My Stock Watch List For June 2015

lookingFresh off of a little break for the Memorial Day weekend, I’m back to thinking and writing about high-quality dividend growth stocks.

Well, I should say back to writing. I’m always thinking about this stuff.

Specifically, I’m thinking about what stocks right now look attractive to add to the Freedom Fund. Since this portfolio of mine will be one day literally paying for my freedom by generating enough dividend income for me to live off of, it’s in my best interest to stuff it with the best businesses at the best valuations I can find at any given time while still keeping diversification in mind.

Lower valuations usually come with higher yields (relative to the yield you’d get at a higher valuation), since price and yield are inversely correlated. And great businesses tend to routinely grow their profit, with that rising profit allowing for rising dividend payments. Finally, diversification acts as a great safety valve, ensuring that increasing dividend income should continue to flow even if one company or one industry experiences short-term or even long-term issues.

As such, I’m listing some stocks here that all seem to be trading for pretty solid values. I also happen to think that all of them demonstrate enough quality – both quantitatively and qualitatively speaking – to warrant interest, and it appears all are poised to continue growing their respective dividends. And I currently have room in the portfolio for all of them. Keep in mind, however, that these stocks may not be suitable for your own portfolios. This list is obviously customized to my own needs. That said, I think many of the stocks I’m about to list offer something to like for almost any investor.

I’ll start by noting that my primary interests and big ideas this month will likely seem repetitive.

I am first and foremost interested in adding to stocks that I’ve recently been buying. I initiated a stake in Union Pacific Corporation (UNP) about three weeks ago and then shortly thereafter averaged down. That stock is still in my wheelhouse, so I am very likely to add to that name once again this coming month.

W.P. Carey Inc. (WPC) and Omega Healthcare Investors Inc. (OHI) are a couple of REITs I’ve been buying up lately, and both are also still trading around the price I recently paid. So I remain interested in those stocks as well.

Apple Inc. (AAPL) is another stock that remains on my list. I initiated a very small position back in early April, before they announced their most recent blockbuster quarter. AAPL is on the upper end of what I’m willing to pay, but I’d love an opportunity to double down here. I used up a free trade in my Scottrade brokerage account to initiate that small stake and I’ll likely use another to double the size of that position. Great brands, super loyal customers, and just fantastic fundamentals across the board. Not really much to dislike there. I’d love a cheaper price, but that’s the same tune I’m always singing.

However, my ideas don’t end there. Let’s see what else is catching my eye right now!

Travelers Companies Inc. (TRV)

This is a stock I’ve been watching for some time now. Much to my chagrin, I’ve watched it mostly increase in price over the last year. But a small pullback since the middle of April is opening up a potential chance to finally pull the trigger. I love the insurance industry. It’s an industry that’s been around for a very long time and will likely remain profitable for the foreseeable future. It’s also an industry that I’ve previously mentioned wanting more exposure to. Travelers would give me diversification in the industry due to its exposure to P&C, whereas my current major insurance holding in Aflac Incorporated (AFL) offers primarily supplemental insurance. TRV was on my watch list back in September 2014, but I never pulled the trigger. Might be time to rectify that.

I just recently penned a piece on TRV’s fundamentals and valuation, concluding that the quality is high and the valuation is attractive right now. Trading for a P/E ratio of 9.96, its valuation appears to be much more attractive than many other major P&C insurers I follow. The yield of 2.38% is in line with its five-year average, but well above that of the broader market. TRV is building up a nice track record regarding their dividend – they’ve increased it for the past 11 consecutive years; I currently see no reason why that streak won’t continue. And with a 10-year dividend growth rate of 9.5%, the dividend metrics here are quite appealing.

Starbucks Corporation (SBUX)

Although it’s not my top idea right now, this stock offers a lot to like. Another name I’ve watched relentlessly rise in price, Starbucks operates the largest coffee chain in the world. A great and seemingly unassailable brand, strong customer loyalty, corporate awareness of and focus on the customer, and a product that people enjoy all bode well for continued success. It seems unlikely I’d have enough capital to stretch beyond the stocks I’ve already mentioned above, but SBUX is a company I’d love to own equity in at some point. I occasionally write at a Starbucks that’s within walking distance from our apartment, and that place is absolutely packed every single time I go there. I like that.

The valuation appears at the very upper end of fair. I think a case could be made it’s worth up to $50 per share, but it’s slightly beyond even that. I never mind paying a fair price for a great business, but I also don’t like (or recommend) overpaying. The P/E ratio is 30.32, which is strong even for a company growing at a rapid clip. And the yield of 1.24% doesn’t exactly get my blood pumping. But I suspect they’ll continue to grow their dividend for many years beyond the current five-year track record they’ve already built. Over that last three years alone, the dividend has grown at an annual rate of 25.2%. Great brand, great business, and great dividend growth. And it’s easy to understand how they make money and how they’ll likely continue to make money. But the valuation is a bit of a stretch here. Nonetheless, it remains on my mind.

Gilead Sciences, Inc. (GILD)

This one’s a dark horse, but it’s recently popped up on my radar. I don’t have any exposure to any pure-play pharmaceutical companies, let alone biopharmaceutical, due to my longstanding concerns over drug pipelines that have to constantly remain robust and the expiration of patents that can send profit into a free fall. That said, our global population is increasing in size and age. And increasing wealth across the board means increasing access to high-quality medical care and associated pharmaceuticals. Moreover, there are still a lot of diseases and medical issues that need attention, money, and treatments. I also recently discussed that my overall allocation to high-quality healthcare stocks is below what I’m aiming for, so I’ve got some room to ramp up exposure in this area of the economy.

GILD just recently initiated a dividend (and a significant stock buyback plan), so it’s not at the top of my list. But the company’s recent growth is nothing short of breathtaking. The runway for growth seems to be sustainable due to the fact that a significant number of their drugs, like blockbuster Sovaldi, have patent protection for more than a decade. The stock yields only 1.54% right now, so one would have to hope that management remains committed to growing the dividend. However, a lowly P/E ratio of only 12.69 (due to rapidly expanding EPS) seems pretty attractive for a company growing so fast. For perspective, EPS has grown at a compound annual rate of over 37.08% over the last decade, though a substantial portion of that growth happened just recently. This is a very interesting stock.

Conclusion

So those are some of my top ideas right now. I kind of listed them in order, meaning I’m highly likely to buy more UNP, OHI, AAPL, and WPC before buying anything new. But I do think TRV is very interesting here as well. It’s unlikely I’d have capital left over for SBUX and/or GILD after all of that, but I do like both businesses due to what I see as a lot of potential for future growth. Amgen, Inc. (AMGN) is another I’ve been looking at a bit (in the same vein as GILD), but the valuation and growth seem to favor GILD.

In addition to these ideas, there are a number of stocks, like Diageo PLC (DEO) and Archer Daniels Midland Company (ADM), that I remain interested in from prior watch lists. I’m also strongly considering adding to my position in T. Rowe Price Group Inc. (TROW) as the stock is near the same valuation as it was I initiated my stake in the company a couple months back. Franklin Resources, Inc. (BEN) is another great stock that I’ve been watching, which would complement TROW quite well. As always, so many stocks, so little capital!

Full Disclosure: Long UNP, OHI, WPC, AAPL, AFL, and TROW.

What’s on your watch list for this month? Any high-quality dividend growth stocks out there that are particularly attractively valued?

Thanks for reading.

Photo Credit: bplanet/FreeDigitalPhotos.net

Note: Affiliate link included.

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175 Comments

  1. Thanks for the list Jason. I’m looking to average down on UNP as well. I’m also very interested in DEO and ADM. Hope you have a great June!

    Ken

  2. For the past year or so $DEO has been solid around the $108-109 range. It’s hit that about three times and always bounces although it’s been lower highs each time. I initiated a $SBUX position about a month ago. Also initiated a $WMT position in the past week or so. Adding to $JNJ below $100 and $PG below $80.

  3. Hope all is well, Jason! Great looking list here, thank you for sharing. I’ve found it challenging to commit to anything in May so far, but my cash position is getting too big for comfort. Gotta pick something soon. I’m really liking UNP a lot and am pretty sure I’ll pull the trigger here even if it means barely missing the ex-dividend date. I’ll be eagerly reading these comments too for any other ideas! Take it easy my friend!

  4. GILD is one of the few individual stocks I have because I bought it before I got my current job, where I’m not allowed to invest in individual companies. Glad you like it too!

    As for Travelers, do you typically use P/E multiples to value insurance companies? I typically see price/book.

  5. Thanks for sharing your watchlist, Jason. Some of those stocks are also on my watchlist and my investment $s are looking for a new home 🙂

    Looking forward to what you buy in June.

    Best wishes
    R2R

  6. Jason,

    Apple is my favorite on your list, even if I will not buy it based on strategy of keeping our money on the Swiss market. I am dreaming that one day they will quoted on the SMI… ok that will never happen.

    Looking forward your next buying post… and see which one you picked!

    Have a great week.

