My Stock Watch List for August 2015

lookingIt’s that time again. The beginning of another month means a whole new set of opportunities to pursue.

Seeing dividends hit my brokerage account ranks very highly in terms of life’s pleasures for me. One of the few things I have in common with John D. Rockefeller.

But coming in not far behind receiving a fresh dividend is exchanging cash that does nothing but sit there for equity in a high-quality business that can potentially pay me growing cash flow for the rest of my life.

As such, I quite look forward to the start of a new month. It means capital levels are being replenished, which gives me the ability to reload my BB gun for a fresh hunt.

It appears that I’ll have the cash flow for three separate transactions this month. Perhaps four, if I’m lucky. And what you see below are some of my top ideas right now. This list could obviously change if stock prices radically change over the coming days or weeks, but the stocks listed below are very likely to be among the purchases for August for the Freedom Fund.

Caterpillar Inc. (CAT)

I recently initiated a position in this world-class heavy equipment manufacturer. The stock price fell a bit shortly thereafter, which has once more brought this stock to the top of my list. If I liked the stock at $81, then I obviously like it that much more down here at $77. The reason the stock fell is due to the Q2 earnings report that slightly missed revenue expectations. All in all, I actually thought the results were pretty solid when considering the environment they’re operating in. Meanwhile, FY 2015 guidance remained unchanged – the company expects EPS to land in at $4.70 to $5.00.

It’s a cyclical company, no doubt. But, like I’ve mentioned before, the dividend isn’t cyclical at all. 22 consecutive years of dividend raises, a 10-year dividend growth rate of 12.8%, and a recent dividend increase of 10%. They handle the cycles well when it comes to paying shareholders. And an accelerated buyback of $1.5 billion of stock in Q3 should help buoy results. The P/E ratio of 13.24 remains attractive, even in light of falling earnings. Meanwhile, the yield is a sky-high 3.99% (about 180 basis points higher than the five-year average). In fact, I liked this idea so much that I decided to add to my position just as August got underway. I’ll put together a post on that very soon.

United Technologies Corporation (UTX)

This is a stock that’s long been on my radar, but I kept missing opportunities to pick up shares. Well, it appears another opportunity is upon us. The company recently announced Q2 results that disappointed, including slightly reduced guidance on the year. While reduced guidance halfway through the year isn’t reassuring, the company is still expecting EPS to come in at between $6.45 and $6.60. At under $100/share, you can see where this becomes a compelling name. Meanwhile, the company announced the sale of its Sikorsky business to Lockheed Martin Corporation (LMT) for $9 billion, which seems like an attractive price for UTX, from what I can see.

The stock’s P/E ratio now sits at 14.26 after a drop of over 13% YTD. That compares rather favorably to the five-year average of 16.4. This one is now right in my wheelhouse. Consider UTX has increased its dividend for 22 consecutive years, with a 10-year dividend growth rate of 12.9%. That growth rate is fairly impressive when you combine it with the yield of 2.57%. That yield, by the way, is more than thirty basis points higher than the five-year average. A lot to like here.

Albemarle Corporation (ALB)

Another high-quality value play, ALB’s stock is down more than 11% YTD. Not sure that’s warranted, however. Like many companies, recent results have been challenged. But then you have to ask yourself if the world is never going to change. Is the economy in 2050 going to be the same as it is in 2015? Highly unlikely. More people will be alive buying more products and services that will be priced much higher. And Albemarle sits in a great position with the recent acquisition of Rockwood Holdings, Inc., the world leader in lithium product production. And we all know where lithium demand is going with the increasing proliferation of lithium-ion batteries. In addition, ALB has exposure to renewable energy through the manufacture and marketing of products used in the production of solar cells.

The stock appears expensive with a P/E ratio 23.86. But using adjusted earnings shows that the stock is actually rather cheap. And its current yield of 2.18% is considerably higher than the five-year average of 1.4%. ALB flies under the radar as a dividend growth stock, but it does have some pedigree. It has increased its dividend for the past 21 consecutive years and the last decade has seen the dividend increase at an annual rate of 13.8%. This stock becomes more interesting to me by the day.

Toronto-Dominion Bank

Notice a theme yet? Another high-quality company with an incredible track record for rewarding shareholders that’s absolutely beaten up right now. TD is down more than 16% YTD. Can opportunity knock any louder? Although I think the concerns over the housing bubble in Canada are warranted, the regulatory and financial environment up there is significantly different than that of what we know in the US. Thus, I think there’s some insulation. But TD has been in operation since the mid-1800s and I see no reason why the bank is in any immediate trouble. Quite the contrary, recent results have been more or less in line with last year. But the stock (down more than 22% over the last 52 weeks) isn’t. It’s in that disconnect that I think TD remains attractive here.

The stock yields a juicy 4.02% right now, backed by an incredible dividend history that stretches back to 1857. Although the conversion to USD is throwing the dividend growth off (TD declares its dividend in CAD), the bank has increased its dividend regularly since 2011. The stock’s P/E ratio of 12.80 is attractive both in absolute terms and relative terms. I have a smallish position in this bank, and it’s now trading fairly close to my cost basis here. I definitely wouldn’t mind increasing that position here.

Omega Healthcare Investors Inc. (OHI)

One of my favorite real estate investment trusts, I added to my position not that long ago. The stock is up a bit since then, but I think it remains attractively priced right now. The company announced Q2 2015 results yesterday – AFFO of $0.77 was up considerably over the $0.69 the REIT reported for the same quarter last year. They just continue to hum along and I quite like that.

The stock’s yield of 6% immediately grabs attention, but there’s a lot more to the stock than just a high yield. They’ve increased the dividend for the past 13 consecutive years, and typically do so on a quarterly basis. A “pay raise” every three months? On an already-high yield? Sign me up. The ten-year dividend growth rate stands at 10.9%, so you’re getting a very high DGR on a very high yield. That combination tends to result in very strong total returns, which is exactly what OHI has produced over the last decade. I’m highly likely to add another tranche sooner rather than later.

Conclusion

So these stocks are five of my best ideas right now. It’s very unlikely I’ll have enough capital for all five, so at least one will have to wait. But I absolutely wouldn’t mind buying any one of these stocks – or even all five – right now at current prices.

In addition, there are some dark horses. Big Oil continues to drop and I’m starting to become somewhat interested in adding to one of the supermajors. Exxon Mobil Corporation (XOM) is now down more than 15% YTD and is trading a bit below my cost basis. It’s a small position for me and I wouldn’t mind averaging down a bit here. Not extremely interested in that, but if XOM continues to drop, my interest will naturally increase.

Another dark horse is Whole Foods Market, Inc. (WFM). It’s down almost 30% on the year. Although the yield isn’t particularly attractive, the valuation is compelling here. Just about every valuation metric you can look at is currently well below the five-year average, which is somewhat warranted in light of slowing growth. Nonetheless, the company does offer a fairly unique shopping experience. There’s a Whole Foods in downtown Sarasota and it’s literally packed every single time I’m in the area.

I’m very excited to unload my BB gun over the coming weeks. Hopefully, Mr. Market cooperates and kicks up the volatility a notch or two. While the market is sitting near all-time highs, many of the stocks I’ve listed above have strongly corrected over the last seven or eight months. As always, the stock market is a big store with a lot of merchandise available. One just has to walk to the back of the store and take a look at what’s on sale at the clearance rack. I think these stocks represent some of the highest-quality merchandise located at the back of the store.

Full Disclosure: Long CAT, TD, OHI, and XOM.

Anything on your radar right now? Any compelling plays I’m not aware of? What are you buying? 

Thanks for reading.

Photo Credit: bplanet/FreeDigitalPhotos.net

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193 Comments

  1. Not sure about the other opportunities, but UTX has been beaten down badly. This is a very good company with a strong track record that is attractive today.

    Whole Foods is a good company, my only concern is that they are not very dividend friendly – like what they did with the dividend during the GFC.

    Best Regards,

    DGI

  2. Hey,
    That 13 consecutive years of increases for OHI coupled with that 6% yield has this on my buy list this month. Hope to join you soon as a fellow shareholder soon!
    Rich

  3. Nice list Jason. I’m eyeing CAT as well and I’m also interested in averaging down on XOM (already). Have a great month!

    Ken

  4. I always enjoy reading your watch lists for new stock ideas and/or perspectives on familiar names. Most of your stocks this month are familiar to me, but Albemarle is not. Do you see ALB as a wide moat company?

  5. DGI,

    I agree with you on WFM. That’s what’s largely kept me on the sidelines. That and valuation/yield. The valuation and yield have become more compelling over time as the valuation has compressed while they simultaneously increased the dividend, but the pedigree isn’t quite what I’d like. We’ll see, but it remains a dark horse for me right now.

    UTX has indeed been quite weak lately. $100/share seems like a pretty solid value here, although I’m curious to see how the $9 billion gets allocated. I’ve read that they plan on spending it all on buybacks from various articles, but I haven’t actually come across any communication from the company. Regardless, they’ve long been a well-run enterprise with a focus on growing shareholder remuneration. Wouldn’t mind at all picking up a few shares here.

    Thanks for dropping by!

    Cheers.

  6. Rich,

    I was looking at OHI today and, much to my chagrin, found it up a bit. Still a solid value, though.

    Looking forward to having you on board. They’ve served me very well. Quarterly increases, strong underlying operations, and a fantastic yield. Tough to go wrong there. 🙂

    Best regards!

  7. Hi Jason – Congrats on all your success!

    It is really cool to see you laser-focused on the long run and seeing the slump in industrials and energy as an opportunity rather than worrying about your brokerage statement balance every minute(although you are doing very well there too!!).

    Have you ever considered 3M as an investment? Very good long-term dividend track record and high quality company…pretty popular with dividend growth investors and a bit beaten up right now.

  8. Jim,

    ABL is #1 or #2 in every market they compete in, so I think they have competitive advantages through economies of scale, being vertically integrated, and also being the low-cost producer. However, many of their products are commodities. A wide moat is just a concept and an opinion, but I do think they have advantages over others. The Rockwood acquisition is very exciting when you think about the potential in lithium over the long term.

