the same securities.

    Best of luck,
    Dividend Odyssey

  51. UNP can be purchased fee-free through ComputerShare, which is the icing on the cake for me. I’m going to take a closer look at UNP as well.

  52. DM:

    No interest in Oil services companies like SLB and HAL. They too are trading far lower than their highs from about a year ago? Any particular reason you have stayed away beyond your portfolio already having out exposure…just curious. Thanks.

  53. Great list once again! NSC is really interesting since I heard about it! Glad to see you’re back with AAPL too! hehe!

    Have a good trip sir!

    Cheers!

    Mike

  54. PG could be a buy if it keeps sinking… long-term prospects should still be reasonable, however the PE is still a bit high. In any case, I’m watching this one.

  55. Not sure if it really makes sense to increase payouts. They can certainly afford it without coming even close to risking insolvency for sure.

    I do, however, think of it as (partially) my own small business. I’d never have a business I owned take on debt in order to fund capital returns for myself and other partners in order to keep some meaningless streak alive. It’s nice to see consistency, but prudent management is infinitely more valuable… at least in my book.

    In the future, it would be nice if some companies elected for variable payouts… especially for cyclical businesses. Those businesses tend to be under-leveraged since they don’t want to further constrain cash flow if they already pay dividends, and buybacks are much more flexible. Some non-US companies already do this and it makes a lot of sense in theory… give back all the free cash flow you don’t plan on needing for the business.

    Hey, maybe I’m too much of an idealist. 🙂

  56. Jason,
    Why do I keep hearing Patton Manning? OMAHA! Have a great trip.

    AAPL is my third largest holding at 3.3% of the portfolio. I keep thinking that is too much to have in a single tech stock, but there is no real reason to do any trimming. Probably won’t add any shares, though.

    WPC has only come down about $1.50 since I initiated a position (thank you very much for the analysis). I see that my other REITS, HCN, O, and OHI are all down today. I might add VTR to the REITs I hold as opposed to adding to current positions, just need to do more home work before I commit funds.
    KeithX

  57. Hey Jason! Looks like a great combo of companies to be on the lookout for.

    I noticed the price of TIS drop significantly recently. Is there any particular reason and should we average down at this point?

  58. Nice list, Jason. And congrats on the book, the marriage, and the trip! You’re living the life.

    Except for AAPL, these are all on my watch list as well. They’d been new positions for me – again except for AAPL.

    I already own as much AAPL as I’m comfortable with. I purchased a fair amount two years ago and it’s doubled since since. Apple has a solid balance sheet and fantastic products (which I use), but not a big enough moat for me to make it a core holding. It’s currently 4.5%. – which is my 6th largest is core level for me. So I certainly won’t add to it.

    I’ve been looking at WPC, but just because O was too expensive. I love O. In fact now that it pulled back I added a little more today. WPC appears to be in better than fair value, but I know what I’m getting with O – an excellent business with prudent management. I don’t have any red flags with WPC, but have not done my due diligence (only so much time and so many business).

    ADM and UNP will almost certainly be in my portfolio at some point. DEO? Maybe. WPC might depend on how much O continues to drop:)

    Enjoy Omaha!!

    IB

  59. Jason,

    How come depending on where I look I get different numbers for DEO P/E ratio? M* has it as 23.4 (but also list forward P/E as 73.6, Seeking Alpha has P/E(ttm) as 18.30, ShareBuiler has P/E(ttm) as 35.88…. How come they vary so greatly? And if a site list “P/E” and doesn’t say ttm or future, how do I know which it is? Thanks!

    Ryan V.

  60. Do the dividends from DEO getting fully remitted, or is there a withholding? Reason I bring that up is that I used to hold TD but sold it after seeing the dividends were being reduced by Canadian law. I was not getting as competitive a dividend yield as I wanted.

  61. Jason

    BEN, NOV are the main stocks on my watch list. Also hoping for dips on SBUX and NKE to get some more growth stock exposure. Thoughts on these?

    Best wishes on the trip

    Guy

  62. Seraph,

    Ha! I hear you there. I also want to “own them all”. Specifically, I’d like to collect UNP and CNI. I think I’d feel pretty comfortable with those two and NSC.

    Happy shopping this coming month. We’re so fortunate to have first world problems like so many stocks and so little capital. 🙂

    Best regards.