    RA50

  7. I know that I’m off topic here… but what do you think about one of your core holdings, and I talk about Walmart. The stock value came down from from 90 in January to 75 this year. I thought about buying with a Dividend north of 2.5 %… well… prior to look at dividend growth. Here are the numbers:

    02.12.2015 Cash 0.49
    05.08.2015 Cash 0.49
    06.05.2015 Cash 0.49
    11.03.2015 Cash 0.49
    06.08.2014 Cash 0.48
    07.05.2014 Cash 0.48
    07.03.2014 Cash 0.48
    04.12.2013 Cash 0.47
    07.08.2013 Cash 0.47
    08.05.2013 Cash 0.47
    08.03.2013 Cash 0.47
    05.12.2012 Cash 0.3975
    08.08.2012 Cash 0.3975
    09.05.2012 Cash 0.3975
    08.03.2012 Cash 0.3975
    07.12.2011 Cash 0.365
    10.08.2011 Cash 0.365
    11.05.2011 Cash 0.365
    09.03.2011 Cash 0.365
    08.12.2010 Cash 0.3025
    11.08.2010 Cash 0.3025
    12.05.2010 Cash 0.3025
    10.03.2010 Cash 0.3025
    09.12.2009 Cash 0.2725

    Since march 2013 virtually no growth. Should I invest my money elsewhere? What are your thoughts?

    cheers

    Stef

  8. I was surprised to see GILD on the list, but it makes since after your explanation.

    Starbucks is one of those places I rarely go to because I don’t understand why people are shelling out $5+ for a coffee, but every time I drive by the couple where I live, they are packed!

    It looks like you have a lot of choices to potentially put your capital to work in June!

  9. Jason,
    Yahhh, Starbucks and Gilead. These are two of my favorites right now. Starbucks Asian expansion and push of tea shops and tea brands stateside make me excited for their ability to continue a long tail of growth off an already broad base of stores.

    Gilead has the makings of what a Dividend Aristocrat will look like in twenty years. Recently initiated, the low payout ratio and cash flow from Harvoni and Sovaldi mean they have several years to enhance their product portfolio–which already has some half-dozen drugs HIV & Hep C drugs in Phase III.

    Thanks.

    Eric

  10. Looking to add to positions in June that I initiated in May – OHI and CAT are at the top of my list.

  11. Of course, all solid names any which way you look at it which is why you find the above in pretty much every DGI portfolio. Like you, going into June, I will most likely be adding to positions that I already have as the last month or so saw me initiate several new positions with ADM, DOV, HCP, HCN and VTR. I have to say that I do like ADM from the names mentioned and have had TRV on my watch list for a long, long time as well but also never pulled the trigger. There still are some great values to be had even though many names are expensive. I have a feeling though that REITs will be popular again as interest rate chatter from the Fed and bond yields continue to grab headlines and will give us all better REIT prices going forward. Thanks for sharing your potential picks.

  12. As an FYI you can invest fee-free in SBUX using Loyal3, so if you can only purchase SBUX a little at a time, that is an option. I don’t really care for SBUX’s corporate awareness. They have some practices that I don’t like, but I don’t really care about corporate ethics. If I see a company at a good value, I’m buying into the company. I’m looking at getting some SBUX myself using Loyal3, because I can only invest in small, but frequent, increments.

  13. Keep an eye on CB too. It’s a similar high-quality business to TRV and has even kept its combined ratio even lower than TRV these past couple years. I would love to eventually own both.

  14. I like SBUX but unclear about its growth looking forward. With its low payout ratio SBUX should continue to raise its dividends moving forward.

  15. Adam,

    Agreed. DEO looks pretty solid around that $110 area or lower. It’s right about there right now, which gives it a yield north of 3%. I like that.

    All great companies there. SBUX is one that I really missed out on as it’s continued to run up. But it appears there’s still plenty left in that tank.

    Thanks for sharing. Keep it up!

    Take care.

  16. George,

    Absolutely. If I didn’t already own enough NSC, I’d be on it here. In fact, I think many of the major railroads are pretty attractive right now. CNI is another I’d love to own.

    Cheers!

  17. Ryan,

    Too much cash is a great problem to have, my friend. 🙂

    Have fun shopping over the course of June. Sounds like you’ll be in a great position to really pick your spots.

    Best regards.

  18. Professor,

    Yeah, valuing insurance companies (and other financial companies) using book value is somewhat common. Although, to me, a business is ultimately worth all the cash flow (via dividends) it can generate from now to eternity, discounted back to today. Earnings growth should drive dividend growth and the stock price over the long term. So I think the P/E ratio is pretty relevant there.

    GILD is impressive, especially lately. They’re doing quite well with HCV and HIV treatments. Long-term patent protection bodes well there. The dividend history is almost non-existent, so I’d be making a pretty big concession. We’ll see. 🙂

    Thanks for stopping by!

    Take care.

  19. R2R,

    No problem. Hope it provided some value. 🙂

    June should be fun. We’ll see how it goes, but I’m looking forward to staying pretty active. Have fun shopping over there!

    Best wishes.

  20. RA50,

    Apple has a great brand. The customer base is extremely loyal, which is wonderful to see from the perspective of an investor. Wish I would have invested a while ago, but it is what it is. The stock just didn’t make sense for the me of a few years ago. Regardless, I’ve done well without it.

    Thanks for all the support. Can’t wait to post some buys here pretty soon. 🙂

    Hope you have a great week as well.

    Best regards.

  21. Hi, I have ARLP and recently i bought more ARLP. What do you think about this stock? Many thanks

  22. I prefer Amgen over Gilead though you are right Gilead is cheaper based on valuation and future growth, GILD’s EPS had been astoundingly impressive due to their Hep C drugs.

    If NSC and UNP continues to go down I might add some shares especially NSC hitting the 52 week low and offers the better entry yield for me, although UNP has the higher growth I believe.

    I read your piece on Daily Alert about TRV and the valuation is very impressive.

    Still not considering any energy stocks at this moment?

    Thank you for sharing your watch list Jason and take care!

  23. Stef,

    Right. WMT’s dividend growth over the last two years has been nothing short of unimpressive. That’s one of the reasons why I haven’t bought any more stock in quite some time.

    But I just took a quick look at WMT not too long ago:

    http://dailytradealert.com/2015/04/22/this-stock-has-raised-its-dividend-for-42-years-in-a-row-3/

    I don’t think it’s cheap here, nor do I think it’s particularly expensive. However, future dividend raises will have to be substantially higher than what we’ve recent seen to warrant the current valuation.

    Hope that helps!

    Take care.

  24. R2R,

    GILD would definitely be a dark horse. But the fundamentals are really out of this world. It concerns me when I see such radical growth over a short period of time, but the runway seems pretty solid there.

    Yeah, I used to never go to Starbucks. I never found the appeal in dropping a bunch of money on a coffee that would be gone in 10 minutes. Seemed like a total waste to me. Still does, really. But I’ve been more interested in getting out of the house to write since staying at home every day becomes a bit of a bummer. I could go to the library for free, but it’s not the same vibe. I do know that the Starbucks across the street is absolutely jammed every single time I’m there… and I’m there for hours at a time. Really crazy.

    Definitely a lot of choices. More choices than capital, which is a first world problem for sure. 🙂

    Thanks for dropping by!

    Best regards.

  25. I love reading your watch list posts. I like Starbucks too although there are not as many of them near where I live because other chains seems to be more popular.

    I trade in the UK market and I am looking at Legal and General, Banco Santander and Vodafone to name a few.

  26. Eric,

    Definitely agree with you on both stocks. You’d think that the amazing growth (in both underlying operations and the stock prices) would mean limited upside from here, but I actually think the long-term growth is absolutely intact for both. SBUX has that base of stores which should mean the expansion of FCF as capex drops, although expanding food sales may limit margins. Nonetheless, I’m very excited. Great potential. Great brand.

    GILD has a lot going for it as well. The cash flow is incredible. I’m excited about their prospects. The stock could easily double from here if they continue to grow even half as fast as they recently have, so there’s potential. We’ll see.

    Thanks for sharing your thoughts!

    Best regards.

  27. John,

    I’m right there with you in regards to adding to recent purchases and OHI. Both sound like good ideas to me. 🙂

    Have fun deploying that capital!

    Cheers.

  28. DH,

    I certainly hope you’re right about REITs, though a lot of the research I’ve run across shows that they actually perform quite well as a group even when rates are rising. Rising rates means the overall economy is doing better, which bodes well for economic growth, increasing rents, and an expanding tenant base. Nonetheless, I hope for even better values. 🙂

    Thanks for stopping in!

    Best wishes.

  29. Adam,

    I’m not a fan of Loyal3, but that’s great to know there regarding SBUX. I know they offer a nice roster of stocks over there, though the overall pickings are quite slim relative to the whole market.

    Best of luck with those small purchases. They absolutely add up over time. 🙂

    Take care!

  30. cwalczaksd,

    Definitely. CB is a fantastic insurer. The valuation isn’t as attractive as TRV right now, but it’s one I track. I imagine it’ll find its way in the portfolio at some point. I’m right there with you in regards to owning both. 🙂

    Thanks for the suggestion!

    Best wishes.

  31. Tawcan,

    I think SBUX’s dividend will continue to grow at a very handsome rate. S&P Capital IQ is predicting 18% compound annual growth for EPS over the next three years. That underlying profit growth in combination with the low payout ratio bodes quite well for the dividend. International expansion, diversification of offerings, and the raising of prices all offer a lot of growth potential. We’ll see how it goes! 🙂

    Cheers.

  32. FFF,

    I like both AMGN and GILD, though I think GILD is the better buy right now. AMGN has built a great dividend growth culture in a short period of time, however. GILD is still unproven there, so that’s something to be mindful of.

    I’m still not particularly interested in any energy stocks. Again, that’s partly due to my strong exposure there. The other part of it is that I don’t think the valuations are all that great across much of the high-quality stuff. I’d like some more Exxon, but the forward P/E ratio is almost 16. We’ll see. If XOM continues to drop, I might average in a bit. But I’m not overly excited about energy here.

    Thanks for stopping by. Have fun shopping in June! 🙂

    Best wishes.