    I’d definitely take a look at it!

    Cheers.

  9. Nice watchlist, DM. I need to whittle down my own list. I am looking at too many at the same time. Need to focus!

    Thanks for sharing your list.

    R2R

  10. Mark,

    Thanks so much. Appreciate that!

    We’ll see how it goes. I’ve never personally been bothered by seeing stocks fall, assuming I have the conviction there and the long-term fundamentals haven’t negatively changed. I’m not sure if that’s just a temperament thing or what, but I’m usually very excited to see red in the morning. Conversely, seeing stocks up gives me anxiety. I’m just wired that way. I mean, it’s great to see the net worth grow, but it’s not nearly as exciting to me as seeing cheaper stocks.

    As far as MMM goes, it’s a great company. One I regret not buying years ago when it was attractively valued. It was much cheaper back in 2010 and 2011. I don’t think it’s cheap right now, but nothing wrong with paying up for quality. 🙂

    Thanks for stopping by!

    Take care.

  11. R2R,

    I know how you feel. I’m always looking at dozens of stocks. It’s good to have a few ideas in mind just in case prices change rapidly on you, but I find it better to focus in on a few names and then really commit to deploying capital. Having ten stocks in mind when you only have capital for one or two might make it hard to actually pull the trigger.

    Best of luck over there!

    Cheers.

  12. DM,
    I’ve also been looking around for the potential allocation of the $9 billion. I’d like to see some go toward debt paydown in addition to dividends and paybacks. We’ll see. Added some UTX a few days ago.

    I’ve been contemplating adding more WFM to some retirement accounts. We own some in my wife’s IRA from a while back. The long-term growth plan is intact, so I still like the prospects going forwards. They have a new lower-cost concept store coming out soon as well. I don’t focus as much on dividends in retirement accounts so I like it there, but I think I own enough at this point.
    -RBD

  13. DV,

    Definitely. MMM is in very rare company with 57 consecutive years of dividend increases. And the sheer number of patents they have. Really crazy stuff. 🙂

    Thanks for dropping by!

    Cheers.

  14. RBD,

    Yeah, it’s strange with UTX. Multiple outlets reported that they were going to spend the whole $9 billion on buying back stock, but I haven’t come across anything from UTX directly on that. I guess we’ll see how it goes. Shrinking the company like that might not be a totally bad idea, but it’s also not like their other businesses have been on fire lately.

    I think WFM has come down to the level to where the valuation is pretty appealing. Not totally convinced on them as a dividend growth stock, however. And I’m also not completely impressed with management. It’s a dark horse, but I might have room there at some point.

    Happy shopping over there!

    Best regards.

  15. I’m also staring down CAT, UTX, and XOM. Right now it’s a matter of starting a new position in CAT/UTX or averaging down on XOM. Lot’s of good opportunities out there for everyone this week.

  16. Dylan,

    Indeed. Plenty of opportunities to go around. It’s good to be an investor with some cash in hand. 🙂

    Best of luck deciding where to go with your capital!

    Take care.

  17. Hi! Thanks for sharing your watch list. UTX looks definitely interesting. It would be also tempting to buy more of XOM. I have cash restrain on dollar when being a euro investor and dollar being as strong as it is now.

    That lead me to think of recent news about Baxalta (http://www.bloomberg.com/news/articles/2015-08-04/shire-makes-unsolicited-bid-to-acquire-baxalta-for-30-billion) and selling that position to get some cash on purchases in dollars.

    Any opinions from the readers?

  18. I’m surprised you didn’t list AAPL. Thought you would be averaging down. My watchlist is XOM, AAPL, COP. Too bad no capital for a few more days 🙁

  19. Antti,

    XOM is in my peripheral vision here. I think there’s still more pain ahead since the low oil prices haven’t worked their way through TTM EPS, but I also don’t think someone would be unhappy snagging XOM here at this price when looking back on it in a decade or two. I also keep in mind that I purchased XOM at a price not much higher than this, but when oil was priced about twice as high. So there appears to be some kind of disconnect there.

    As far as Baxalta goes, I’m still holding. But perhaps other readers can chime in on what they’re doing with that. 🙂

    Take care!

  20. Harry,

    Yeah, Apple is becoming interesting here, but I never intended for Apple to be a large position. As I’ve mentioned a few times now, my overall exposure to the Technology sector is likely to be very low, strategically spread out among a few of the cash cows of the industry. If it drops more, I might be interested, though. Wouldn’t want to go much heavier than I already am, however.

    Happy shopping over there. Hope you can land that capital and reload your BB gun in time to land the opportunities you’re after. 🙂

    Take care!

  21. It’s really cool that the Industrials were beaten down so hard the last few weeks. I bought CMI today.

    On my watch list are also DOV and PH. All three stocks have double digit dividend growth over a long time, espacially DOV and PH.

    What do you think of these 3 stocks?

  22. Jason,

    I think you would like $CMI.

    $DCI was interesting when it hit below $32. I was averaging down before it bounced again. Judging by volume and price action, I think the company did some buybacks toward the end of July.

    But $CMI, I think you’d really like $CMI….

  23. mephisto1104,

    Yeah, I’m really loving the weakness in Industrials lately. Although you’re looking at cyclical results by the very nature of the business models, many of those stocks out there with 40 or 50 consecutive years of dividend increases hail from that sector of the economy.

    As far as those three stocks, I think they’re all solid. Pretty solid values, decent yields, excellent fundamentals, and growing dividends across the board. All comes down to what kinds of businesses you want to be in. 🙂

    Best regards.

  24. Nice list. I’m definitely interested in CAT and OHI. Now is the time to find great deals- especially since we’re investing for the log run.

    I had an extra $150 in my brokerage account, so I bought a few shares of KMI even though the $8.95 transaction fee would be a whopping 5.96%($8.95/$150). If I didn’t buy now, I would have needed to wait one more month to buy. I figured that even with the almost 6% fee, I’m still averaging down on my current -16% position.

    With a current dividend yield of 5.66%, I just had to pull the trigger.

  25. Adam,

    Yeah, I’ve looked at CMI here and there. Great fundamentals and excellent dividend growth. For me, they’re not all that diversified, though. And I’m not sure how strongly I want to be in the engine business. They obviously do well with what they know, and there’s something to be said for doing one thing very well. But I honestly go back and forth on how excited I am to be in the business of engines. And because of that, I keep looking elsewhere.

    Donaldson is something I get a lot more excited about. Easy to understand and there’s a need across so many different industries. That’s another strong play there.

    Happy shopping over there!

    Cheers.

  26. Joel,

    Ouch. That’s a really high commission there. I’d be very careful about doing that ever again. I’ve long sought to keep my fees at somewhere around 0.5%, which I find reasonable during the accumulation phase. Especially when considering that I’ll be paying very little in feels while I’m living off of my dividend income. But 6% is going to severely constrain your income and returns. You’ll notice that whenever they do those comparisons on actively managed funds versus index funds that the latter often wins out due to lower fees. And we’re only talking a spread of maybe 1% or so here. 6% would obviously make it much more attractive to just buy funds.

    Wish you the best of luck, though!

    Take care.

  27. Jason,

    You mentioned the oil companies, have you evaluated TransOcean (RIG)? We don’t have cash at the moment, but later in the year if the oil price continues to be that low, we could potentially buy even more to average down even further.

    My only concern is that the dividend will be very low for next couple of quarters, therefore no benefits but the capital gain could be very important the day the oil price goes up.

    What is your feeling?

    Cheers,

    RA50

  28. RA50,

    I’ve looked at RIG before. I even owned it once upon a time before the blog was started. I was a bit more willing to stretch outside of my comfort zone back in those early days. Fortunately, I did very well buying and later selling RIG. But I find it to be an exceptionally low-quality company. If frequent dividend cuts and poor operational results are your thing, then RIG might be interesting. Not for me, though.

    Hope that helps!

    Cheers.

  29. I picked up CAT last week after the earning announcement. It’s a great company for the long term. I’m also interested in XOM. Oil price won’t be low forever.

  30. Joe,

    I’m with you. CAT could very well go lower. But I’m pretty happy picking it up near a 4% yield right now. Even with reduced earnings the company still has plenty of room to pay and grow that dividend. Cash flow remains robust.

    I hear you there on oil. I don’t anticipate it remaining low forever, either. Just a little concerned about valuations there. I was able to snag XOM in the mid-$80s when oil was around $100. Oil has since dropped substantially and XOM has barely budged. There’s vertical integration but recent earnings have dropped roughly in half YOY. Either I got an incredible deal or there’s more to come. Definitely not a bad idea to just average your way in, though.

    Thanks for dropping by!

    Best wishes.

  31. Thanks, Jason. It’s easy to lose focus on the long-tem goal when the market tanks like this. I just had the urge to buy, and couldn’t wait one more month to include these funds with my regular monthly purchase. You’re right about the fees though. I’ll try not to do that again. I just figured that I’m at a -16% with KMI, so even with the 6% commission I’d be averaging down for me. I guess my fear was that oil would be back up in a month, and I would lose the opportunity.

  32. Hi Jason,

    Thanks for sharing your watch list for august! I’m currently looking at FAST and maybe HSY. Who doesn’t like chocolate, right? What do you think about Fastenal’s valuation? Doesn’t look cheap but not as expensive as it was a little time ago.

    I opened an account at Degiro today as my current broker takes 15 € from every transaction to NA stocks. It seems that Degiro is significantly cheaper and one can buy from Nasdaq with 0.66 €/transaction. Don’t know what they charge from NYSE though. I’m excited to start buying stocks every month opposed to once in two to three months!

    Also excited for the DIS Q3 results later today. I’m actually hoping for a little disappointment so that I could add to my current position. Let’s see what happens!

    Keep up the great work!

  33. That’s a good point on how UTX’s cash from the sale will be utilized.

    According to the press release from July 20 “Proceeds from the sale are expected to be used to fund additional share repurchase to offset the earnings impact related to the sale.”