  63. RA50,

    I can imagine. I’m limited in terms of foreign choices myself – I mostly stick to UK and Canadian stocks due to a variety of reasons, including favorable tax rules.

    Appreciate the well wishes. Enjoying Omaha thus far. The weather today was incredible. 🙂

    Cheers!

  64. mephisto1104,

    Hope to join you as a shareholder in ADM at some point. I really think it’s just a matter of time. Might not be this month, but it’ll eventually find its way into my clutches. 🙂

    As far as WPC goes, you can’t use EPS to evaluate a REITs profitability. You should really be using FFO, as I described when I analysed the stock last month:

    https://www.dividendmantra.com/2015/04/recent-buy-61/

    You may want to read a bit more on how REITs work and how FFO/AFFO is calculated.

    This article might help a bit:

    http://www.investopedia.com/articles/04/112204.asp

    Cheers!

  65. M,

    I know what you mean. DEO is one that always eludes me. It’s definitely a permanent fixture on my watch list, however. 🙂

    Appreciate the kind words. We’re having fun. Toured all of downtown today as well as the Old Market district. The art museum is definitely a highlight.

    Thanks for stopping by!

    Best regards.

  66. Thorsten,

    I know what you mean there about Nestlé. High-quality company, but it does add a degree of difficulty for many foreign investors. We’re lucky in that the 15% withholding can be reclaimed, so it’s one I’m just waiting for the right valuation for.

    Glad you took another look at WPC. I’m pretty fond of the stock after really giving it a good look. I spent a lot of time looking over the last few annual reports, and the consistency is there. I really don’t see much to dislike at all. The yield and DGR in combination with one another is pretty rare. It’s just not often you see that kind of yield with that kind of dividend growth, especially over a long period of time.

    Thanks so much for stopping by. Hope all is well!

    Best wishes.

  67. olli0816,

    I like your list there. JNJ is my largest single investment, so I can’t say anything bad about that stock at all. And I agree BBL is cheap. I loaded up on the way down, and I’m quite happy with that. 🙂

    DEO is facing depressed earnings right now, which is inflating the P/E ratio a bit. I think they’ll be fine over the long haul, but we’ll see how it goes. It’s not my favorite stock because I don’t think it’s a big steal here considering some of the short-term headwinds, but I think there’s still a long-term opportunity there. And, really, I don’t think any of the stocks above are steals. WPC might be the best value of all, assuming they can continue growing at an aggressive rate.

    Thanks for sharing. Have fun shopping over the course of May. Lots of choices there.

    Cheers!

  68. divy,

    Right. I think it really comes down to your preferences, risk tolerance, and your goals. If your aim is to beat a benchmark or something, then it makes sense to maneuver around with concentrated positions. If your aim is to live off of sustainable and growing dividend income with low risk of seeing a decrease in real income over a long period of time, it makes sense to diversify across many high-quality businesses. Just my take on it.

    And I don’t think that writing about stocks gives me a great advantage. Like I’ve written about before, managing a large portfolio chock-full of high-quality companies just isn’t that time consuming. I don’t need to watch JNJ or PEP or anything very closely. And I was doing this while working more than full-time at the car dealership while also keeping up with the blog.

    Cheers!

  69. Ville,

    AAPL is interesting. It’s actually trading for a lower valuation now after that huge quarter, but my valuation was modeling in 15% dividend growth. So I’m just 50/50 on it. I think it’s roughly fairly valued right now, but that’s not necessarily a bad thing when considering the quality there. They’re doing about as well as a company worth over $700 billion can.

    I’ll take that idea into consideration. I think it’d be great to revisit some old positions that I’m already full on. I kind of went down that road when writing an article on starting over a while back, but those stock ideas obviously can’t stay evergreen. I’ll see if I can come up with something here pretty soon. 🙂

    Take care!

  70. DH,

    Yeah, I’m hoping the drop in demand for oil shipments have an even bigger impact on the railroads over the coming months. So far, they haven’t really been hit all that hard. And UNP in particular is fairly diversified.

    Nice move there on ADM. I just popped over to see that and you’ve been busy. Awesome!

    Hope to join you as a shareholder here at some point. I suspect it’ll be sooner rather than later. 🙂

    Keep up the great work. Keep those buys coming.

    Best wishes!

  71. Jan,

    AZN has never really come up on my radar. I suspect that’s because the dividend hasn’t increased in dollar terms over a long period of time. It’s yield for me (based on currency effects) is actually 4.09%. However, I suspect that’s just a short-term issue. Currency effects that act as headwinds eventually act as tailwinds.