  33. Jason,
    For Apple- look to Loyal3! I’m completely satisfied so far. 100% profits. Up 6% with SBUX so far, I keep thinking that wouldn’t be the case through Scottrade. You can buy fractional shares, and with you being long, you don’t have to worry about the batch trade. If you have the funds in your account and make the trade before 2pm, it will go through that day. It has a simple interface, but again, for ZERO costs, you should look into it for APPLE purchases.

  34. dzogen,

    Yeah, SBUX isn’t cheap. I think it’s on the very upper end of what I’d be willing to pay. Wouldn’t mind establishing a small position and then seeing where it goes, however. It could easily grow into its valuation quite quickly and then beyond it. But could just as easily fall quite heavily in a broader correction (as would most stocks). Would love to see the latter scenario play out. 🙂

    Take care!

  35. Laura,

    Thanks so much! Hope you found some value in the ideas. 🙂

    I’ve held Vodafone for quite a while now. Wish they would have been able to hold on to VZW, but I knew that was going to change at some point.

    Good luck making the right choice(s) for your portfolio!

    Cheers.

  36. Brian,

    Yeah, I’ve been open before in regards to not being a big fan of Loyal3 (or other newer, relatively limited services). But I’m glad it’s working out for you thus far. Keep averaging your way in! 🙂

    Cheers.

  37. I’m just learning to value companies and stock. BEN seems attractive right now. What are your thoughts?

  38. Just curious…

    Are you concerned about having too many stocks?

    I am an avid reader of seeking alpha and many do not recommend owning over 30-40 stocks. They say that the benefit of diversification is lost after 40 or so stocks and that one loses the ability to stay up to date on the intricacies of each company.

    I myself have about 70 and I get paranoid about having this many but when the market gets slightly overvalued, I have a hard time adding new money to the great companies I already own and then start looking to add new value stocks.

    I think it is extremely easy to manage and stay up to date on 70 stocks with the use of notifications from the seeking alpha app on my I-phone and the internet in general. I think this old philosophy is from a time when the internet was not available and thus it definitely would be difficult to manage a large number of stocks.

    Would love to see an article/your thoughts on the right number of stocks for a long term/dividend growth portfolio!!!!

  39. Hey Jason,

    Last night I was digging into David Fish’ CCC list to add both ‘yield’ and ‘DGR-3yr’ to my Watch list. I’m currently in the process of evaluating my first 10 months of DGI blogging and the purchases that came with that. After my list was completed I felt like I needed more stocks on the list. This is where I found the exact same stock you are writing about..

    T. Rowe Price Group Inc. (TROW)
    Their double digit growth numbers in the entire past decade sure looks very promising, to say the least.
    The 2.61% yield that comes with this ever growing Business Equipment giant is just a great addition to the future growth.

    Thanks for the post!

    Best wishes, DfS

  40. Mike,

    I like BEN quite a bit. I mentioned it above. However, TROW has a much higher yield and better fundamentals across the board. BEN has the lower valuation, which seems to be somewhat warranted. I like both, but prefer TROW. Hope to own both at some point, as they do differentiate themselves.

    Best regards.

  41. JM,

    “Are you concerned about having too many stocks?”

    The short answer is no.

    The long answer:

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

    “Would love to see an article/your thoughts on the right number of stocks for a long term/dividend growth portfolio!!!!”

    Like I mention in the article above, there is no “right” answer. It all depends on the individual investor. Some find 30 or 40 more than enough. Some like 100. Peter Lynch was managing more than 1,000 at one point. Buffett has most of BRK’s common stock portfolio in four. But I look at it from the perspective of dividend income diversification and safety. And if one stock out of 20 eliminates its dividend, you’re out 5% of your income (assuming equal income weight). If you own a portfolio of 80 stocks, you’d have to see four dividend eliminations to see the same net effect (with the same assumptions). I prefer that safety. And there are far more then 30 or 40 great businesses in the world. I see no reason to artificially limit oneself.

    Hope that helps!

    Best wishes.

  42. Also,

    Are you working on an app for smart phones yet? Would love to be able to read your site with that convenience!!!

  43. DFS,

    Agreed. TROW is a great business across the board. I’m hoping to add to my position at some point here in the near future. The fundamentals are really outstanding, with all of them being at or near the top of the industry. Very excited about their future prospects, though I’d keep in mind that their AUM depends a lot on asset prices. So a big swing in the market could cause a big swing in their results. That said, they did quite well during the crisis. 🙂

    Keep up the analysis!

    Best regards.

  44. Jason,

    Great list here. Lanny is a big fan of SBUX and he has turned me into a believer haha You are correct, their multiple is high and the yield is low, but you have to love the recent dividend growth. That, coupled with the rapid growth and the fact that SBUX has a strong customer base that gladly returns frequently, might justify purchasing the company at a premium. But that is up for debate. For now, they are on the outside of my Watch List as I prefer a few other stocks, such as ADM and JNJ, at the moment. Interesting inclusion of GILD, I like the bold pick there. I’ll have to look into them more now that they popped up on your radar. Thanks for the tip off

    As always, thanks for putting this list together!

    Bert

  45. JM,

    I don’t know of any small blog that has an app specifically designed for the site, but, no, I don’t have any plans for that. The site is mobile responsive, so it plays well with mobile devices. 🙂

    Cheers!

  46. Bert,

    No problem. Hope you found some value in the ideas.

    ADM and JNJ are strong picks as well. If I didn’t already own 100 shares of JNJ, I’d be all over it. One of the most consistent companies out there. And I love their breadth.

    Definitely take a look at GILD. It’s like a growth stock and a value stock all wrapped up into one, with a nice little dividend in there as well. An interesting stock. Great prospects.

    Thanks for stopping by! Have fun over the coming month. 🙂

    Best wishes.

  47. Say, Jason,
    Do you have any tips for evaluating the balance sheet of an insurance company? I looked up TRV real quick and I see $69B of long term investments and $70B of “other liabilities.” So is that $70B of float? What does that mean exactly?

    Thanks.

  48. Grant,

    This post on Investopedia gets you started, with additional links for further reading:

    http://www.investopedia.com/university/fundamentalanalysis/fundanalysis7.asp

    For all financial statements, the best place to go is the company’s financial reports. The 2014 annual report breaks down liabilities as follows (in millions):

    Claims and claim adjustment expense reserves …………………….. $ 49,850 $ 50,895
    Unearned premium reserves ………………………………… 11,839 11,850
    Contractholder payables …………………………………… 4,362 4,328
    Payables for reinsurance premiums ……………………………. 336 298
    Debt ……………………………………………….. 6,349 6,346
    Other liabilities ………………………………………… 5,506 5,299
    Total liabilities ……………………………………… 78,242 79,016

    The first column is FY 2014; the second is FY 2013.

    Source: http://investor.travelers.com/Cache/1001196496.PDF?Y=&O=PDF&D=&fid=1001196496&T=&iid=4055530

    Cheers!

  49. Great watch list and some decently priced choices to take advantage of for the long-term. I have small stakes in both GILD and SBUX and intend on increasing shortly (after today, some nice dips to take advantage of). HSY is one I want to hold a significant stake is as well and currently my first choice to pounce on. One of those companies that I never plan on selling while it slowly grows and churns out cash in the background.

  50. this is a very good list, thanks for putting this together.
    Glad to hear you are warming up to GILD – I had mentioned this to you after they announced their dividend.
    I have a starter position, and would look to adding more in low 100s

  51. I see that you already own some RDS.B. With a yield north of 6%, I thought I might see that on your watch list too.

  52. Hi, Jason
    In my radar I have Southern Company, Colgate-Palmolive and Emerson Electric. What do you think about utilities like SO o Duke Energy? Risk???
    In Europe, looking for Bayer, Munchen Re, Siemens.
    Insurance I recomend you ALLIANZ. Great Company!

    Cheers from Spain.

  53. Hi Jason. I was hoping you could answer a few questions.
    Will you follow the 4% safe withdrawal rate I hear so much about once you get to a point where you are using your dividend payouts to live off of?
    Do you have any concerns about the possibility of an equity bubble or are you so long term (10-20 years +?) that even a 20 to 30 percent drop in the market is somewhat of a non-issue for you, and if so, are you actually looking forward to a dip because of the opportunity to grab some bargains?
    I ask because I have put a sizable amount of money into dividend stocks in the past few months and, due to the fact that I have always been more of a short term trader, am feeling a little uncomfortable with this super long term approach, especially at the levels I got in at. I guess the big question I have is, as long as dividends remain consistent and/or growing, is the stock price viewed as somewhat irrelevant year over year?

    Thanks in advance,
    ND

  54. I’m looking into adding some defense industrials. Any thoughts on UTX, LMT or NOC?

  55. Dividend Mantra,

    Great list of stocks there. SBUX is always packed up here in Canada, even with Tim Horton’s close by. These coffee businesses are cash cows.

  56. BidAsk,

    Nice move over there with small stakes in both SBUX and GILD. Great (but very different) businesses, from what I can see. 🙂

    I hear you on never selling. I hope to never sell any more stocks at all going forward. We’ll see how well I do with that.

    Thanks for dropping by.

    Cheers!

  57. Joel,

    Yeah, I’ve never been real excited about pure-play pharmas. I’ve seen a few now struggle over many years after big drugs go off patent, or when the pipeline just doesn’t produce. So it’s a tough business. But both AMGN and GILD have done well, are doing well, and appear well positioned to continue doing well.

    I’d love to see GILD drop below $100. Not sure if we’ll get there (seems more likely to go up than down), but I’d be a buyer for sure.

    Best regards.