  34. Hi Jason

    Any interest on PG at these levels, I’ve been tracking for a while and seems like it’s at a reasonable level to add to my portfolio.

  35. Sampo,

    Like I recently mentioned, Fastenal has long been a well-run company, although the recent management shakeup is interesting. They’ll have to come up with a succession plan that works at some point there. But I think FAST is a great company. And the valuation appears rather compelling here on a relative basis.

    Happy shopping over there!

    Best regards.

  36. DGI,

    Yeah, I couldn’t find the press release, but that jives with what’s been reported. Someone just emailed me the SEC release which states the same. It’s interesting in that they’re basically shrinking the company in absolute terms, offsetting the loss of Sikorsky with the reduction in shares. They must be really confident in their ability to better concentrate on Otis, Carrier, and P&W. Guess we’ll see how it goes. 🙂

    Cheers!

  37. JT,

    I already have pretty solid exposure to PG. And I’m not sure we really know how all these big changes are going to play out for them. Wouldn’t mind adding maybe a little more, but I’m not compelled to do so right now. Recent growth has been concerning for what should be a secular growth story, so I’m waiting to see how that’s affected by the restructuring.

    Best regards.

  38. Jason,

    Can you elaborate more on this on your last response to me?

    I usually make one purchase a month of about $250-$300(2.98%-3.58% @ $8.95/trade). Obviously this isn’t my primary investment account, as my 401k gets higher contributions- so my taxable account is more of my play money account.

    8.95 x 12=$107.40 per year in commissions. Over 15years(I plan at retire around 45-50yo), those commission would amount to only $1,611, or grow to about $2,800 had they been invested at 7% return. Besides having to pay the initial commission on the transaction, it shouldn’t further affect my portfolio.

    I understand that annual management fees(I keep those way under 1%) on mutual funds can have a huge impact on returns over the years, but on individual stocks, you only pay those commission twice(when you buy & when you sell). On 401k accounts, you don’t pay a commission with each contribution, but you do pay an annual fee(worked into the mutual fund price). That percentage is found on the mutual fund prospectus. It is recommended that that fee be kept at under 1%. My 401k mutual has an annual fee of .18%, which translates to $1.80/yr for each 1,000 in that account.

  39. Joel,

    There’s no need for me to elaborate. It’s your money and you should invest it as you see fit. I was just pointing out that you’re paying an exorbitant amount in commission fees based on your comment. I would never – repeat, never – pay $9 for a couple hundred dollars worth of stock. You’re just shooting yourself in the foot at that point. 7% is not far off from the annual returns of equities in general. So you’re almost a year behind every time you do that.

    Wish you much luck, either way. 🙂

    Cheers!

  40. Just picked up some OHI recently and I really like the long term potentials for this stock. TD is another stock we might add more in the near future. Would love to add more consumer stables.

  41. Tawcan,

    Nice move there with OHI. It and O are a couple of REITs that I’m very interested in adding to now that I’m mostly fully stocked up on WPC and DLR. OHI has done nothing but impress me over the time I’ve been a shareholder. Glad to be a fellow business partner with you. 🙂

    Best regards.

  42. Gotcha. If instead of investing a smaller amount monthly, I were to invest quarterly, I could be missing out on potential dividends & growth on the smaller monthly purchases that I didn’t make. At the same time those few hundred dollars would be losing value(due to inflation) just sitting in my checking account.

  43. Joel,

    I think you’re missing the point. That’s fine. It’s your money.

    Missing out on a dividend here or there isn’t much to worry about when you’re giving up 4% to 6% of your money right off the bat. Unless you’re investing in a stock that’s paying a 16% to 24% annual dividend, that quarterly dividend will not be making up for the commission fees. And “inflation” isn’t running high enough to where waiting for three months and choosing a more attractive cost structure will harm you. We’re talking about annual inflation in the very low single digits here. The math doesn’t add up for you.

    If a 1% fee of a mutual fund is your line in the sand (which is already very high), you’re paying something like 4 to 6 times that with your fee structure. That’s akin to paying 4 to 6 years of fees up front. If you invest for 15 years, you can do the math and see how that shakes out.

    But this is way off topic and I’ve said all I can say about it.

    Take care.

  44. Jason,
    There are so many stocks “on sale” right now and not enough capital… It’s driving me crazy!!
    I don’t think I’ll be in the position to buy more than one stock this month but I’d like to average down on CVX and XOM. I’d also like to increase my stake in OHI and EMR (who just happened to drop by almost 4% today again)… I wouldn’t say no to more TD shares…

    God I need more money! I’ve decided to limit my spendings to the bare minimum for august and even start making a budget like you do to grab every pennies out there who could be turned into shares of these extraordinary businesses!

    You’ve really put yourself in a great position to be able to buy 3-4 times in august after your june and jully shopping spree. That’s just great!

  45. Allan,

    I know how you feel. I’ve spent considerable time where I was only able to buy one or, maybe, two stocks in any single month. But, you know, that just forces you to concentrate on your best ideas and really savor the ability to save and invest. And it gives you more motivation to strongly budget and figure out where to come up with that extra capital. If it were easy, everyone would be doing it. 🙂

    Best of luck over there with the cost control. My ability to strongly budget and cut out the fat has been immensely helpful in my ability to invest as much as I do on a regular basis. Even though my income has been really strong lately, expenses are roughly flat. The larger the delta, the closer I am to freedom.

    Cheers!

  46. I had 15 shares in TD but they split last year and I am now the happy owner of 30 shares of TD that are increasing in price and paying a decent dividend.

    Perhaps you should watch another great Canadian bank, The Bank Of Nova Scotia. It pays a good dividend but it’s price has been struggling for at least a year. A bargain right now for sure.

  47. beth,

    Already ahead of you on BNS. I actually averaged down on my BNS position back in March at a similar price to what it’s available for now. 🙂

    But TD continues to perform rather strongly in the current environment. Slightly concerned about the overstretched housing market up there. The Canadian banks performed relativey well during the financial crisis, but Canadian housing wasn’t as expensive as it now is and Canadians weren’t as heavily indebted as they are now, from all that I’ve seen. Nonetheless, the environment up there favors these banks over the long term.

    Thanks for dropping by!

    Cheers.

  48. Your perspective on seeing red in the morning is very interesting…so counter to typical human nature, imo a signal you will do VERY well in the next major crash.

    Re. MMM..just for my education, what kind of valuation would you like to see it at to be ‘cheap’. It interests me because it’s down about 15% from it’s high.

    Would you look for a certain p/e…EBITDA multiple?

  49. Mark,

    We’ll see how it goes. I’m interested in getting the next crash done and over with just to see how it all shakes out. Need all the help I can get. 🙂

    As far as MMM goes, you can see exactly how the current valuation (using a number of metrics) stacks up against the recent historical averages:

    http://financials.morningstar.com/valuation/price-ratio.html?t=mmm&region=usa&culture=en-US

    Everything but the yield is unfavorable right now. A high-quality company, no doubt. Cheap, though? I don’t think so. But that’s up to you to decide whether or not MMM is worth paying up for. If MMM can continue growing like it has recently, it’s probably not a bad play at all. But there appears to be a premium there.

    Best regards.

  50. Jason,

    This is my first time commenting but I have been following your blog for quite some time now. I can’t thank you enough for directing my attention to OHI. Prior to reading your blog, I had never even heard of this REIT. I initiated a position in this company back on June 8th at $34.42 (6.39% yield). I intend to hold onto this gem forever. Again, I appreciate the guidance.

    Dividend Clockwork

  51. One thing to keep in mind about Caterpillar — it should get a boost if US-Cuba relations continue to improve/normalize. The sugar industry in Cuba could DEFINITELY use Caterpillar products (as could construction if US money flows in to build more hotels, etc.), so that could be a boost to Caterpillar’s bottom line.

  52. it appears most DGI investors are selling both Baxter and Baxalta after they announced the dividend cut, I dissapointed as well, the 52c was the old legacy payout, while the new combined is only 18.5c, your thoughts on the announcement?

  53. I love TD, and at 4% right now I think it’s a great buy. The foreign tax on the dividend is irritating, but I love owning Canadian banks that also happen to be growing in the US.

  54. Hey Jason,

    I have been following your story for a while and it is truly inspirational. Keep up the good work!

    I just had one question, WPC or OHI? Assuming you weren’t at full positions on either of them, which would you pick at current valuations?

  55. DC,

    Thanks for following along. And I appreciate you stopping by and leaving a comment. 🙂

    Glad you found value in the post and the information on OHI. I’m with you on holding forever. I’ll be invested right alongside you for the next few decades as long as Omega continues to deliver.

    Cheers!

  56. Chadnudj,

    That’s an angle I hadn’t really thought of. I wonder how much business Cuba really accounts for? It’s an awfully small island. Of course, if there economy improves markedly after improved relations with the US, that could provide a nice little boost.

    Thanks for sharing!

    Best regards.

  57. John,

    Yeah, that’s unfortunate that the combined dividend is now much less than what the legacy Baxter paid out. It’s an unfavorable change, no doubt about it. However, I’m personally going to hold on to my shares. I still really like the underlying business models and I hope, in time, the dividend growth from both firms makes up for some of that income reduction. Time will tell.

    Best wishes!

  58. Ear Money,

    I’m with you. The foreign withholding is indeed irritating. I find it a minor inconvenience, but I’d rather it not be there in the first place. That said, TD is a really solid bank. The expansion into the US is great in the diversification sense, but somewhat of a drawback when you consider they’re getting further away from their home market with that really favorable regulation. Pros and cons. Always trade-offs. 🙂

    Thanks for stopping by!

    Cheers.

  59. Jason,
    You are an inspiration! I am old enough to be your mother, but I have not yet developed the ability to be happy seeing red in the morning, LOL!
    Re TD, is it better to own it in a tax-deferred account ( foreign withholding)?
    Thanks,
    Judy

  60. Jon,

    Thanks so much. Appreciate the support!