    That said, I’m not particularly interested in pharmas like AZN. I prefer more diversified medical companies that have that exposure to pharma, but also have other areas of the business that can hold up when patent cliffs hit. Pure pharma plays can actually be incredibly cyclical and they need to have that pipeline constantly working. Just something to be aware of.

    Cheers!

  72. FJ,

    Nice move over there. CNI is one of the best railroads around. I think UNP and CNI will be the other two railroads I end up owning, along with NSC. That’ll cover a good chunk of the continent. 🙂

    Thanks for dropping by!

    Best regards.

  73. Ravi,

    I hear you on AAPL. Those thoughts – will people continue to buy iPhones for years to come – are the same thoughts that crossed my mind for years now. But they continue to sell more and more iPhones. Smartphones are ubiquitous. I don’t see that changing. Maybe the iPhone won’t always be the hot item it is now, but they actually have plenty of room in terms of market share expansion. So it’s not like it’s all downhill from here, in my view.

    I’m not sure about personal transportation. Are the economics really that great? Hasn’t Amtrak had plenty of financial problems? I don’t think personal transportation is really where I want to be. Airlines are another industry that I’m not enamored with, which is obviously personal transportation. I’d rather invest in UPS for its cargo jets than Delta for its personal transportation jets. The economics just seem a lot more favorable.

    NKE is a great stock. I just took a look at it for DTA not too long ago. I think it’s overvalued, but it’s a great pick at the right price.

    I’ll try to say hi to Warren. That’d be my dream to say hi and shake his hand. Let’s just hope I can get within 20 feet. 🙂

    Cheers!

  74. Jonny,

    Great question!

    I plan to address this along with a few other topics pretty soon. It’s tough to write about, however, because a “full position” changes as a portfolio grows. Simple math would tell you a full position is the size of your portfolio (in dollar terms) divided by the total number of positions you hold. A full position for me was about $2k or so back in 2012. Now it’s about $4k. But I think the answer is more complicated than that. It really comes down to how much dividend income you want to generate from any one stock. That said, I consider about $4k as a target for me right now. There are some stocks (like PM, PEP, NSC, JNJ, etc.) that I’m heavy on because I’m particularly enthusiastic about the businesses and the valuations presented opportunity at one point or another – this also means I’m not interested in buying any more right now. Other stocks I’m light on because I’m not as enthusiastic. Then there are some that I’m light on by accident, still waiting for the right opportunity to add.

    But this number will vary depending on the investor. But $4k is right about my target for a full investment.

    Hope that helps!

    Best wishes.

  75. DGI,

    I hear you there. DEO is seeing depressed earnings right now, which is inflating the valuation a bit. But I really think this is a great business over the long haul. The yield is there, the valuation is somewhat fair (even with the depressed EPS), and the business model is fantastic and within my circle of competence. I’m on the hunt. 🙂

    UNP’s a great railroad. Some of the best fundamentals in the industry. I took a picture of its headquarters building here in Omaha. Beautiful building!

    Thanks for stopping by. Let’s keep our fingers crossed on that pullback.

    Best regards.

  76. Alex,

    I don’t follow CALM at all, so I really can’t opine. Just taking a quick look, it appears that the dividend is all over the place? That’s probably why it’s never come up on my radar before.

    Cheers!

  77. Brian,

    I’m with you on DEO. They’re facing some headwinds right now that just can’t persist forever. Currency effects come and go. What’s a headwind today could very likely be a tailwind tomorrow. I’m a bit concerned with the volume numbers, but they have the right brands to endure and succeed. I’m not concerned at all about their ability to compete and do well for the next decade or two.

    AAPL is indeed a beast. That last quarter was nuts. They are mostly an iPhone company now, but it’s good to be in the business of selling iPhones! 🙂

    I wish they were a bit more diversified there, but the Watch could shake things up a bit. We’ll see how that goes over the next year.

    Thanks for stopping by. Enjoying Omaha thus far. The art museum was a highlight. Great weather right now as well. Apparently it was snowing just a couple weeks ago. It was 75 and sunny today. Very fortunate.

    Best regards.

  78. DO,

    Looks like we’re largely on the same page there. Great minds think alike. 🙂

    Happy shopping over the coming month!

    Thanks for dropping in and sharing.