  58. Jim,

    Not a real huge fan of Shell, all in all. I like spreading my bets across many of the supermajors so as to avoid black swan risk, but Shell’s fundamentals oscillate from poor to average. But beyond that specific stock, I’m overexposed to energy as a sector. If I see a really compelling opportunity, I’d be on it, but I don’t see anything that really pops out at me beyond what I’ve already purchased in the past. However, like I mentioned in the post, my opportunities will probably vary from yours. If you are light on energy, then it might make sense to start averaging in here. But Shell’s valuation is stretched, historically speaking.

    Best wishes.

  59. Javier,

    Colgate is a great company. One I never got my hands on. Hope to at some point here. EMR looks pretty attractive right now as well.

    I’m not a huge fan of utilities in general, though I think SO is one of the better choices in the industry.

    I recently quickly discussed why I have very little utility exposure:

    https://www.dividendmantra.com/2015/05/sector-allocation-as-it-pertains-to-dividend-growth-investing/

    Happy shopping over there. Always fun to deploy capital across high-quality dividend growth stocks. 🙂

    Cheers.

  60. Hey Jason,

    Thanks for informing us of your watch list!
    Honestly I find these posts some of the most helpful for me, just to give me a guide and some things to look into, so I actually really appreciate these posts.

    I’m very wary to invest in US companies right now, considering I live in Canada; and the conversion rate between the CAD and USD is a big 20% difference… However I am super, super interested in WPC and OHI so I’m having some trouble making up my mind here…

    Best regards,
    Dividend Beginner

  61. Nick,

    I’ll do my best. 🙂

    I don’t follow the 4% SWR. I plan on living solely off of the dividend income the portfolio generates, once that income surpasses my expenses. That should happen in about seven or so years.

    On your second question, I look forward to dips. Expensive stocks are the enemy of an asset accumulator. And since price and yield are inversely correlated, my goals are easier to accomplish when stocks are cheaper and yields are higher. If my portfolio immediately dropped in value by 30%, but my new capital became equally more effective, I’d be jumping for joy.

    “I ask because I have put a sizable amount of money into dividend stocks in the past few months and, due to the fact that I have always been more of a short term trader, am feeling a little uncomfortable with this super long term approach, especially at the levels I got in at.”

    Right. I think it’s important to be cognizant of your personality, psychology, and limitations. I get emails sometimes from people where they’re freaking out when the market drops by 5%. These people probably shouldn’t be in stocks at all. I view the dividend growth investing strategy as actually incredibly approachable when it comes to stock investing, as I’ve discussed quite a bit in the past. But even this strategy isn’t for everyone. Stocks are just too volatile for some. And those people would be wise to own up to that and make the appropriate moves.

    I know you asked very similar questions to the ones above before, and I did my best to answer them then (and now). You noted (back then) that most of your money was historically in a long-term bond fund. You may be best served to continue with that strategy, but only you can really answer that. 🙂

    Hope that helps!

    Take care.

  62. Steve,

    I think UTX is the best pick of those three by far. At least, right now it is. The valuation is the lowest of the three, historically speaking. And they’re broadly diversified, instead of relying too heavily on the US government. I think UTX is a great company. Seems about fairly valued right now.

    LMT is a solid company, though I don’t think the valuation is particularly compelling right now.

    Hope that helps!

    Cheers.

  63. IP,

    Thanks for the firsthand experience over there. Always appreciate the report from the “ground level”. 🙂

    SBUX will very, very likely be a bigger and more profitable company in 10 years. It’s just a matter of paying the right price today. It’s a tad expensive here, so I’d be stretching for it. We’ll see. I doubt I’ll have capital for it anyway. But just a great brand there.

    Best wishes!

  64. Thanks for sharing your list with us Jason, it’s great to hear what stocks others find appealing even if they haven’t pulled the trigger on any trades yet. TRV looks interesting, as you mentioned the PE ratio and dividend growth both look good not to mention they are crushing their peers in terms of EPS growth.

  65. DB,

    So glad that these posts help. Obviously, my interests and yours will probably be a bit different, but I think there are some compelling opportunities up there for investors across the spectrum. OHI and WPC will very likely both get some of my capital in June.

    Yeah, the exchange rate adds a layer of difficulty for you. Might make sense to concentrate more on domestic plays or stocks in other economies around the world. I don’t really follow the exchange rate, so I don’t know where it’s at or where it’s been. But I know I’d be a bit more interested in that if I were a Canadian investor.

    Best of luck making up your mind. I doubt you’ll go wrong either way over the long haul. 🙂

    Take care.

  66. Captain,

    Yeah, their EPS growth has been fantastic over the last decade, helped in large part by a significant share repurchasing plan. I went over that in my article referenced above, but I think they cut their outstanding share count in half over the last decade. Rising interest rates could be a nice little tailwind for them as well. It’s a solid opportunity here, in my view. I’m hoping I can initiate a position in early June.

    Thanks for stopping in!

    Cheers.

  67. I’m a happy owner all three of your on-deck stocks, GILD, SBUX and TRV. Recently bought DFS and GLW – while they don’t have the highest yields in the world they’re both super cheap, have good growth prospects and easily cover their growing dividends.

  68. hey Jason a good list. I am long AAPL and SBUX. I am looking to add around more share of AAPL around 125. On SBUX i have a good size position on it but if it pulls back would be glad to add to it. I see the dividend going up on both. enjoyed the article. have a great day

  69. All great picks there. Really liking UNP and I expect to add some to my portfolio soon. I still want to add another insurance company to my portfolio and I’ve been thinking CB so I’ll have to look into TRV. Theres so many great companies out there. I cant wait for the consumer staples to get back into better value because theres still several I want to add to my portfolio. ROST is looking good here too after the dip and im still looking at XOM as well. Thanks for the update.

  70. Do you watch for companies that are about to go through a rough patch and then pounce when a usually well performing stock takes a publicity fueled dive?

    For instance, if Johnson and Johnsons was about to run in to a PR nightmare over their new and heavily promoted diabetes drug Invokana would you watch the slide in price and then buy shares?

  71. Randall,

    Nice! Hope to join you as a shareholder in all three sooner rather than later. I imagine I’ll own a chunk of TRV pretty soon. 🙂

    Interesting purchases there. Tough to go wrong with any of the major card issuers. I’d love to own more V and maybe even add MA to the mix, but the valuations are a tough stretch (like SBUX right now). In addition, those yields aren’t exactly compelling.

    I hear TRV calling my name here!

    Best regards.

  72. michael,

    Thanks for sharing!

    I’m with you. I see each continuing to grow their respective dividend for many years to come. Two of the best brands on the planet. 🙂

    Cheers.

  73. JC,

    I hear you, my friend. More stocks than available capital. A good problem to have, but still a problem. Just gotta stay consistent and add what we can. 🙂

    Hope all is well!

    Best wishes.

  74. Jason,
    Nice list. I personally bought TROW today, plus added to positions in AMGN and GILD. I really like the valuations of GILD and AAPL, but AAPL has doubled since I bought it and is the third largest position (behind JNJ and PEP), so I don’t want to add more. AMGN and TROW also appear reasonably priced. All 4 are projected to have double digit earnings growth. Don’t think you could go wrong with any of them.
    Best of luck,
    Keith
    Long: AAPL, AMGN, GILD, OHI, SBUX, TROW, WPC

  75. beth,

    Absolutely. If a high-quality company hits a rough patch, I’m absolutely interested in buying on the way down. I’ve done that quite a few times now. TGT is a good example of that. I initiated a small position and then aggressively added into the $50s after the data hack was announced and struggles in Canada hit a fever pitch. I also bought a lot of JNJ back in the day when they were coming off of major recalls.

    The problem is separating short-term trouble from long-term problems with the business. That takes practice and we’ll never be able to tell the difference every time. But, generally speaking, I’ve found that the great companies are able to keep on moving through those rough patches. The key is to pay attention to the fundamentals.

    Best regards!

  76. Not sure if this post makes sense…but would def. want to get your opinion. I’m looking to invest a small amount on one of these stocks…

    NSC, UNP, BNS, ENB, WMT, TROW, TD, DEO

    Which one (only one) would you recommend for long term?

  77. Keith,

    Sounds like we’re on the same page there. Nice moves across the board. TROW is still trading hands for a solid value and the biotech firms are growing at a rather rapid clip. I just need to find about $10,000 in my sock drawer so that I can buy them all. 🙂

    Keep it up!

    Cheers.

  78. I feel that any problems at Johnson and Johnson’s would be temporary because they produce so many different products and one big fail of a new, heavily marketed wonder drug is opportunity for stock buyers. I will be watching.

  79. Harry,

    That’s a really tough call. I don’t know if I could just pick one. Depends on your risk tolerance, circle of competence, income needs, the portfolio you already have, and time horizon. The Canadian banks are the riskiest plays there, in my view. So I would rule them out right away when thinking about just one stock.

    I think the best values left are NSC, TROW, and UNP. So I would narrow it down from there. NSC is cheaper than UNP, but the latter sports better fundamentals almost across the board.

    DEO might be your lowest-risk stock of all, but I think the three I listed above provide better value at this moment. Again, just really depends on you.

    I’m personally most interested in UNP and TROW right now (from your list), which is due to my own portfolio’s needs and the opportunities I see available.

    Cheers!

  80. Man, this post might have the most stocks listed that you have ever had. A lot of solid choices there. I’m thinking of putting together a post just like this asking readers to make a decision for me… So many companies, so little capital.

    My choices I’m debating include: DLR, OHI, MO (overvalued but asking for target price), GLP, DPS, DE, PH, T and BA.

    Looking forward to see what you decide to do!

  81. I’ve been following TRV for months due to their incredible stock buyback record and concurrent dividend growth. I agree the current price is quite appealing! I will be looking to add fresh capital there soon as well. It would have happened last month but UNP was too good to pass up!