    I honestly couldn’t say I have a clear preference for either one. They’re both excellent REITs with great long-term prospects. Similar valuations right now. WPC has a higher yield, but OHI has a higher 10-year dividend growth rate. WPC has better recent dividend growth, however. OHI has grown its underlying AFFO/share at a higher rate over the last decade, but WPC is far more diversified.

    They’re different REITs with different areas of focus. Not possible or fair to directly compare. Really depends on which you prefer and which you might understand better. I like both, though.

    Best regards.

  61. Judy,

    Thanks so much. I’m just wired a certain way. Doesn’t make me better than anyone else, but I do think that some people probably shouldn’t be invested in stocks, and certainly not individual stocks. Some tend to find that out the hard way.

    As far as your question goes, you’re indeed better holding TD in something like an IRA. Per my understanding, most Canadian stocks held in a tax-advantaged account aren’t subject to Canada’s foreign withholding. That’s due to a unique tax treaty we have with Canada. As always, it pays to perform your own due diligence on that.

    Best wishes!

  62. Nice list, Jason.

    The oil majors have started to attract me again as well at current prices (especially Royal Dutch Shell) . Over the long-term they look very attractive indeed. That being said, the oil price is not looking like it is going to rocket up any time soon. But stranger things have happened.

    Good luck with your choice!

  63. All great stocks.
    In my radar CAT too, NVS, CL, EMR and GSK and maybe add more XOM, WMT and PG if prices still down.
    Good luck in your shopping, Jason.

    Cheers from Spain

  64. Jason,

    First let me thank you for your perspective on XOM the other day. Now it appears that we have the same thoughts that the stock price has further to fall based on your comment above about the TTM EPS. I would much rather wait on the sidelines as the price continues to fall as the stock appears overvalued in my opinion.

    I also want to change my stance on your article series. I previously ranked the dividend growth articles as my favorite, but after some thought I believe your watchlist is my favorite. It provides useful information to anyone about stocks that currently are providing great value. The watch list is an investor’s guidebook while the dividend growth and dividend income articles are more of the report cards that highlight the results from purchases that originated from a watchlist.

    Now on to my watchlist. I won’t go into detail as I already highlighted last month my favorite play of VEREIT which reports Friday. I moved it up from 10% of my portfolio to 20% from two separate purchase blocks at $8.50 per share during the month of August. I will now spend the next few months trying to build around it as I expect it jump up quite a bit within the next month and start paying dividends. My next purchase will probably be LyondellBassell. I already purchased a block back in May and it has dropped over 10% since then. It looks like a good time to average down as the stock yields 3.4% and the earnings perform fine irrelevant of the price of oil (Heck I would argue the company does better in a low oil priced environment as it purchases oil to produce its products). Aside from the yield they buyback a considerable amount of shares as a percentage of shares outstanding each quarter. I would definitely suggest taking a look at LYB. Other than that I am slightly interested in AAPL and DIS with the recent declines and I feel GILD is way undervalued based on FCF. Alas I want to boost yield in my portfolio before adding more to these stage 3 rocket stocks.

  65. Super healthy looking list here Jason. I’d be happy to own all of them. I’m holding UTX myself and was a bit disappointed with the quick sale to LMT. That was a huge and major first move for the new CEO, and while I wouldn’t mind them retiring a bunch of shares, but I’d almost rather see a majority of that cash invested back into the other businesses or a new acquisition more in line with their long term goals. I trust management knows waaay more than I ever will though, so I’m happy to ride it out from here, I’ll be buying more if it drops into the mid 90’s. Good luck with whichever you choose and I’m excited to read about it. Thank you for sharing your thoughts with us!

  66. TDD,

    Yeah, tough to say what’s going to happen with oil. I hear a lot of people saying, “Oil’s not going to rebound quickly.” But where were those people predicting the massive drop before it happened? I just prefer to admit that I have no crystal ball and move on. 🙂

    Thanks for stopping by. Should be a lot of fun, but stock shopping is always fun.

    Have fun shopping over on your end!

    Cheers.

  67. Javier,

    Too many high-quality stocks. Never enough capital. If anyone wants to send me a check, I’d be glad to have it. 🙂

    Best of luck with your choices over there as well. Another month full of opportunities!

    Cheers.

  68. Simon,

    Nice! I’ve long been concerned about their subpar fundamentals, but I also quite like my quarterly Shell dividend. 🙂

    Glad to be a fellow shareholder. Thanks for sharing!

    Best regards.

  69. TDM,

    Yeah, I’m with you. I think my point was that allowing management too much latitude in regards to dividend growth is a bad idea. No reason not to be prepared for the cycles when you’re in a heavily cyclical business. That said, the lower earnings definitely haven’t worked their way through the system yet. Like I wrote, I bought XOM at $84 when oil was $100. Oil is now half that and XOM is only down like 10%. So I’m not sure of the disconnect there. I definitely wouldn’t mind owning more XOM, though. I’m pretty much topped up in every other name. I have a little room for Shell, but I view them as a much less attractive business than Exxon.

    DIS could be interesting tomorrow. I see it’s down something like 6% after hours. Wasn’t really planning on adding any more DIS right now, but if it drops rather substantially tomorrow, I’d be interested in that. In my view, DIS is the best media/entertainment company in the world. But I, too, don’t want to go too crazy on those Stage 3 stocks. And I’ve been dipping there quite a bit lately. So we’ll see.

    Have fun over there!

    Best wishes.

  70. Ryan,

    I’m with you. I’m a bit surprised to see what they’re doing with the capital. Although I think one could argue the rotary business isn’t a natural fit with the rest of the business, they do operate somewhat different/independent businesses across the board. But it seems like they got a good price for Sikorsky. I’m just not sure about the decision to shrink the business like that on an absolute basis. On the other hand, I think UTX at $100 is a pretty solid investment, and that goes for me or management. Maybe they just don’t see any bolt-on opportunities right now.

    Nonetheless, I decided to initiate a position earlier today. I think the value is compelling enough to see where things go. I’m also not sure I agree with the way they’re handling Sikorsky, but I don’t disagree strongly enough to pass up UTX at less than $100. Glad to be along for the ride with you. 🙂

    Thanks for stopping by!

    Best regards.

  71. Jason,

    That’s a great list. Right now Oneok is on my radar (initiated a smallish position yesterday) and I’ll be rounding out that position in my portfolio. I’ve been eyeing ALB as well. Consistency is the key and hopefully this will bear fruit not in 1-2 years but 5-10+ years from now.

    Thanks for helping us to keep the focus and ignore the noise.

    -Mike

  72. O, XOM, AAPL, DIS and PG are on my watch list along with a handful of names in the financial sector. Should be another interesting month.

  73. Nice set of companies, DM. I’m looking to buy OHI , TD and peek at industrials. Energy companies are great to buy right now but there is risk of further down slide to play out. Keep racing!

  74. Jason,

    Love the list. I have been looking at several of the same companies myself. ALB is one I never heard of, but sounds quite interesting.

    I was looking over your portfolio and I noticed that you don’t have much of a presence with consumer food stocks (i.e. Nestle, Kraft, Kellogg, General Mills etc)….Is this because of a certain aversion to this sector? Or is it more because you haven’t seen any particularly good deals lately? I know you scooped up HSY recently (as did I) so just curious on your future outlook there, and your thoughts on some of those large cap food stocks.

    Guy

  75. Mike,

    Nice move there with Oneok. Some energy plays have held up well (like XOM), while others have been hammered (like OKE). As always, it’s a market of stocks, not just a stock market. 🙂

    Keep it up!

    Cheers.

  76. nishnash14,

    I’m with you there. Another interesting month, indeed. 🙂

    I see DIS is down strongly after hours. That could be on my radar tomorrow. We’ll see how it plays out. Keeping my fingers crossed that it’s down 10% or so.

    Have fun over there!

    Cheers.

  77. R2R,

    Sounds like a solid list there. We’re on the same page regarding TD and OHI. I’m still waiting for some of the REITs to truly get hammered on interest rate fears, but my desire for strong volatility there has mostly been met with nothing. Industrials, meanwhile, have been pretty volatile lately, which has shifted my attention a bit. Gotta shop where the sales are. 🙂

    Take care!

  78. Guy,

    ALB is very interesting. Love the lithium exposure there. If electric vehicles are the wave of the future, ALB is well placed.

    As far as the major food companies, it’s a combination of concerns over changing dietary trends and valuations. I don’t mind owning a stock like GIS, but I’d want some margin of safety there in light of concerns over its main products (like cereal). I would never in this lifetime pay 30 times earnings for GIS, though. Same goes for a lot of other stocks that have been bid up very high after the Heinz deal set off some dominoes a while back. I’m patient. I can wait. 🙂

    Thanks for stopping by!

    Cheers.

  79. Purchased TD myself last month. Not only has the stock itself been beaten a bit with >5% YTD, the CAD currency has had a similar experience with going 10-12% YTD. That is some nice douple dipping to take advantage off.

    Also means CAD was +/- 10% in value the past 5 years, and now in the past year its gone trough >20% almost like there is some bubble going on. For us however this means that the dividend could potentially also recieve some nice growth without the company lifting a finger, if the CAD would go back down in the future.

  80. Sampo

    I advise on some more due diligence on degiro. They are not a bank and act like a fund. On some German forum people were wondering how consumer protection in case of insolvency would actually work out. They also may loan your shares to get you the low commission and again some people were wondering who bears the risk.
    Personnaly I am considering Lync or even directly Interactive Brokers to save on fees for US and UK share (and exchange fees), for Finnish shares I will stick to Nordnet.

    Just my two cents on saving fees in Finland.

    Philpp

  81. Hi Jason,

    Looking at my watchlist as well as reading posts like yours, it really makes me feel like I’m in a candy store.
    So much quality companies for sale at fair prices, with excellent growth, earnings and yield numbers.

    Good luck with your decision!