    Cheers!

  79. adam,

    Good stuff there. I know Computershare has quite a few stocks on their fee-free program. Good to know UNP is there.

    I’d definitely recommend taking a look and doing a little DD. Looks pretty solid from here. 🙂

    Take care.

  80. Chris,

    Well, I’m already heavily exposed to energy. It’s somewhere around 15% of my portfolio now, which is heavy for me. I’d prefer to be somewhere around 10%. And with earnings falling across the board, I’m not interested specifically right now. So it’s in general and specific terms. If I see extremely compelling value, I’ll jump. And that’s what I did as I bought NOV on the way down. But I find one oilfield services stock to be enough for me. Some may prefer two or three there. SLB would be the only other one I’d own, though.

    Best regards!

  81. Mike,

    NSC is a great company. They’ve done well by me. 🙂

    Thanks for dropping by. Having a great trip thus far. Enjoying Omaha. Great art museum. And wonderful weather right now.

    Cheers!

  82. DB,

    Definitely one to watch. I don’t find the valuation particularly compelling, especially with the lackluster growth. But I’m hoping (as many shareholders probably are) that the initiatives involving brand concentration help the company move in the right direction.

    Happy shopping! 🙂

    Best regards.

  83. Ravi,

    Well, I think one of the nice aspects about CVX and XOM is that they maintain fairly uniform consistency through the cycles. That’s why a lot of investors are attracted to them in the first place (when looking for energy exposure). They don’t pay out huge dividends when times are good and they generally pay a progressive dividend when times are tough. We’ll see what happens with CVX over the next year or so. They certainly could continue paying their static dividend for a while and keep their streak alive, and they’ve been known to skip a quarter here and there during times of volatility. I suspect they’ll hand out a raise sooner rather than later.

    But it’s important to not compare a small business to an oil supermajor or any other company that can give shareholders better value and the opportunity for better returns through growing dividends rather than retaining earnings. 🙂

    Cheers!

  84. KeithX,

    Ha! That’s funny. Love me some Peyton. Had a rough year toward the latter end of the last season.

    I’m with you. I see no reason to trim AAPL if it’s only 3.3%. Depends on what you’re comfortable with, though.

    I’m glad to see the REITs down. I hope that continues a bit. WPC just hit the 6% yield mark today. The trigger finger is getting itchy. 🙂

    Best wishes.

  85. AJ,

    TIS dropped for a variety of reasons. But largely because they had a secondary offering at $23 to partially fund the building of a plant in South Carolina. TIS has changed a lot since I bought. It’s gone from a sleepy paper company that pays out most of its profits in the form of a big dividend to a company that’s aggressively trying to become a national player – now expanding to both coasts. We’ll see what happens with the dividend but it continues to become more unsustainable. I think the growth potential is much greater now, but with more risk. On the other hand, the potential for dividend growth in the near term is much less. I thought about adding more as it’s one of the few stocks I’m down so much on now, but I never intended to invest heavily there. I’m pretty content right now just to see how they continue to grow and expand. Could be a great investment, but I’m not sure how the dividend plays out over the next year or so.

    Cheers!

  86. IB,

    Thanks so much! Enjoying Omaha thus far. The weather is simply fantastic right now.

    I’d be with you there on AAPL. I wouldn’t want more than 4.5% of my portfolio in any single tech holding. In fact, I’m aiming for a 2.5% weighting to the tech sector as a whole. So 4.5% would be getting pretty heavy for me.

    O’s a great REIT. It’s still expensive right now, but I like it a lot more as it nears 5% yield after dropping about 5% over the last week. Can’t argue with the quality or consistency there. And I wouldn’t mind owning more. I think I’d be adding more around that $44 mark, which would bring the yield up over 5%. Great stock, though. Doubt you’ll be unhappy over the long haul there.

    So many stocks, so little capital. Let’s see what opportunities we get over the coming weeks!

    Thanks for sharing. Have fun shopping. 🙂

    Cheers.

  87. Ryan,

    You’ll find that a lot of financial sites have difficulty giving out accurate numbers for foreign stocks. And that’s because a lot of them (like DEO) report twice per year, and then you have to factor in foreign exchange rates and the fact that ADRs usually equate to more than one ordinary share. I find it best to go right to the investor relations site for a respective company and grab the numbers for myself.

    Take care!