  82. ADD,

    Ha! You’re probably right about that. A lot of choices up there. I have a good feeling I’ll be pretty active in June, so I suppose the list reflects my enthusiasm. 🙂

    That’s a big list you’re considering as well. Tough choices. Always more stocks than capital, right?

    Have fun!

    Best regards.

  83. Patrick,

    Yeah, TRV’s buyback plan is incredible. They basically cut their share count in half over the last decade. That’s helped drive a lot of the EPS growth over that period since the top line was mostly flat.

    I hear you there on UNP. I put a good chunk of capital to work there. Hope to repeat that performance in June. 🙂

    Thanks for stopping by!

    Best wishes.

  84. Jason – here are two good companies for you to add to your watch list – BX, KKR. Enjoy! 🙂

  85. GILD is fascinating. Usually a company with that sort of growth rate would be trading at 30x earnings or something crazy like that. Finally declaring a dividend is causing me to take another look. I’m low on both health care and growth-type stocks so it would be a good addition, but the financials just seem too good to be true.

  86. Justin,

    Agreed. The valuation and growth almost don’t match. I think the valuation just hasn’t caught up to the growth quite yet. That and the fact that it’s hard to forecast where they’ll be in five or ten years because that growth has been so explosive. The runway seems to be quite long, however. Very interesting for sure.

    Best regards!

  87. I too recently initiated positions in SBUX and GILD. Although they have short dividend histories, I’m banking they can continue and grow their dividends with the mountains of cash they produce.

    Also been looking at REITs to supplement the O and DLR I own, and perhaps a railroad, although there are a few I like. Sometimes it’s tough deciding to deploy my cash reserves into stocks that are attractively priced now, or hanging on in the hopes div stocks as a whole drop in price if the Fed raises rates for an even better buying opportunity.

  88. I’m watching Nova Scotia Bank for this month. Seems to be going down nicely over the past month, hopefully that continues for a bit more. Dont think you need any info on that stock.

    Another one is Merchants Trust (LON:MRCH). Initial growth seems low (10yr CAGR for dividend is on 2,58%) and the stock is moving sideways for the past 2,5 years or so. But the yield is 4,82% and dividends increases are on a 33yr streak. All that on a P/E of 15 or so and 75% pay-out ratio for a company that exists for >125 years.. Their investments seem very solid, with mostly dividend paying blue chip companies like Shell, GlaxoSmithKline, HSBC, BP and the list goes on.
    I dont see many century old blue chip companies in the US. Outside of the US it might just be the only one. Let alone a company that give a nearly 5% yield and remains healthy doing so.

    Also keeping an eye on Unilever, IBM and Diageo. They go ex-dividend in August, so would be nice to pick them up beforehand.

  89. Muy buena lista para tener valores en el punto de mira, yo te sigo muy a menudo y tus valores también lo pongo en mi radar, pero yo tengo que ser más selectivo, mi liquidez no es infinita.

    Enhorabuena por todo lo que estas consiguiendo.

    http://lacasadeldividendo.blogspot.com.es.

    Aqui es donde inicio mi nuevo camino.

    Saludos Jason

  90. Hello Jason!

    …. next to “Recent Buy” my favorite read here! Having said that I must correct myself as my top read here is “Cash Flow is better than Cash” which is THE inspiration!

    Well, UNP 2,1%, AAPL 1,7%, SBUX 1,24%, GLD 1,54%, TRV 2,38% … mmhh … I guess I do agree with Dave van Knapp´s attitude in which he favors great companys with 2,7% yield minimum! Still, Dividend Growth Rate included leaves some cash to be desired IMHO.

    Therefore, I picked up another of your suggestion with TROW which nearly yields 2,7% (2,56%) and it seems good value for money right now! P/E 17,69 (5y ave 22), yield 2,55% (5y ave 2%)

    Thank you for sharing, because as usual I would not have found this pearl which joins my string.

    Best wishes
    Thorsten

  91. Look’s like a solid list to me.

    I am looking at increasing my exposure to insurance companies as well. In the short term, they should do well once interest rates rise. Over the long term I see there future as even brighter as more and more of the world’s population begin to insure themselves in one way or another.

    I recently opened a position in Legal & General here in the UK. I may build on that over time and my previous holding in Anglo-South African insurer, Old Mutual.

    Keep up the good work, Jason!

  92. I like the choices. AAPL, GILD and SBUX are my # 1, 4 & 5 holdings in terms of market value. I also have a bunch of TROW, OHI and WPC. I have no UNP but it has been on my watchlist for sometime, maybe this will be the month I get some.
    Happy investing.

  93. With respect to Gilead, I question why the PE is so low relative to other companies in the space. In my opinion this is a warning sign, and is not a sign of complacency in terms of the market not awarding the company a higher valuation. To me, this signals “pay attention”.

    The growth has been nothing short of stellar, so if this is the case, I ask again, why such a low PE relative to growth, and relative to others in the space. The answer, in my opinion, is due to more than 50% of revenue being derived from just two drugs. There’s huge concentration risk here, and while the past margins on these two drugs have been huge, the Abbvie deal with Express Scripts brings up the potential of margin erosion going forward.

    There’s a lot of ifs and buts surrounding the go forward picture, and there’s no reason why this can’t be part of a large diversified portfolio, but investors must be cognizant of the risks here before being allured by the low PE on its own (all in my very humble opinion).

  94. Averaged up big time on NSC. Added a lot to WMT yesterday. Have HSY and UNP on watch list to add this week. If PG drop by another couple % then I am very tempted to add on to that as well.

  95. I too have GILD and AMGN on my watchlist. I’ll probably start a small position in June, I need more healthcare stocks in my portfolio.

    I also have HOG (Harley Davidson) on my watchlist. They are down 16% so far YTD, a nice pull back for me to start a small position next month.

  96. Apple and Starbucks! You sound like me now! 🙂

    Buying a load of Apple way back in 2007 (Hello iPhone!) was the single most lucrative thing I ever did. I hold most of those shares to this day.

    The other dividend stock I own is Costco. I love the company. They hold themselves to very high standards (Munger himself is a director), have a super loyal customer base (SAMPLES!!!) and are growing at a healthy clip. As you pointed out a while ago, it’s an expensive one, but I’m OK with that.

    Oh, Costco has a history of issuing big-ass, one time dividends too ($7/share 2012 in and $5/share in 2015).

  97. Most jobs in professional services (think public accounting, consulting, banking, etc) have restrictions on what you can trade depending upon level (various restrictions for associates, managers, and partners which become more restrictive as you advance) as well as geography (offices you work in and clients at those offices) as well as the clients that you specifically serve.

  98. Hi DM

    Great list as usual
    Looking also at GILD and OHI
    BAX is another one I would like to own but not sure If it is more wise to wait after the split…

    Frank

  99. There are some nice ideas over there. I like the Gilead idea and I was looking sometimes on it, but not to closely. The suggested REITs are all good and there is nothing against to buy them. OHI is my favourite of them. I added a small position AAPL and they get more and more. I like this company and may be I will add one or two times more this year. UNP is nice but I will wait with them. TRV has not much yield and is for this price too expensive for me. SBUX is a company to think about but as you mentioned its quite expensive. I like the business modell and its very popular. You can find in Munich quite a lot of Starbucks. I have to think about this but I have no answer at the moment. May be you can´t do wrong with it. TROW is interesting.

    Next month I will not buy too many shares. I will buy DUNDF as a new position and may be more BBL so that I get quite near to my target of 250 BBL. I looked at the new SOUHV (South32) shares and they are at 8.32 $. I´m not sure if this was a good decision as I only had 100 BBL before the split. So I have a position with 800 $ and this is expensive to sell. So I can hold them only. May be there is a good dividend yield and it would be worth to add shares in the future – hopefully.

    At the moment I´m thinking of BX (at present I have 50 shares). This company developed quite nice (share & dividend) and I think they can get higher in the future. PM is very interesting, too, and I will add some in July. But on the other side Gilead is something which I should include as well. We will see….

  100. I recently initiated a position in UNP and NSC.. Good companies, which will likely be around in 100 years. GILD is one i need to research more. My dividend research shows a company initiating a dividend for the first time is more likely to do well. Very well actually.

  101. Wade,

    Nice moves there. I certainly love having a great base of companies with 25+ years of growing dividend payouts; that base forms the core of my portfolio. But I also love the idea of being able to invest in a company right as they start that track record, near the start of that long ramp. SBUX and GILD appear to be a couple of solid candidates for that.

    Best of luck deciding when to deploy that capital. I prefer cash flow to cash, so cash is generally burning a hole in my pocket when I have too much of it.

    Cheers!

  102. GoT,

    That’s pretty interesting. I don’t think Merchants Trust is available on one of our exchanges over here, but it seems like a pretty solid call from what you’re saying.

    “I dont see many century old blue chip companies in the US.”

    There aren’t many, but I can think of four or five companies off the top of my head that have been paying dividends for more than 100 years. Takes a special kind of company to make that kind of claim. And I own equity in three of them.

    Unilever, IBM, and Diageo are all nice choices as well. I’m looking at DEO as well. Fantastic brands there. And the odds of people consuming their products for another 50 years seems quite high to me.

    Have fun! 🙂

    Best regards.

  103. lacasa,

    I hear you. My liquidity isn’t infinite, either. But I think I’ll have enough capital for a few purchases next month. We’ll see how it goes. Always nice to have some solid ideas on deck. 🙂

    Thanks for dropping by!

    Take care.

  104. Thorsten,

    Thanks so much. Glad you enjoyed that article. It is a cornerstone of my strategy and belief system as it relates to investing and achieving financial independence.