    Best wishes, DfS

  82. A lot of great companies here. I’m still looking at one of the railroads and an opportunity to buy HSY at a less-than-ridiculously-expensive price. I’m also looking to add a healthcare REIT to my portfolio and I keep looking back and forth between OHI and HCP. And of course, TD is calling me. Haven’t bought a good bank in awhile (I’m hoping to average down on WFC and was looking at MTB as well awhile back). EMR, NOV, and now XOM and CVX are looking attractive. I really need a visit from the money fairy.

    I’m trying not to look at the stock prices each day, instead focusing on making more money at work and online. I invest large chunks of cash every few months to make huge purchases in a small amount of companies, but the waiting kills me. At least it keeps my commissions to a minimum.

    Happy hunting!

    Sincerely,
    ARB–Angry Retail Banker

  83. I’ve lurked on your website for quite some time…thanks for the effort you put into your writing/sharing! It’s sincerely appreciated! You and I are on the same page for a lot of the companies you’ve mentioned above. I picked up more CAT, UTX and ETN just yesterday after I sold BAX and BXLT. BAX/BXLT essentially reduced their dividends and since I’m after growing income, it was time for me to move on. I’ve noticed that you’ve got BAX and BXLT in the portfolio…..any plans on selling since the dividends aren’t what they used to be?

    http://www.dividendgrowthinvestor.com/2015/08/what-should-i-do-with-baxter-and.html

    I’m probably going to pick up more OHI as well….need to find some $$$ first though.

  84. Jason, thanks for the awesome blog! Really motivated me to start investing in good dividend stocks.

    I just saved about $10,000 to allocate to good dividend paying companies, and was wondering if you could indicate your top 5 to start looking at for a beginning dividend portfolio (to narrow down my search a bit). I am a big fan of WP Carey and Realty Income, not sure how you would feel about these for a starting portfolio though?

    Thanks again, and keep up the awesome work!

  85. Good Day Jason
    I own UTX and is down below my cost basis, I look to add a few more shares and average down on any more pull back. I think the long term on this stock is good, I also enjoy the dividend on it. WFM is a really good company, I wish we had a store in our city. I not sure it will have the high growth that it once did, but if not it might mean management may become (hopefully) more friendlier to the dividend. CAT is another good company. I think been hit by the slow down in China. If we get any good news out of China the stock goes up. I like the dividend it gives you while you wait. I think XOM is a great company and may be better off than the CVX I own. I haven’t heard of TD but It maybe worth a look. it sounded interesting. OHI its another high quality stock with a good dividend. A good list of stocks Jason can’t wait to read a new article on which stock you average down on, or newly add to the freedom fund.

    Cheers

  86. Looks like EMR may be on tap to slide a bit more. It continues to bottom-out. Looking to pick up a few more in the near future.

  87. Right now it accounts for very little business…..but that’s because of the embargo. It’s a HUGE investment opportunity, though, given how far behind their infrastructure is compared to how close they are to the US (making us a natural trade partner with low transportation costs for trade), their population, their education level (relatively high), and the areas in which they need development (agriculture and construction — both of which Caterpillar could help with).

    I’ve long believed that the Cuban embargo was dumb economically for America, and that giving it up would allow a great deal of US businesses to flourish, especially those dealing with tourism, automobiles, construction, and agriculture (and equipment for all of those).

  88. Hi Jason,

    I thought about all this and I’m now going to make purchases of at least $500-600 at a time, even if that means that I can only buy every other month.This will make the $8.95 commissions paid 1.49-1.79% of the purchase, which is a whole lot better.

    Sometimes it’s hard seeing money in an checking account, sitting there, waiting to get invested- especially when you see PF bloggers jumping in on some good deals. You feel as if those “deals” will go away the longer you wait. I like that you’ve been tracking your portfolio over the years on this website- I might start a blog to track my financial journey. I’ll track my 401k, taxable account & mortgage. I too would like to show the world that frugality, and a regular ol’ middle class income, is enough to reach the goal of FI in the California bay area. I know we’re heavily taxed on dividend income at the state level in California, but I still think that DGI and the snowball effect is the way to go.

    Joel

  89. GoT,

    Agree with your assessment there. I mentioned something a while back when I was discussing Canadian stocks, that dividend growth could actually take a nice swing in the other direction when the exchange rate normalizes. With or without that, however, the Canadian banks offer a nice yield/dividend growth combination there. TD is trading near my cost basis right now, so it’s a name I continue to circle. But I am a bit concerned about potential housing setbacks up there. Can’t see anything being as pronounced as we had down here a few years ago, but I think it’s something to be mindful of.

    Cheers!

  90. DfS,

    I’m with you. I honestly don’t know how others can sit on cash for months or years on end when there are solid companies trading for fair or better values, paying growing dividends all along the way. It’s that replenishing and growing cash flow that has greatly aided my cause over the last few years. Of course, I wish the market was still at levels from three or four years ago. But you take what you can get. 🙂

    Happy shopping over there!

    Best regards.

  91. ARB,

    I know how you feel. If the money fairy visits you, make sure you mention my name. 🙂

    More stocks than capital, but that’s a great first world problem to have. To even be in the position to regularly buy stocks at all is a blessing that a lot of people around the world don’t have. I remain incredibly grateful every day.

    Hope you land a little unexpected capital at some point in the near future here.

    Cheers!

  92. Paul,

    I’m going to continue holding BAX and BXLT. I find it better to sit on my hands in most cases if a company is still operating soundly. The dividend change was unfavorable and unfortunate, but I still really like the business models and potential going forward. I’m hoping the future dividend growth makes up for the reduction over time. We’ll see how that goes.

    With you on CAT and UTX, however. I actually just initiated a position in UTX yesterday. Should have the post up some time next week. Glad to be a fellow shareholder! 🙂

    Best regards.

  93. nishnash14,

    Nice! I’m thinking about adding to my DIS position here. It appears to be modestly undervalued (after the drop) and I can’t think of a better entertainment/media company in the entire world. I guess you have to ask yourself if someone were given $200 billion, could they recreate Disney? I strongly doubt it.

    Love it when a high-quality company takes a dump on record profit. The rationality of Mr. Market and all that. 🙂

    Cheers!

  94. Rob,

    Thanks for dropping by. Glad you found the blog. Hope you continue to find a lot of value here. 🙂

    Unfortunately, I can’t really pick out five stocks for you or anyone else. Everyone has different risk tolerances, time horizons, income needs, circles of competence, etc.

    But I share what I’m personally buying and what I own with the world. I can’t think of any bigger recommendation than that which someone has already bought or is buying.

    Good luck over there!

    Take care.

  95. Michael,

    Thanks for sharing. Glad you enjoyed the list. 🙂

    I decided to scoop up some shares in UTX yesterday. So it looks like we’re fellow shareholders there now. It’ll be interesting to see where they go from here, but Sikorsky was a pretty small part of the business. And if UTX is good enough for me below $100, it’s good enough for the company as well, in my opinion.

    Best wishes!

  96. Mike,

    The lower, the better. I’m probably done buying shares, but Emerson’s not. The cheaper the shares for the buyback, the more accretive to EPS it becomes.

    Keeping my fingers crossed it stays below $50 for a while. 🙂

    Cheers!

  97. Happy,

    Tough to go wrong with any of these stocks, in my view. Just depends on where you’re most comfortable. 🙂

    Happy shopping!

    Cheers.

  98. Chadnudj,

    I certainly hope that’s the case. Would love to see Caterpillar take on some serious business. Guess it just depends on how much Cuba’s economy expands by virtue of any changes in the embargo. Cuba’s economy right now is somewhere along the lines of Turkey, last I knew. But I’ll take any order I can get. 🙂

    Best regards.

  99. Joel,

    Not surprising at all. I’m 100% sure their parks will look different (and be bigger) over the course of the next decade or two. The expansion potential is really amazing when you think about their library of content/characters (that’s growing). And that expansion potential exists both across existing parks as well as internationally with new parks.

    Cheers.

  100. A fine group of companies, Jason!

    I initiated a position in CAT today. At this price, I’m more than willing to endure some cyclicality.

    A good business at a (below) fair price. More than good enough for me 🙂

    Cheers

    Jarmo

  101. Jarmo,

    Glad to have you on board as a fellow business partner. I really think CAT will serve us well over the long haul.

    I’m with you on being willing to endure the cycles for that ~4% yield and the attractive price on shares. Besides, that growing dividend isn’t cyclical at all. 🙂

    Best wishes.

  102. Thanks for the list Jason. I look forward to it each month.
    Like a few others mentioned, I added to DIS this morning. If I didn’t already own a bushel of Apple I would consider them too.

  103. Rob,

    Absolutely. Glad you enjoy the posts. I enjoy sharing! 🙂

    I also just added to my DIS on the 9%+ drop. It’s the world’s premier media/entertainment conglomerate, in my view. The company is incredibly unique and exciting. I long ago thought about making it a core position and I haven’t changed my tune there. This recent move boosts it to a full position for me. Record profit and the stock is down 9%. Gotta love it. I get that ESPN growth is slowing, but there’s still just a lot to like here.

    If Apple falls much further, I’d be interested in adding there. Never intended on owning much, so I’m being a bit cautious in regards to my exposure.

    Edit to add: Star Wars hasn’t even been released yet. Love this opportunity on DIS.

    Best wishes!

  104. Hi Joel,

    Just my $.02 here. I know starting off is fun and exciting and you want to dive right into investing and are worried about missing out on a “good deal.”

    The thing with the market is that 9 times out of 10, you’ll be able to find a “good deal” no matter what month you put your capital to work. This week it could be $AAPL. Today it could be $DIS.

    Today’s good deal could just as likely be a value trap. Some folks say the oil stocks are on sale, but you can find just as many folks that say oil stocks are overpriced.

    Something to consider would be using a brokerage that offers commission free ETFs.

  105. Hi Jason, thanks for so much writing 🙂
    I am looking for American REITs to buy because of their high dividend.
    WPC is fixed. Among the Health Care REITs I have on my radar: OHI, HCP or VTR.
    You alraedy wrote about OHI.
    My question is: what are Your reasons, why You don’t consider the Large Cap VTR and the dividend aristocrat HCP with about 30 years in a row paying dividends?
    I am Looking forward to reading Your answer,
    Karl (Bavaria).