  88. Guy,

    I think BEN and NOV are both cheap, particularly NOV (though with more volatility right now). I already have enough NOV. But BEN is one on my list. I think it would complement TROW well.

    Neither NKE nor SBUX are cheap. Though, I think SBUX’s valuation is justified a bit more than NKE’s. I looked at SBUX a while back before the split and concluded you could make a case for $100 share ($50 post split). I was in a Starbucks location today and it was absolutely packed. I mean packed. I’ve gotta grab that stock at some point.

    Cheers!

  89. Tawcan,

    I hear you. Keep in mind, however, that DEO’s earnings per share is depressed right now due to currency effects and volume issues. Factoring out the FX and you’d be looking at a valuation pretty well in line with what DEO usually sports. I don’t think it’s cheap, but I don’t think it’s as expensive as it appears.

    Thanks for stopping by!

    Best wishes.

  90. ARB,

    There you go. All the more reason to own it. 🙂

    I’m not a drinker, but I’ll appreciate your support immensely once I become a shareholder!

    Cheers.

  91. Two interesting stocks that have caught my eye are Seagate Technology (STX) a hard drive producer and LyondellBassell Industries (LYB) a chemical company. Both are attractively priced on a FCF/EV basis and they each pay a solid dividend. Unfortunately LYB as jumped up quite a bit since I started it tracking it at the beginning of the year. STX has a solid balance sheet, but it’s projecting out declining revenues due to future technology changes. I haven’t exactly researched how easily they will be able to adapt and change, but right now STX seems the most attractive since LYB has jumped up over 20% already this year.

    I wouldn’t mind getting some more AAPL, but I want get some more yield in my portfolio as two of my three purchases so far this year have been more of the low yield/growth variety (DIS and AAPL).

  92. I’m glad you’re taking some quality time with Claudia, time to spoil her a little!

    Cheers

  93. I’m personally watching the gold/silver mining stocks. Those are ranging between -50% (goldcorp, royal gold) to a massive -80% (pan american silver corp, now same value as it was in ’96) due to lower precious metal prices.

    That has been one abysmal drop while everything else has been going trough the roof.

    My reasoning is that most stocks have gone up 200-300% fold in more or less the same period that these stocks have crashed. And i just cant explain why industries consuming gold can go up so much, while the demand is actually going down. So these stocks could still be going to follow, or they are a prediction of whats comming. Either way it goes, i feel that precious metal stocks are currently the better long term value purchase.

  94. My main problem is that there are too many stocks… or maybe I have too little cash…. 🙂
    I would love to have a share in both DEO and UNP. They are on my watch list for some time now already. There is a lot to like there, especially DEO. I hope to be able to pull the trigger at a 3% yield mark. That would be great.
    I’ve been eyeing AAPL as well, but I’m a little lukewarm about tech stuff.
    Hope you enjoy Omaha?
    Cheers.

  95. Jason,

    Thank you for sharing your thoughts once again! Hadn’t heard of most companies, except Apple (obviously) and Diageo.

    If I had to pick one of the five above Diageo would get my vote – not too surprising since I’m already a shareholder. Consumer staples remains one of my favourite sectors because of the non-cyclical and steady growing nature. And alcoholic beverages will remain popular for decades to come.

    Enjoy your trip to Omaha! Hope you have a great time and get to meet many of your blog’s followers.

    Best wishes,
    NMW

  96. Jason thanks for your reply. I didn’t even think about it being a foreign stock. I’ll double check with a few US based companies and see if the numbers vary as much.

    Ryan V

  97. It’s like a restaurant stock, except with far better gross margins.

    At that point, the only key challenge is growing volumes faster than costs. Margins will certainly go down a bit over time as food is added into the mix, but so long as people are spending more then it’s not a bad thing. I’m anticipating how their premium coffee rollout goes. That’s where I’m hoping a bit of even higher margin stuff comes into the mix.

    Given strong performance and margins, I’m okay with 25x fwd earnings. Today sbux is a little closer to 27x and NKE isn’t too far enough either. Of course, I’d much rather pay in the 22-23x range, but these are two names which could certainly grow into valuations within 1-2 years even if the broader market pulls back.

    For what it’s worth, sbux was my first purchase outside of my comfort zone in terms of valuation, but the group has a place in the portfolio… especially considering how much they return in dividends plus buybacks.

    I try not to be a fanboy, since that’s when you start making bad decisinos, but these two names come close. Looking forward to NKE someday!