    Yeah, some of these stocks won’t fit certain investors’ needs as it relates to yield. I generally like to see a yield over 2%, so some of those picks are betting on robust growth for decades to come. If I were older, it might be a tough bet, unless I were interested in growth plays and selling equity to pay bills (which I’m not). But I’m fortunate in that I can occasionally make these bets based on my age and situation.

    TROW is an excellent pick. It’s near my cost basis here, so I wouldn’t mind at all grabbing some more. The fundamentals are at or near the top of the industry across the board. And the growth is really surprising since it flies under the radar.

    Glad to be a fellow shareholder!

    Best wishes.

  105. TDD,

    Yeah, I love the insurance industry. TRV’s float is now greater than $70 billion. That’s a heck of a pile of low-cost capital there.

    I’m not sure about the future population insuring themselves. If the bulk of the population in the US in 2015 can’t insure themselves, I’m not sure why emerging markets will be able to do it in the future. But I do agree with Warren Buffett in that these self-driving cars could be a problem in terms of insurance. So that’s maybe something to watch when looking out another 10 or 20 years. But TRV isn’t a major auto insurer, which is one reason I like them.

    You keep up the great work as well. Best of luck with the recent purchase over there!

    Cheers.

  106. Rob,

    Nice! With those being among your top holdings, you’ve done well in terms of capital gains. And now all of them are paying a nice dividend as well. Gotta love that. 🙂

    UNP is a great railroad. That growth will likely slow at some point in the near future, perhaps significantly. But I think it’s an attractive purchase even if it slows by 2/3. The competitive advantages are enormous.

    Wish you luck with deploying your capital this month!

    Thanks for stopping by.

    Take care.

  107. Dan,

    Yeah, I hear you there. The growth has been stellar, but perhaps more relevant to the low P/E ratio is the fact that the growth has been explosive. More than doubling sales YOY and seeing profit quadruple takes some time to digest. But there is definitely risk there. I think the drug risk in terms of blockbuster drugs making up a significant portion of sales is something you see a lot of times with a lot of pharmas, which is why I’ve been hesitant to invest there. AMGN has a couple of major drugs. ABBV of course has Humira. So that’s just something you have to look at in terms of the patent protection, pipeline, and track record. And, like you mention, any of these companies should be part of a diversified portfolio. Someone would have done very well betting the farm on GILD a few years back, but that kind of foresight is impossible to come by.

    Thanks for dropping by!

    Best regards.

  108. AJ,

    PG is a stock I’ve wanted to buy more of for some time now, but the valuation (and growth) just hasn’t been there for me. But I’m hoping the initiatives regarding focusing on core brands really starts to move them in the right direction. Would love to see earnings finally start to move in the right direction again.

    NSC is a great railroad. I’ve been very happy with my stake there. Probably not interested in adding any more, as I’d like to eventually get UNP and maybe CNI around the same value, but just a great company. Looking forward to seeing where these railroads are 20 or 30 years from now.

    Cheers!

  109. Sam,

    I’m with you there on healthcare. It’s something I’m lacking as well. Not an immediate concern, but something I hope to remedy over time. And GILD seems like a solid long-term bet here. Not really digging the lack of dividend history, but this could be just the start of something great.

    HOG seems interesting. I’ve never really been a big fan of auto manufacturers, which would then trickle down into something like this. I’d be curious to know why the top line and bottom line have basically not moved over the last 10 years. And then you’ve got deteriorating fundamentals almost across the board. Could be a strong value play, though!

    Best of luck either way you go. 🙂

    Take care.

  110. Mr. 1500,

    I’m a little late to the party, but it seems like it’s still a very nice party to attend. 🙂

    Costco is a really great company. I remain concerned about the valuation and growth potential (those stores are quite large), but if I were a current shareholder, I’d be very happy holding on to my shares. I find it a tough sell to pay nearly 30 times earnings for a retailer, even a great one. But there’s no doubt they’ve done well with that business model. And those special dividends sure make the ride a lot more fun!

    Thanks for stopping by.

    Best wishes.

  111. Frank,

    Sounds like we’re on the same page here. BAX is another great company. I’m not quite sure I’ll be buying any more, but I think it’s a solid long-term pick.

    Have fun over there!

    Take care.

  112. olli,

    Yeah, SBUX is definitely expensive here. It’s been expensive for some time now. And one wonders if/when it’ll be less expensive. Not real sure, but I do think this is near the upper end of what I’d be willing to pay. No doubt the brand is something special, though.

    As far as South32 goes, they’ll be paying a dividend. They’ve already committed to paying out something like 40% of earnings in the form of a dividend. Won’t be much because it’s such a small chunk of the parent company, but that’s in addition to the BBL dividend. All in all, I find that quite nice. Very similar to what I saw with COP/PSX, where the parent company continued to pay out a significant dividend and then the smaller spin-off also started paying out a nice, but smaller dividend as well. We’ll see how that goes.

    Looks like you have a pretty lengthy shopping list over there. Just like me. Should be fun this coming month. 🙂

    Best wishes.

  113. DGI,

    GILD is interesting. Not one I’d usually be sniffing around, but the potential has caught my eye. Would love to get on something like that right as it begins a lengthy dividend run.

    I’m with you on UNP and NSC. They’ll likely be around for a very long time come. Looking forward to riding those trains for many years.

    Best regards!

  114. DD,

    Nice moves there. All three seem to be solid bets for the long term. I’m very interested in putting my capital to work in at least one of them this coming month. The more I look at them, the more I like them. 🙂

    Cheers!

  115. What is your though on WMT? I know they had disappointing dividend growth the last couple of years but their payout ration is still not that high and has room to grow. It is also the fifth largest position for WB’s portfolio. WMT is a kind of stock where you can mint your money. I would like you to do some analysis on it. And you always tend to ignore HSY every time I put in comment. This is a stock that always tread with higher PE but look how much wealth it is creating since its inception or trough out 80’s and 90’s and so on.

  116. AJ,

    I mentioned WMT in an earlier comment when asked about the disappointing dividend growth. I don’t think it’s particularly cheap or particularly expensive right now. I think it’s worth about $70 or so here:

    http://dailytradealert.com/2015/04/22/this-stock-has-raised-its-dividend-for-42-years-in-a-row-3/

    I’m not a huge fan of retailers in general due to low margins, almost non-existent switching costs, plenty of competition, and somewhat low barriers to entry. But WMT is one of my favorite retailers. Probably not a bad bet here, but I don’t think it’s a steal or anything. Its recent pullback from around $90 (which was too high of a price for this stock) means it’s more appealing here, but it’s still trading higher than its historical valuation.

    HSY is a great company. That’s one that I’ve heard recommended for a couple of years now, but I always found it too overvalued. The stock’s price has been mostly sideways over the last two years or so due to overvaluation there at the beginning of that period, while EPS has steadily marched upward. That combination has brought its valuation down quite a bit from very lofty levels. It’s a stock that almost always trades for a premium. 23 times earnings for a company that’s grown EPS at a 7% or so annual clip over the last decade seems a bit strong to me, though. They’ve grown about as fast as WMT over that period, but you see the difference in what investors are willing to pay for a dollar of earnings. Obviously, impossible to compare the two directly. Totally different business models with very different risk profiles. But the stocks I’ve been willing to pay more than 20 times earnings for lately have been growing quite a bit faster (DIS, V, and maybe even SBUX now). I don’t know. HSY doesn’t seem like a bad bet here. Again, not crazy about it. Its annualized return over the last decade is 6.28%, which is fairly low. I imagine some of that is due to chronic overvaluation. Great business model, though. Absolutely wouldn’t mind owning a chunk of it.

    Cheers!

  117. Hi Jason,
    I’m so excited! I bought 80 shares of Union Pacific, and it really made me feel like the old days, when I was playing Sid Meier’s Railroad Tycoon.
    I just love railway companies. In Europe we don’t have many of them.
    Ans Union just paid a 55 cents dividend, which adds to the fun. Thanks for the analysis on Union.

    Best regards from Holland!

  118. DM,

    I just had to comment. I’m ecstatic to see you put Gilead on your watch list!! My brother is a relatively new employee of Gilead for the past two years. He recommended that I buy the stock over a year ago and I’ve been reaping the benefits in that short amount of time. I had an inkling that a dividend was in the future this year and could not believe my fortunes when they announced it earlier this year. Gilead was the only non dividend paying stock in my portfolio and now I can happily say that my entire portfolio consists of only dividend paying stocks now!

    I can say with confidence that they’ll only continue to grow and expand rapidly within the next few years. They have many drugs in their pipeline and have set their sights on acquisition as well. I hope you’ll join me in being a shareholder soon enough!

    Melissa

  119. Thank you for the response Jason.
    At this point I’m long, strong and committed and your responses and great blog are helping me to stay focused on what really matters in this investing approach.
    As for market drops, does the philosophy change at all once someone is all in, meaning that they are not anticipating any funds in the future that may be used for additional purchases, or does it essentially just become, at least for the most part, a turn off the computer and check the positions every month type relationship, with no real concern for what the market as a whole is doing? I guess what I’m asking is, does anything change once there is no longer a buy into the dips type option available?
    I also wanted to ask your opinion on BDCs such as PSEC, GSBD & TCPC.
    Thanks in advance for your response.
    -Nick

  120. Nice post Jason
    TRV sounds pretty nice currently with decent growth and P/E. If yields spikes a bit up, I am a buyer 🙂

    Regards
    Dividend Freedom

  121. Dutch Guy,

    Ha! I know how you feel. I used to always gun for the railroads when I’d play Monopoly as a kid. They were easy cash cows. Funny how life changes but stays the same. 🙂

    Glad to be a fellow shareholder. I suspect we’ll do quite well over the next few decades with UNP.