  106. Have you ever looked at TGH? They seem to be a very solid company and right now have a very high yield.

  107. Karl,

    Thanks for dropping by from Bavaria. 🙂

    OHI has a higher yield than HCP and better long-term dividend growth. I don’t know why anyone would want to accept lower yield and lower growth. One or the other, but not both. In addition, last I looked, OHI was the better value and didn’t have the potential tenant issues.

    Similar story with VTR. OHI has a much higher yield, similar or better growth, and, last I knew, a better valuation.

    Best of luck with your choices!

    Take care.

  108. Jason,
    What do u think about OKE at 35? after their earnings miss ? I am really tempted to initiate a position here at an almost 7% yield. Is the dividend safe ?

    thanks,
    DG

  109. il,

    I took a look at TGH some time ago and couldn’t really wrap my brain around the business model or some of its cash flow numbers. Fell into the “too hard” pile for me.

    I see it’s down something like 50% YTD. If you’re interested in TGH, this could be the time to buy. But I’m not personally interested.

    Take care!

  110. I am a “very” beginner at this, so I have a question on DIS. Aside from the recent drop, it seems to be at the top of its game from a technical (charts) based view.

    What makes this an attractive buy?

  111. Jason,
    Thanks for taking the time to answer and give your valued opinion on individual questions. They are very valuable as always 🙂
    A quick follow up question – i have a small position in KMI and none in OKE, would you have a preference over which one to buy today, considering KMI is at 52 week lows too ? and has a yield over 6% (which i dont remember KMI having for a long time now).

    thanks,
    DG.

  112. DG,

    I prefer KMI out of the two, which is why I have a much larger position there. They have a much larger and more extensive network, which affords them unrivaled insulation and scale.

    Best of luck!

    Cheers.

  113. Thanks jason ! It also helps to see that their market cap is almost 10 times that of OKE…

  114. DD,

    Love OHI. It’s been a very solid performer for me. Management does what they say they’re going to do. Have no complaints there. Wouldn’t mind at all scooping up another 30 or 40 shares here in the near future and may just do that. 🙂

    Glad to be be a fellow shareholder!

    Best regards.

  115. Hello Jason! I’m looking to pick up more shares to average down my positions in companies like BP and OKE. Sorry if you’ve already covered this but do you have any plans of averaging down your positions in these two companies? Loving their dividend yields right now, based on current prices. 🙂

  116. I especially like CAT. Price is very attractive to me these days. I just like this company and all the toys they make! 😉 haha!

    Cheers,

    Mike

  117. Congrats on the purchase of UTX! I look forward to reading your article on it. I’ve been a UTX stockholder for about 2 yrs and am very excited about where they are going. A few specific long term reasons…
    Benefiting from Urbanization: I think this is a long term tailwind that will fuel the companies earnings for decades to come. Not only is population increasing, but people are moving to more cities, especially in China and India and this is great for both their Carrier and OTIS businesses.
    Aviation: Boeing predicts passenger traffic to rise 5% a year from 2015-2034, about 38,000 airplanes. Which means a lot of P&W Engines, but also a lot of business for their UTC Aerospace business which makes many of the components that go into airplanes. P&W also powers the JSF and KC-46 which are new military airplanes with very large orders backlogs.

  118. LPI,

    I own enough BP and OKE for my own comfort level. As I’ve discussed quite a bit over the last few months, I’m personally overweight on the Energy sector as a whole (in relation to my own goal there). I could maybe see one more very small tranche on OKE because I think the value and yield are very compelling here, but that would be about it. As always, it’s prudent to watch your risk and make sure you’re not falling outside your comfort zone there.

    Take care!

  119. Peter,

    That’s a great point there on urbanization. I think that’s a long-term tailwind for a company like UTX and companies similar to it. China is interesting, though, in all the ghost cities they have going on over there. So I’m not sure how well that bodes for Otis over the near term, but the world’s a much bigger place than just China. And the rest of the world was petty solid for them. 🙂

    I think they have some really solid brands and products there, and Sikorsky was a small part of the business. If I like UTX below $100, then I think so should management. So the reduction of the share count could work out pretty well there. Even with reduced guidance, the dividend is still well covered and the stock is a really solid value here.

    Should have the report done some time next week!

    Best regards.

  120. Lots of good options here but I have nowhere near enough capital to make all the buys I’d like too. First world problem I know. I’m also looking at ETN, guess theres just something about tge industrials right now. I was looking at SJM over the last couple weeks but the share price jumped about 6% since then. ALB looks really interesting and I’ll have to put them on my list of companies to analyze. Solid DG history and I like the exposure to both lithium ion batteries as well as solar. I think those are two industries that will just continue to grow. Thanks for the update and looking forward to seeing what you buy.

  121. JC,

    First, my condolences. So sorry to hear about Luke.

    But I’m with you on the Industrials sector containing some solid value. Big names like EMR, CAT, UTX, and ETN there have fallen rather significantly lately. When opportunity knocks I like to open the door with a fistful of cash. 🙂

    ALB is definitely interesting. I looked at it initially some time ago and passed it up for something else. But that won’t keep happening. I’ll very likely own it at some point here in the near future.

    Thanks for stopping by.

    Best wishes.

  122. Great list of stocks here which gives you a further opportunity to grow your portfolio and dividend income. By the way my latest blog post on $2 million dollar stock portfolio mentions you and asks would you sell if you had a portfolio this size.

  123. Hello Jason,
    Thank’s for answering. So I will buy WPC and OHI to expose the REITs in my dividend portfolio for the long haule.
    Regards,Karl.

  124. Laura,

    My answer to your question there is an unequivocal no. I would never sell $2 million worth of equity in high-quality businesses that will likely compound, in aggregate, at between 7% and 10% a year over the long term. I’d have to be out of my mind. Unless I had a dire need for the cash for some type of illness or something equally pressing, the stocks would definitely not be sold.

    “I have to say that in my current position if I had a 2 million dollar stock portfolio I would definately sell off a a large chunk possibly up to 1.5 million dollars worth so that I could do something more pleasurable between the hours of 9 and 5 as opposed to work. This amount of money would enable me to never have to worry about money again.”

    Yeah, I don’t really get that. A $2 million portfolio at a 3.5% yield would throw off about $70,000/year in passive income, even while the value and income both grow. If $70k/year isn’t enough to “do something more pleasurable between the hours of 9 and 5 as opposed to work”, then I can only assume someone has a spending problem. As such, that would mean one is spending more than $70k/year, meaning $1.5 million will likely only last you 10 or 15 years. Maybe less if you’re really that bad at budgeting and restraining yourself. Then it’s back to the old grind “between the hours of 9 and 5”.

    Just my thoughts on it. But it would be a good problem to have. I suspect I’ll be in such a position within the next few decades. 🙂

    Best regards.

  125. Well, TD and CAT have my vote from your list. OHI looks good to me as well but I have a feeling we’ll be seeing some great buys in the REIT space sooner than later as interest rate hike talk dominates the headlines once again. ALB is a new name for me so I’ll have to take a look at that name eventually. For August my focus will be on adding to my current holdings. Happy summer shopping.

  126. Your answer really makes sense. I guess I never considered the amount of dividend income that would come with such a large holding. 70k is lots of money each year and you could easily reinvest half of it and keep the other half for living expenses.

  127. I’ve been seduced by WFM for years now, it’s finally coming down to an acceptable price. One factor that I think makes the comany very attractive is the prospect of substantial growth from their craft beer bars. It’s concept that’s has only been rolled out in certain stores, but is something I think will become a hit in due time.

  128. Keith,

    We’ll see about the REITs and rising rates. Haven’t really seen much carnage there, but would love to see volatility really spike. However, I just buy when there’s value and quality. Timing or even contemplating rising rates is a fool’s errand.

    Happy shopping over on your end as well. I’m sure you’ll be busy if the past few months are any indication. 🙂

    Best regards.

  129. Spoonman,

    That’s a great point there. I haven’t really seen the craft beer bars, but it’s emblematic of Whole Foods and their unique experience. I do know that the sushi/food area is very, very popular at the store in Sarasota. It’s as busy as any restaurant in the area, which says a lot.

    My bigger issue with Whole Foods is the lack of consistency. Up until recently, the growth wasn’t all that outstanding. And there was that dividend cut as well there. In addition, the yield is low and I have to be careful about how many stocks I buy with low yield. But we invest in a company for where it’s going, not where it’s been. And the future appears to be fairly bright for this unique retailer.

    Thanks for dropping by!

    Cheers.

  130. Hi Joel,

    I don’t work for either of these 2 companies and have nothing to gain, but let me suggest you check out loyal3.com and robinhood.com. Both offer fee free ways to invest. Loyal3 has several nice DGI stocks and you can get in for as little as $10 at a time. You don’t exactly get to time the markets, but that shouldn’t matter if you are just looking to buy and hold. I’ve been happy with the results so far. Robinhood, I believe is only on iOS, but again, no transaction fee. Both of these services have allowed me to do some investing with relatively small amounts of money.. I can only afford to invest about $200 per week and I do it via those services.

  131. Hello and thanks for having this site. I have been following it for a while and admire what you have done/are doing and the example you are setting for those looking for some financial freedom and the as an advocate of living withing one’s measn while still being happy.

    Question: In short, would you ever using part of your portfolio for wealth maximization at age 40 over dividend growth or consistent dividends?

    If you are not immediately using the dividends for some expense purpose (pay bills, higher quality of life) why would you not consider a lower dividend/no dividend yeilding growth stock, at least for a time? Would this not be a cheaper option than a dividend reinvest, assuming you believe the company in question is growing faster than whatever you could be reinvest the divident at?

    I don’t want to rock the boat though – you’re doing great! Just wondering if you’d ever invest in something like a Canadian Solar CSIQ (new riskier but long term upside has great potential, no div) or a Berkshire(mature persistent benchmark outperformer also no div) and if so or not, why/why not?