    I’d love UA as well, but that stock is way up in the stratosphere. They’re a bit earlier in the growth stage as well, but I do anticipate payouts to start there within 5 years. Few retail and consumer goods stocks never pay a dividend, so it’s just a matter of time.

  98. Great list of stocks here. I really like MSFT, but as you mentioned, the stock has shot up a lot and would like it to drop down before I want to initiate a position. AAPL is a great stock to be invested in and since I hold a sizeable position in it, I won’t be increasing it anytime soon.
    ADM and UNP are couple of nice stocks to get in for the long term. I don’t hold position in either of these sectors and would like to add to my portfolio if possible.
    Thanks for sharing.

  99. Hi Jason,

    Thanks for sharing your list. I really like UNP right now. I think it will drop a few dollars more in the coming weeks. For now I am selling puts on UNP and CNI hoping to get in on the low side. Have fun in Omaha.

    Dividend Dreams

  100. Hi Jason,
    I’m in ADM (46,10$) and I’m very happy with it. Solid company with great dividend growth…40 years!
    Diageo is also in my radar, but I prefer Anheuser-Busch InBev (BUD)…what do you think about this stock.

    Cheers from Spain.

  101. TayDiggsMoney,

    STX is pretty interesting. I’ve never taken a look myself. I’m pretty limited in terms of my interest in technology stocks, mostly just sticking to the blue-chip stocks that produce prodigious cash flow. But there’s certainly many other opportunities out there. Just depends on your risk tolerance and circle of competence. 🙂

    I hear you there on the low-yield stocks. I’ve also been somewhat aggressive with that lately today, shifting my investments as the dividend income is starting to become sizable. But I’d like maybe one or two more Stage 3 stocks before being all done. Not interested in necessarily loading up right now, but that becomes somewhat easy when many of my favorite consumer stocks like PG are expensive, especially relative to growth.

    Best of luck deciding where to go with your cash!

    Cheers.

  102. GoT,

    Hmm, that’s an interesting play. I’ve long been uninterested in precious metals, though I have some very minor exposure there to the mining side through BBL. Best of luck with those. Hope they turn out great! 🙂

    Take care.

  103. Jos,

    Ha! I think the problem is too little cash. That’s always the problem for me. I don’t know if there could ever be too many stocks. 🙂

    Definitely a lot to like between those three names. And they all offer something different in terms of yield, growth, and industry. Hope to own all three, but that pesky cash problem continues!

    Thanks for dropping by. Enjoying Omaha thus far, but still waiting for the main event tomorrow. The weather is cold and dreary today, so we’ll probably rest up after walking around so much yesterday.

    Best regards.

  104. NMW,

    Tough to bet against DEO. I don’t think it’s particularly cheap right now even with the FX concerns, but they should do well over the long haul. Some of the best brands in the world over there. The yield is definitely there for me, near 3% right now. Hope to join you as a shareholder one of these days! 🙂

    Thanks for stopping by. Appreciate it. Hope all is well in Belgium!

    Best wishes.

  105. Ravi,

    I hear you there on SBUX. It’s probably one of the last low-yield, higher-growth stocks I’ll end up buying over the near term and perhaps the long term. NKE might fit in there as well, but EPS growth of less than 12% over the last ten years isn’t exactly eye-popping. But I agree about both potentially growing into their valuations. Neither is quite cheap, but really depends on what you think about the businesses and how fast they’ll grow over the next decade.

    I can tell you that I was in a Starbucks location in downtown Omaha yesterday and it was absolutely packed. I don’t mean busy. I mean certain areas of the location (and it’s quite big as far as Starbucks locations go) were elbow-to-elbow. I just love seeing that kind of stuff as a potential investor. They’ve seem to found their groove after Schultz came back. The food will compress margins a bit, but I think that’s just another area to add value and revenue. We’ll see how it goes. I’m continuing to watch this one.

    Best wishes!

  106. DGJ,

    Yeah, it’s unfortunate MSFT popped so much and so quick. I’m just glad I got in beforehand, but I was hoping for more opportunities to add there. They continue to make pretty good moves over there in terms of their revenue mix and cloud growth. The last quarter was really solid, like AAPL’s.

    I’m in the same boat as you with ADM and UNP. Both are great stocks that would just add that much more diversification and quality to the portfolio. And both seemed to be priced right, with UNP offering fairly decent value right now.