    Thanks for dropping by from Holland. Keep it up over there!

    Best regards.

  122. Melissa,

    Your brother did right by you, that’s for sure. That’s fantastic. 🙂

    I anticipate being a shareholder in GILD fairly soon. It’s really just capital holding me back at this point, not interest. But June should be a great month for dividend income and I continue to work hard in other areas. So we’ll see. Could be a very busy month.

    I’d just hold that GILD and ignore the noise. They’re poised for a great run over the next decade or so.

    Cheers!

  123. Nick,

    That’s a good question. I suppose it depends on the individual. For me, it matters not. The psychology is either there or it’s not. The enthusiasm, of course, will change depending on whether or not you’re still accumulating assets. But the psychology doesn’t change.

    If the market corrects by 10%, Buffett’s common stock portfolio via Berkshire Hathaway will drop by about $10 billion. My portfolio will drop by about $20,000. I think you either have the fortitude to handle that volatility or you don’t. But I expanded on these ideas here:

    https://www.dividendmantra.com/2014/06/why-investing-new-capital-during-all-time-market-highs-doesnt-scare-me/

    As far as BDCs go, I’m not particularly interested. I keep things simple. And BDCs, in my view, are not simple:

    https://www.dividendmantra.com/2015/02/keep-it-simple-part-2/

    https://www.dividendmantra.com/2015/02/keep-it-simple/

    If you can’t quickly explain off the top of your head how PSEC makes money and how they’ll likely make more money 10 years from now, I would recommend not investing there. And if I’m not mistaken, PSEC just cut its dividend – during a period when most companies have been killing it. Doesn’t seem to bode well. I’d be careful when chasing yield.

    Cheers!

  124. DF,

    Thanks!

    Yeah, TRV is awfully appealing here. I also wish it had a higher yield, but it’s more or less in line with its five-year average. As an insurance stock, that yield is actually pretty solid. We always want more income, though. 🙂

    Best wishes.

  125. So as someone just starting out, I have been slowly building my portfolio. I would like to add more CVX or XOM at the current prices. But I keep going back to some of these companies with more growth potential (SBUX/V) even though I am paying a premium, but often wonder if prices will ever come back down. Any thoughts would be greatly appreciated.

    Great post! Thanks!

  126. Hey Jason,

    An interesting thought came across my mind while reading your response re: WMT. I wonder how much these companies that routinely increase their dividend keep inflation in mind. For the last few years, inflation has been under 2% (and more recently even under 1%), so a dividend raise over that is still pretty good.

    http://www.usinflationcalculator.com/inflation/current-inflation-rates/

    And if EPS is a lot higher than the dividend raise, then in the long run this would allow the company to save the money and give dividend raises in-line with inflation when inflation rates are significantly higher.

    Your thoughts?

  127. David,

    That’s really an individual call. But I look at value and quality first and foremost. So when I first started out with building my portfolio, I always tried to find the best one or two opportunities every single month and plop my cash down. Most of the time those ideas worked out great. Once in a while, however, they didn’t. And that’s really the same process I go through today, though I’ve expanded into what I call “Stage 3” stocks now that I’ve kind of got that rocket airborne. I would never knowingly buy into a stock if I didn’t think it was the best available opportunity for my capital at that time, knowing all that I know while keeping diversification in mind.

    I think your best best is just to value each business individually, since all of them offer quality. Value them with that growth in mind and then go with whichever one you think is the best opportunity and best value. Obviously, the oil supermajors have lower expectations on them (hence the lower valuations), but they also lack the ability to control their own destiny to a degree since their major products are commodities.

    Hope that helps!

    Best regards.

  128. Josh,

    Hmm, that’s interesting, but I think it lacks merit. I’ve never really heard a CEO mention inflation as it related to a dividend raise or really witnessed any correlation between inflation and dividend raises. In my view, it comes down to company performance, earnings visibility looking out over the foreseeable future, and competition for that cash. When inflation is quite high or quite low, that can affect company performance and hence the dividend growth. But I don’t think there’s a 1:1 ratio there.

    For perspective, WMT handed out an 18.2% dividend raise back in early 2013 and inflation wasn’t particularly high back then (as it hasn’t been in some time now).

    Cheers!

  129. Mantra,

    Everyone loves starbucks…. I bought it for someone’s portfolio that I manage about 4 years ago and wow… is all I have to say. It’s been an amazing stock, but I tribute that to being an amazing company, at the end of the day. Management is strong and knows what the customer wants or knows what the customers will want for the future, it’s astounding. Great dividend metrics that have!

    -Lanny

  130. Lanny,

    Even someone as frugal as myself enjoys the occasional iced coffee over there. 🙂

    Though, that’s mostly because I’ve been looking for opportunities to write outside of the house. If I were still at the dealership, I doubt I’d be in there… ever. Funny how your perspective can change over time with unforeseen life events.

    It’s been a great performer – both in terms of the stock and the business. And there still seems to be a lot of gas in the tank.

    Thanks for dropping by!

    Best regards.

  131. Hey Jason,

    Quick question im hoping you can help me with :D,

    Im currently looking to add industrials to my porftolio and im split between three stocks at the moment…

    GE, UNP, HON.

    which order would you personally rank these and what do you like/dislike?

    GE is a behemoth of a company but is in a slight transition

    UNP is a great “safety stock” but growth could be slow (and high debt but thats normal for that industry)

    HON i like quite a bit and is valued quite highly by my brokerage, but since i havent seen it on your watchlists/portfolio what are your thoughts on this stock? (theres a nice video on youtube, “Five-Year Plan 2014-2018 | About Honeywell | Honeywell” that could be interesting to watch if you have some spare time)

    Personally id like to add all three with largest holdings in this order… 1) GE 2) HON 3) UNP … but id love to hear your thoughts!

    Best Regards,
    Christian

  132. Hi DM,

    Can you explain some more about how you compile your watchlist? I would like to
    know how you monitor stocks and how you find potential good stocks.

    Kind regards,
    Amro

  133. Good looking list you got there Jason.

    I’d like to buy some Travelers myself, but the yield is a bit low for my taste ATM and I’d also like to see the history being more than 15 years.

    I just bought some Munich Re from my own watch list. Can’t go wrong there if Mr. Buffett likes it also :).

    It would be nice if you could include in these posts companies you already own that would be on your watchlist otherwise. For example if you’d consider buying JNJ at these levels, but wont because of the weight in your portfolio.

    Hoping for a pullback,
    Ville

  134. Hey Jason,
    Love the Starbucks mention – here in NYC area they are absolutely packed in all types of weather. Many times due to the small footprint of the actual stores the lines are sprawling out the door and down the block. I can only imagine people must wait 20 minutes or more for their “love it, gotta have it” cups.
    What are your thoughts on the commodities scene in respect to dividend growth stocks? Any oil stocks on your radar?
    -Rich (27)

  135. “It would be nice if you could include in these posts companies you already own that would be on your watchlist otherwise. For example if you’d consider buying JNJ at these levels, but wont because of the weight in your portfolio.”

    I like the sound of that 🙂

  136. Christian,

    That’s really tough to rank them like that. I think they’re all great companies. And I’ve never been the type to really rank things like that. I see a good opportunity, and I generally like to pounce. Now, I try to make sure every opportunity I go after is the best at the time, but it’s not possible to do that with absolute certainty. Valuing companies is involves a great deal of guesswork and art.

    GE is going through some transitions right now, as we’ve been expecting for years now. They’re accelerating the sales of major financial assets, which is great in that it speeds the time line up. However, the dividend growth is apparently on hold until 2017. So that’s something to be aware of. But the core industrial side of the house is really attractive.

    I think HON is a great company as well. Hasn’t really been on my radar over the years because it held its dividend static through the crisis (better than a cut, though), but it’s been raising it aggressively since. Really great fundamentals across the board and a valuation that isn’t too crazy here.

    And I’ve already written extensively about UNP, so you know where that’s at. UNP is obviously different from the other two in that it’s a railroad.

    If I didn’t own any of the them and had to rank them, I’d probably rank UNP first. HON and GE could go either way. I just think UNP is the most attractively valued of them right now, though I’d have to take a pretty close look at HON. GE was a lot more attractive before the recent pop and the news of the static dividend. I modeled the valuation before based on consistent dividend growth, so I’d have to revisit that. And at $27/share, you’re probably looking at a fair value now, more or less. HON seems about the same with a P/E ratio near 20. That’s in line with its five-year average.

    I would think less about ranking them and more about how to get enough capital to buy them all. But that’s just me. 🙂

    Hope that helps!

    Best regards.

  137. Amro,

    Sure. There’s nothing real scientific behind it. I occasionally run stock screens either using Google or my brokerage and then I cross-reference that with David Fish’s CCC list. In addition, I keep an active watch list with interesting stocks I’ve run across over the years – that list is kept active over at one of my brokerage accounts. So I have the 50+ stocks in my own portfolio and then maybe another 50 or so stocks on that watch list. That’s generally enough to keep me pretty busy. I think one could come up with 30 or 40 interesting opportunities just off the top of their head. Other stocks come and go as valuations and fundamentals change.

    Maybe I’ll write an article on this some day. But there’s nothing proprietary or special about what I do.

    Cheers!

  138. Ville,

    Good suggestion there. I’ve had a few other readers lately ask me about stocks that I already own enough/too much of, but would be buying otherwise. JNJ certainly qualifies there, as does PM. Maybe I’ll put something together on some stocks that I’m not currently interested in due to enough exposure, but those that offer solid opportunities for others. 🙂

    Thanks for stopping by!