    Thanks in advance!
    Bernie

  132. Bernie,

    Thanks for dropping by! Appreciate you following along very much. 🙂

    If you do follow along, however, you’d really already know the answers to your questions. I’ve answered these kinds of questions to the point to where it’s becoming ad nauseam.

    I will point out that “wealth maximization” and dividend growth investing aren’t mutually exclusive. As such, I find your question very strange. In fact, most dividend growth stocks I write about, invest in, and look at outperform the broader market over long periods of time. So if you’re really interested in wealth maximization, then investing in high-quality stocks that have so much excess profit that they can pay and grow dividends for years on end strikes me as about the most intelligent way you can do that. But, for me, it’s really about income and income growth maximization (which will unlock freedom maximization). Hence, the strategy.

    But the numerous articles I’ve written on the overall strategy and the holistic approach to portfolio construction and investing in general have already answered these questions in detail. Furthermore, a stock that doesn’t pay a dividend is pretty much dead weight for me. For someone interested in living off of growing dividend income, every stock not paying a growing dividend is working to undermine you and your financial independence.

    In the end, there are a lot of successful ways to invest. Many roads to lead to Rome. But I’ve identified this strategy as that which works best for me and my goals, and I’m just sharing the results along the way. This strategy, when pursued and executed in a holistic manner, will absolutely and positively lead to financial independence. But it’s really up to others to invest their money as they feel fit. Tough to argue with being able to retire at a very young age, either way.

    Cheers!

  133. Jason,

    Liking the list you put together – and trust me – I am itching on that Caterpillar – nice move is what I’ll say to that, such a good price point right now. Last price I got in on them was $79ish; so seeing them where they are at is VERY enticing (believe it landed just under $77 today).

    I have been monitoring XOM as well for the time being. Giant oil company, with great dividend metrics we all love.

    I did happen to make a purchase though, just yesterday, so I’ll have to write on that one as well. You may know the company haha… should be a no brainer post when you see it.

    Good luck Mantra and excited to see the moves you make to continue to add to the snowball you have over there! Talk soon.

    -Lanny

  134. Lanny,

    Yeah, loving the volatility on some of the Industrials right now. Really scratching my itch. 🙂

    Glad to hear you’re staying busy over there. And the snowball rolls down the hill just a little further. Success begets success. Keep it up!

    Best regards.

  135. Yep – can’t argue with the company’s prospects. There are risks but management will guide the Company along well and is already doing a good amount of work to reduce its dependency on ESPN.

  136. Hi Jason,

    I just averaged down on my CAT position today. I work for the company so I can move funds in my 401k into with not transaction costs, It’s nice because it allows me to dollar cost average more than I would with my Scottrade account, You can’t be 4% yield with a company that has raised the dividend 22 straight years.

    On another note, i know you bought a position of KMI a while back, and I have been watching the price retreat down below $33 today. That is the point I had wanted to to make a purchase. I have hesitated because they have a P/E of 50, are very highly leverage with debt, and their dividend payout ratio is almost 100%. I like their overall business model, but I wanted to ask you what you thought of KMI at this moment?

    Keep rocking FI life!

    Peter

  137. Peter,

    Hey, it’s great to know that an employee of CAT is feeling the love on the stock right now. That’s fantastic! 🙂

    But I’m with you. Cyclical business, but the dividend isn’t. You don’t amass 22 consecutive years of dividend increases if there isn’t a culture in place that prioritizes fiscal responsibility through the ups and downs.

    As far as KMI goes, my opinion on the company (and the stock) hasn’t changed since the end of May:

    https://www.dividendmantra.com/2015/05/four-stocks-that-arent-on-my-radar-but-perhaps-should-be-on-yours/

    Happy shopping over there!

    Best wishes.

  138. Jason,

    Thanks for the reply. i might have to get KMI soon! It will definitely increase my passive income.

    Peter

  139. Nice article Jason.

    Maybe slightly off topic (and maybe you’ve even touched on this in other articles), but what do you make of the inevitable increase in Interest Rates and that impact on DGI stocks in general?

    I’ve read some opinions that stated that the zero interest rate days saw many bond investors leave to go the way of DGI stocks, and that once Int rates return, there is likely to be a nice wave returning to the bond market. If this were to happen, I guess this could result in cheaper DGI prices for the likes of those in the DGI game for the long haul.

    What do you think?

  140. Thanks for another intersting post!

    Oil prices are meaning lower prices in oil-related companies. In Spain we have Repsol: despite of good 2nd quarter’s results, it’s dropping month by month, like Exxon and Chevron. I agree with you about being interesting in these companies if the price is good.

    On the other hand, have you ever thought in buying Disney? It’s suffering a lot these days.

  141. Nice list! I literally just doubled my position in DIS. I got in years ago for $68.00 – added more a few weeks ago around $115.00, and just couldn’t resist buying as much as I could today in the $105.86 range. I appreciate there could be quite a bit more volatility in the short term, but man I love the play long term. (Bring on the first new Star Wars movie!)

  142. Hey Jason love the website and check in daily!

    What are your opinions on GE, F, and GM? I am not asking for financial advice but I have decent positions in F and GM and a large position in GE which I am thinking of trimming a little to add to other DGI stocks. I was hoping to hear your thoughts on these holdings.

    Thanks

  143. EDH,

    I can honestly say that I think about interest rates (lower or higher) exactly zero times per day. Buffett was asked basically the same question at this year’s annual BRK meeting, and he answered basically the same way.

    I focus on what I can control. That’s controlling my expenses while simultaneously working hard so as to maximize my savings rate. That’s analyzing investments and sticking to high-quality stocks. That’s pulling the trigger when a great company is fairly priced or better. That’s reinvesting my dividend income. But I can’t control interest rates. So I don’t worry about them. Furthermore, most companies I invest in have operated through many interest rate cycles and it’s generally business as usual. I’m not concerned.

    Best regards!

  144. DR,

    I actually added to my Disney position yesterday for the first time since initiating it late last year. I definitely wouldn’t mind another tranche there if the price drops significantly from here. I initially had the plan in mind to make Disney a rather large position. It’s now a full position for the portfolio, but I would love the opportunity to go a little heavy there. The more the price drops, the more I like it. We’ll see! 🙂

    Cheers.

  145. Joel,

    I’m with you on that one. Disney is the world’s greatest entertainment/media company, in my opinion. And it’s really one of the best companies in general. I added yesterday and I’m keeping my fingers crossed it breaks below $100. I’d be very interested in adding again there. 🙂

    Glad to be a fellow shareholder with you. I’m excited for the new Star Wars movie as both a fan and a shareholder. And I’ll be feeling pretty good when I see packed movie theaters.

    Best wishes!

  146. Brazo,

    I’ve never been a fan of auto manufacturers, to be honest. Thin profit margins, intense competition, expensive recalls, the need to have new models every few years, and low switching costs. I worked in the auto industry for years and seen for myself just how “loyal” people are to certain brands. It’s not there. In addition, I had such a poor experience working in the industry that I couldn’t imagine investing in it.

    I remember reading a transcript of a speech by Buffett where he talked about the generally poor economics of the auto industry, going on about how many auto manufacturers there were 100 years ago, and then comparing that to today. That kind of consolidation is good for the existing players, but there’s still poor profitability there.

    Could be great investments, but I have no interest in auto manufacturers. I think there are good reasons why many of them struggle to pay growing dividends for years on end.

    Cheers!

  147. Waiting to see if DIS drops below $100. I don’t have much cash atm, but I’d put it all up if we see sub $100.

  148. Mikey,

    Sounds like a pretty intelligent plan to me. Would love to see DIS break through $100. I thought I got in at a pretty good price at $93 back in December, which is exactly why I’d appreciate another swipe at the stock at that price. Meanwhile, the valuation will be a little better this time around with the bigger dividend and higher profit. 🙂

    Cheers!

  149. dzogen,

    Does seem overdone, but I much prefer DIS to VIAB in that space. VIAB is much more tied to packaged programming and what not, so it’ll be interesting to see how that goes. Definitely a solid value play, though, if you believe in their future. They have some solid assets, especially in Nickelodeon and Paramount. But, again, they’re likely going to see some heat from the changes in the way people consume media.

    Cheers!

  150. Hello over there, Jason!

    Another “recent buy” with CAT, another watch list and again no consumer basic like GIS or ADM.

    Somehow my entry did not show up here, so I am asking again as I am curious:

    In your opinion anything wrong with ADM?! You yourself recommended it some time ago. I just loaded up on ADM with a portfolio weight of around 4,5% already, therefore I am quite curious.

    Regardless of this topic: I am breathless following your blog, great work!

    Best wishes
    Thorsten

  151. Thorsten

    Nothing wrong with ADM at all. It’s a great company. Little concerned about their position as a price taker, and it’s not like I lack exposure to commodities. But I definitely wouldn’t mind owning a slice of the company. Just looking in different directions right now.

    Thanks for following along. A lot more to come. 🙂

    Best wishes.

  152. Hi Jason,

    Thanks again for sharing the list of stocks you have on your radar. When reading your blog you seem to restrict yourselves from technology stocks but let me put one forward you might find interesting: Tessera Technologies (TSRA).

    Reason why I like it: the markets they operate in (security, automotive) hereby already having a strong patent portofio, high operating margins (66%), no debt, a current yield of 2.20%, regular special dividends, a low P/E of 9.5 and the DCF calculations suggest a fair value of approx. USD 55 while the stock can be bought today for USD 36.3 …

    Is it perfect? Certainly not but a lot to like I think.

    Curious to know what your thoughts are on this one!

    Greetings from the capital of Europe (Belgium).

    Lieven

  153. Well I get the dividend doesn’t grow fast but it’s at 5 % yield?
    Beats buying one that grows faster but is only at 2 now ….

  154. Lieven,

    I long ago decided to have a pretty small allocation to tech in general, and then stick to just the blue-chip cash cows of the industry that were at least somewhat understandable. A company worth less than $2 billion that routinely posts losses would definitely not be on my radar. Moreover, it looks like they’re invested in facial recognition technology? Could be exciting, but outside the scope of what I invest in.