    Thanks for stopping by. Keep up the great work over there!

    Best regards.

  107. DD,

    UNP is right in my wheelhouse right now. I’m on the same page as you. I took a picture of the headquarters building in downtown Omaha. Just in case I end up picking up shares over the coming week or so… 🙂

    Thanks for dropping by!

    Best wishes.

  108. Javier,

    Hard to pass up 40 years of dividend growth, that’s for sure. You just don’t run into that with too many businesses out there. Speaks for itself, as producing enough cash flow to grow dividends and grow the business for decades on end doesn’t just happen out of thin air. You have to do a lot of things right for that.

    I’m mixed on BUD, to be honest. Great brands, no doubt about it. But I remain concerned over where the growth will come from and how craft beer affects them over time. I prefer DEO’s spirit exposure there, which I think offers more insulation from the threat of competition from craft products. I’m not a drinker at all, so I don’t have any personal preference or experience. I’m not biased at all. But the more I see people drink beer, the more I see them trying independent/craft brews. I guess I wonder how that affects BUD over the next, say, five or ten years. Maybe I’m way off, but just my thoughts there.

    Thanks for stopping by from Spain! 🙂

    Best regards.

  109. I wanted to build position in MSFT but it popped 20% since my purchase couple weeks ago. I was able to initiate half of my position in EMR last month. I averaged up and double my position in HSY few days ago. I added to PG, WPC and DEO yesterday by averaging up on my position. I also have GPC and UNP on my watch list to buy for month of May.

  110. AJ,

    We’re definitely on the same page. I was actually 50/50 on repeating the same stock buys for May – buying more MSFT, AAPL, and WPC. But MSFT popped out of my valuation range on it, so that’s out. But I’m likely to buy more of the other two, especially WPC.

    Nice job on EMR there. I think it’s still trading for a good value right now. Great company.

    GPC is one that I wish I would have bought a long time ago (add it to the list of many regrets). I haven’t been able to find a compelling valuation on it for maybe the last year or so, but that’s another great stock. One that flies under the radar, even with its lengthy dividend growth streak.

    Have fun in May! 🙂

    Best regards.

  111. DM,

    I love when stocks on my main watch list all appear on your list. One of them, WPC, I already nibbled at.

    Based on your list and the current market trend working against REIT’s, it wouldn’t surprise me if you doubled down on WPC within the next 30 days. Maybe you and me both 🙂

    Enjoy your time in Omaha!

    Best,
    DWC

  112. DWC,

    Nice move there on WPC!

    I kind of listed these in order of personal interest, so I’ll likely be right there with you on WPC. I also spent some time this weekend marveling at UNP’s headquarters building in downtown Omaha while walking around. Seems to be a sign!

    Keep it up over there. 🙂

    Cheers.

  113. Hi DM,
    Thanks for the heads up on “ADM”. That is a no brainer for the long haul. Buy it, forget it, collect the divs. Good pick. Dan

  114. Dan,

    ADM has been a great investment over the last few decades. I see no reason why that won’t continue for the foreseeable future. 🙂

    Cheers!

  115. Jason, what about JNJ. PE is 16 vs 20 yr average of 20. Has been pulled down by currency. Divi of 3 is histrically great place to get in. I just talked myself into buying more!

  116. DD,

    I think JNJ makes a lot of sense right now. It’s truly one of my favorite stocks, if not my favorite. Great company, great track record, great products, great visibility. However, I already have all I’ll probably ever need. And that’s kind of why I made mention of the fact that this list is geared toward my specific needs as this particular time as it pertains to my own portfolio. If I didn’t already have JNJ or enough of it, I’d be on it here.

    Best regards.

  117. Legit! I have been trying to understand more about DEO for awhile now… looks like a beautiful company from what I understand… ADM… have you ever seen the movie, “The Informant” with Matt Damon? It is a hilarious take on a story that happened at ADM back in the 90’s… it is also a very unique role for someone like Damon to take on. Anyway, I certainly have an interest in ADM too. Thanks for sharing man! You rock! Keep up the good work! – JC

  118. JC,

    DEO has a lot to like there. Great brands. And I really like the spirits business from the perspective of craft beverages. Seems to be insulated a little better, from my view.

    I haven’t seen that movie, but maybe I’ll check it out. I think I’ve watched bits and pieces of it over the years. It might be nice to watch it now as an investor. 🙂

    Cheers!

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