    Best of luck if you decide to invest there!

    Cheers.

  155. Hey Jason. Your watch picks are solid companies as always. You asked what your followers have their eyes on. So for me I am looking closely at : VLO — Valero Energy Corp.– Earnings of $8.75 and a dividend of $1.60 . I don’t know if it’s appropriate to ask your opinion as you have so many followers to answer, but would appreciate your take. Best, Dan

  156. Dan,

    Wish you much luck if you decide to buy shares in Valero. I honestly don’t track it. I generally prefer the integrated plays due to their ability to remain profitable through the cycles. VLO, for instance, took a nasty hit to its profit, share price, and dividend not too long ago. Whether or not that will repeat itself is anyone’s guess, and I don’t know enough about their business to postulate. But since I’m interested in growing dividend income for the next few decades, VLO will naturally fall outside my radar since their long-term dividend growth track record is anything but steady.

    Best wishes!

  157. I am looking at averaging down on KMI, UNP, and BNS which are all currently near 52 week lows due to the oil crash. These are solid companies that will weather the storm IMO, but I want to wait for the knives to stop falling before my purchase. KMI and UNP I have to particularly be cautious on because they are nearing full positions (would be up to 4% of overall portfolio) so it would be quite some time to wait before I could average down again. I think the valuations are stellar, but can’t put too many eggs in just a few baskets.

    Also looking forward to buying more O, OHI, and HCP in the coming months if the rate increases hit their share prices. I went on a REIT spree last month when that happened and hope it happens again. I would be especially interested in buying O at a 5%+ yield again!

  158. Daniel,

    Yeah, I hear you there. I love to chase deals, but I can only run so far with them. KMI, for instance, is definitely not on my radar due to my exposure there. But I just continue to collect that hefty dividend, which is a position I hope to be in for many decades to come.

    I’m also hoping for some carnage in the REITs. It seems likely that we’ll see some solid moves on interest rates. So it then seems plausible that there will be some volatility there. But some (like, say, OHI) have already corrected quite harshly ahead of that anticipation. I just continue to pick up the values as I go. Cheaper is always better, though. 🙂

    Let’s hope we can continue to stay busy.

    Cheers!

  159. Lots of good stuff is down YTD. My top of my watchlist at the moment is: CVX (-25%), PG (-17%), TROW (-12%), WMT (-17%), WPC (-13%), UNP (-22%)

  160. Justin,

    Absolutely. Those waiting for a stock market correction seem to have forgotten that many high-quality stocks have corrected rather substantially over the last year or less. Some were perhaps not a great deal to start with, but many are now certainly attractively valued based on any number of metrics.

    Happy shopping over there! 🙂

    Best wishes.

  161. Hi Jason

    Four opportunities a month is a fantastic position to be in, you really are Financially Independent now as most people would love to be able to just live from their dividend income so being able to buy more shares is fantastic.

    I know all of your income is not from your investments, but it has provided a solid base for you to leave the wage slavery behind and now earn a great income from doing something you enjoy, but also being able to chose how much you “work” and when.

    Look forward to seeing the continuing upward trend in your income from investing.

    Thanks
    FIUK

  162. FI UK,

    Thanks so much. I am truly fortunate in a lot of ways. I would have never predicted that I’d be in this kind of spot so soon. But I guess you just can’t underestimate the power of hard work. Patience goes a long way as well. As does luck.

    I’m basically now living a very similar lifestyle to that which I’d be living even if dividend income were covering my expenses completely. That effectively renders me about as close to financially independent as it gets without actually being there.

    Appreciate all the support. Still a long way to go, though. But I’m marching faster than I ever have before. My motivation hasn’t waned. 🙂

    Keep it up over there. We’re closer and closer every day!

    Cheers.

  163. Thanks Jason, always good to read you stick to your personal strategy. Facial recognition is indeed one of the fields TSRA is covering. They fit my investment strategy so will give it a try.

    Just as a suggestion, what might be nice is that you would cover a dividend-mantra starterskit, indicating the top 15 stocks you currently would buy in case you would start again from scratch. Nothing complicated, just have them flagged in your list. As you are a true source of inspiration, this little extra can further help your fans and readers who are pretty new in the field of dividend investing.

    Thanks again and all the best!

    Lieven

  164. Lieven,

    Thanks for the suggestion!

    I actually did write something along those lines not that long ago, and talked about four stocks I’d be buying if I were starting over again:

    https://www.dividendmantra.com/2015/05/four-stocks-that-arent-on-my-radar-but-perhaps-should-be-on-yours/

    Moreover, the stocks I continue to buy are also those I’d likely be buying if I were starting over. Stocks like HSY, EMR, TRV, and many others I’ve been buying lately aren’t somehow limited to those with bigger portfolios or anything like that. It’s just that some stocks will naturally fall off my radar over time as I build out as much exposure as I feel comfortable with. And that’s why I wrote the referenced article. I’ll revisit that once per year as the portfolio grows and some stocks fall off my radar.

    Cheers!

  165. Hey Jason, great post as always. Just curious as to your thoughts on TD versus Bank of Nova Scotia, which has also taken quite the haircut lately and is yielding a bit more (and that you also own, as do I).

  166. Jason,

    That’s a tough call. Largely depends on whether you want more exposure to those international assets with BNS or the heavy North American exposure with TD. BNS is a bit cheaper with a higher yield, so that might be the more preferable play, all else equal. I’m personally looking a bit more at TD right now since I have less of it.

    Best of luck!

    Cheers.

  167. Didn’t wait and bought in at 105. At least at this moment it seems like a good move price wise.

  168. Mike,

    Strong move there. Wish I would’ve waited another day before doubling down on DIS, but I still like the long-term opportunities here. DIS isn’t overly cheap, even after the pullback, but this is about as high quality as it gets. 🙂

    Glad to be a fellow shareholder!

    Cheers.

  169. Any thoughts on BHP? Yield is getting quite juicy assuming that they can sustain it. So juicy in fact that it’s difficult not to add on it. Personally I wouldn’t consider dividend cut to be a very likely scenario.

    Thanks for a great blog. Been a reader for quite some time now and you, Sir, have been quite an inspiration (and writing from an European tax heavy country, source of some jealousy as well).

  170. JP,

    Thanks for the kind words. Glad you find inspiration here. I do my best to share everything as it’s my belief that financial independence is indeed attainable for just about anyone that really wants it.

    As far as BHP Billiton goes, my opinion on the company hasn’t changed since I last wrote about it. It remains cheap, but that all depends on your view of the long-term building out of civilization in many parts of the world. I happen to think the resources they mine for will remain in demand for decades to come. I’d be a buyer right now, but I’ve already committed as much capital as I can to that one stock.

    Best regards!

  171. Jason,

    I believe the Canadian banks in general are sporting excellent yields…I was reading about the taxation of Canadian dividends. Is it true American investors experience “extra” taxation of the dividend payments?

    Guy

  172. Guy,

    There is a 15% foreign dividend tax withholding if held in a taxable account. In tax-advantaged accounts, there is no withholding, as far as I’m aware. But the 15% can generally be recouped at tax time, so it’s really just more of a delay than anything else.

    Cheers!

  173. I’ve been following your site for a while now. I really appreciate how transparent you are with your valuation process. I’ve learned a lot. Just funded my roth IRA for the year and need to narrow it down to three or four picks to keep commissions around the 0.5% level. I have several of the same stocks on my current watch list and a few others. CMI, CMP, NUS and WHG. all peaked my interest when I was perusing Mr. Fish’s spreadsheet. They’re all at favorable P/Es and yields compared to the last 5 years, have excellent growth figures (revenue and earnings) averaged over the last 10 years, sport yields of 3% or better, and if their future DGR is anything like the last 10-15 years, DDM analysis would suggest they are currently selling below fair value. Haven’t done a full dive yet, but first cut financials seem okay (no crazy debt levels anyway). Cummins is the only one I’ve heard of though. I’m reading up on the other three to make sure that a high DGR assumption is reasonable and not just extrapolation of past success. (I never assume more than 8%, but these all need to be 7%+ to be below fair value based on DDM)

    Happy Hunting!

  174. DM,

    You have some solid companies on your list and I’m also looking at CAT for an investment, but I keep wondering do you concider adding to old positions before looking for new ones. I’ll remind you of a quote from Buffett’s 1994 shareholder letter I saw on Marketwatch today: “Before looking at new investments, we consider adding to old ones. If a business is attractive enough to buy once, it may well pay to repeat the process.” I like this one 🙂

    – Ville

  175. Jacob,

    Appreciate that. Thanks so much for the readership. 🙂

    Sounds like you’ve got some solid stocks there to do some further DD on. That’s really where a lot of the fun lies. The DD and shopping process is half the fun. Collecting rising dividend income is the other half. Looking forward to the day when it’s all the latter, but I’m certainly enjoying the former right now during the accumulation phase.

    Happy hunting to you as well!

    Cheers.

  176. Ville,

    Definitely. If I see a stock in my own portfolio that I think is attractively priced AND I have room for it at the time, I’ll absolutely consider adding. And I do quite often.

    Many of my recent purchases involved adding to existing positions: EMR, DIS, NOV, UNP, WMT, TROW, and OKE are some recent examples. And, of course, I averaged down on CAT quickly. It’s just weighing one opportunity against another, but I’m also not artificially/arbitrarily limiting myself to some predetermined number of positions, which opens my universe up pretty dramatically.

    Take care!

  177. Good incite Divmantra! I personally bought UTX last week and am looking forward to seeing what the company will do, looks really solid. Also have CAT on my watch-list although I’ll be waiting to see if I can snag it at a more affordable price.

    -Bryce

  178. Bryce,

    Awesome! I really, really like UTX. I liked it at $99, so I like it that much more down here where it is. Highly likely to add to my position in September.

    Keep rolling that snowball! 🙂

    Take care.

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