    Best regards.

  139. Rich,

    I’ve never been to an empty Starbucks. I’ve actually never even been to a “slow” Starbucks. That bodes well, in my view. 🙂

    I don’t have any oil stocks on my radar. I’m overexposed there, though I wouldn’t mind a bit more XOM at the right price. But I’m anxiously awaiting some upcoming earnings reports to see how downstream operations are making up for the upstream issues. So far, so good. But I think there could be better opportunities in the future. If not, I’m okay with that due to my weighting in that sector.

    I’ve also mentioned this before, but I don’t have the extremely long-term confidence in O&G like I do with, say, a JNJ. Not real sure where the world’s going to be in terms of oil/gas use in 10 or 20 years. As such, I’m not real comfortable with a significant portion of the portfolio being invested there.

    Best wishes!

  140. Tom,

    All really solid picks in this environment. It’d be nice to have the cash for all of them. 🙂

    Have fun. And thanks for sharing.

    Take care.

  141. I was going to recommend a new series, a follow up to your “If I Were Starting All Over Again” post from back in May of 2014. This would greatly benefit your readers, such as myself, that are new to the blog and are interested in dividend growth investing but just not sure where to start. The market is constantly changing, and though it’s overpriced today, there is still value to be had.

    This new series could compliment your monthly “My Watch List For…” posts or you can make it a semi or even annual post. I think since we all don’t start on this journey at the same time, it would make it easier for others to be able to hop on and not feel like they missed the train.

    You still haven’t replied to my message I sent through your “Contact” form 😛

  142. Hello DM, any thoughts on Seagate technology (STX)? I don’t own tech stocks anymore – but I did in 1999/2000 and that didn’t work out well of course (also they were not dividend paying). Much prefer the dividend strategy, feels more secure and much less risky.
    Oh, I’m also looking at NGG (National Grid) but it’s a bit high right now probably due to upcoming dividend payment. Any thoughts on National Grid?
    I bought BHP Billiton (BBL) today at $42.17!
    Thanks for your articles.

  143. AJ,

    Very solid move there. UNP at $100/share seems like an incredible long-term opportunity to me. That’s near the 52-week low even as EPS is near an all-time high. Growth will likely slow, but that’s a great play for the next few decades. 🙂

    Cheers!

  144. ash,

    Great recommendation there. I hope to put something together quite soon here, perhaps tonight. There are a few stocks in my own portfolio that I’m already pretty much maxed out on, but that seem to offer pretty solid valuations/opportunities for investors that aren’t constrained in the same way. JNJ comes to mind pretty quickly.

    And it would definitely be something to revisit every year or maybe more often as the positions I buy and max out increase. For instance, I may max out UNP if I keep buying it over the next six months or year, at which point it would just disappear from my radar. Doesn’t mean it should disappear from your radar, however.

    I never received an email from you. I respond to every email that comes through. If you want to try again and then maybe let me know when it’s sent, I can check to make sure it didn’t somehow accidentally land in the spam folder. I’ve received six contact form emails today, so it appears to be working okay. Let me know!

    Best regards.

  145. Jan,

    I don’t really have an opinion on STX. Just not a company I’d really be interested in. My view on tech stocks is to stick with the true cash cows of the industry, with somewhat easy-to-understand business models and fairly clear growth paths. I also like healthy balance sheets with plenty of cash for acquisitions/buybacks. I think you have to ask yourself if hard drives is a business you really want to be in. The more I read about tech, the more I see that services and software is the way of the future. Recurring revenue through sticky applications.

    As far as NGG goes, I remain lukewarm at best on electric utilities. I think, at some point, most consumers and businesses will generate power at the site of usage. This is already happening on a small scale, but it’s increasing. That creates lower revenue for the incumbents, which means they have to raise prices to keep up with costs. That then incentivizes the customers left over to seek alternatives. The grid will likely always be around, even if batteries take off. But I think that growth could slow from already-unimpressive levels. And infrastructure is unlikely to be cheaper to maintain in the future. So I’d be careful in terms of what I’m paying for some of these stocks and how much exposure I have there. Looking at NGG specifically, its EPS is all over the place. But factoring out a really low year in FY 2005 and two really high years in FY 2006 and 2008, profit is essentially unchanged over the last decade. I guess you have to ask yourself if you think NGG will grow faster for some reason in the future. I also see the dividend is only a bit over 13% higher in FY 2014 than it was in FY 2010. That’s not much growth over that stretch.

    Hope that helps. 🙂

    Best regards.

  146. Actually they were your picks from the comment section on your piece before this 🙂 If you’re looking for an assistant it seems I have the qualifications.

  147. Thanks again for the response Jason. It’s incredible to me how committed you are to always responding to comments and really doing your best to provide quality feedback. You are truly one of a kind.
    I will read the links you provided and continue to read as many old posts as I can with the intention of also reading your book soon.
    Thanks for everything you do.

    Best,
    Nick

  148. Tom,

    Ahh, I see what you were doing there. I comment on the back end of the site, so I didn’t see what you were responding too. My bad. 🙂

    Yeah, those are some of them. Certainly PM and JNJ. But there are some I’m still buying more of, like TROW and AAPL. I hope to put something together on those stocks that I’m not personally interested in due to my exposure, but that others might want to consider based on quality and valuation.

    If I end up hiring an assistant, you’re first on the list! 🙂

    Best regards.

  149. blahblah903,

    Yeah, it is. I’ve noticed a few stocks now skip their usual quarter for a dividend raise this year. Might be a tough year for dividend growth, which will play out in the reports I publish. DE kept their dividend static for approximately six years around the turn of the century. They have the wherewithal to increase it, so we’ll see how it plays out.

    Best regards.

  150. Thanks for the free research, and inspiration that you provide to all of us that follow your blog. You’re the best in analyzing dividened stocks and very dedicated and attention to detail to all questions and answers. There are five stocks that I believe will change the world positively for the next decade. They are EMR, DE, CAT, BBl, & WM. These five stocks are currently sleeping right now but they will wake up soon and fly for long time when the economy straighten.
    Thanks and keep up the good work!

  151. Hippy Joe,

    Thanks so much. Really appreciate that. I’m fortunate to be in a position to share and inspire all while dramatically changing my own life for the better.

    Those are great stocks as well. I actually have a little more room there for EMR and DE myself. Never found a compelling case for WM, but I do love that business model. 🙂

    Cheers!

  152. Hi,

    Cool. This makes we more certain on my journey. So basically you feel I should start building
    my own watchlist of around 50 stocks? Basically one of the most important measures I have found is
    dividend growth. Unfortunatly no one talks about getting paid monthly instead of quarterly. If you
    calculate this and you get the same dividend but paid out monthly you grow much faster. Its just
    plain math.

    Thanks for your comment!
    DV

  153. DV,

    Well, this is just a list of stocks that aren’t on my radar anymore due to the fact that I’ve already kind of loaded up on them. However, I think they all represent pretty compelling investment cases for those with room in the portfolio for them. If I were starting all over again, I’d be aggressively buying all four of these stocks.

    Monthly compounding will be better than quarterly compounding over a very long period of time (assuming all else is equal), though I doubt by much. That said, there just aren’t that many high-quality US-domiciled stocks that pay monthly, so your opportunities there are somewhat limited. I would never recommend sacrificing valuation/quality just to go after a monthly payer.

    Best regards.

  154. Thanks for the tip. It sounds solid and indeed since the dividend strategy is most often buy and hold it will
    probably be better to buy them blue chips.

    Take care,
    DV

  155. Thanks for the response!

    i hear you on buying all of them, would be a true investors dream not worrying about limited capital!

    I think im going to go ahead and pay a fair value for a great business in GE with this months capital, however im keeping a close eye on UNP and HON and see which “Mr. Market” decides is the better buy in a months time 😀

  156. Quality names there, Jason.

    My watch list for this month is JNJ, EMR and UNP. Dark horses are FAST and HSY if they come down in price.

    Br

    Jarmo

  157. Jarmo,

    Great stocks there. I doubt you’ll be unhappy owning any of them over the next decade or two. I hope you end up with enough capital to grab all five! 🙂

    Cheers.

  158. Kind of late, buy I initiated a position in UNP on Friday. I hadn’t given railroads any due diligence, but I really like what I see. Nice that the price has come down about 20% in the last 3 months or so. If the dividends keep growing at the current rate, the dividends will double in 3 years. Nice!

  159. Keith,

    Glad to be a fellow shareholder! 🙂

    The railroads are definitely becoming attractive here. I also like CNI quite a bit.

    I’m not sure if the dividend for UNP will grow as fast over the foreseeable future as it has over the last decade, but I think the 8% rate I modeled in is pretty reasonable. And that offers compelling long-term returns, especially in this market.

    Excited to see how it goes.

    Cheers!

  160. Wow, I’m really surprised to see GILD on this list! I love the company, but thought it would be too speculative for you. It’s definitely risky, but I feel the rewards are substantial and the risks aren’t insanely terrible, as long as you understand what’s happening here.

  161. DD,

    Yeah, I took a look at it and I definitely like what I see. I’m typically a bit hesitant to invest in pure-play pharma due to pipeline and patent concerns, but GILD has a pretty long runway for growth. And my portfolio has grown to the point to where I feel comfortable pushing the limits a bit in terms of what areas of healthcare I’m okay investing in. As long as one is diversifying with the medical device and consumer product companies (like a JNJ, MDT, or BDX), I think there might be some room in there for the really high-quality pharma opportunities. The risk/reward is amplified, which is why I’m just now coming around to these types of ideas.

    Cheers!

  162. Your stock watch list is really interesting Jason. Apple has been on my mind for some time now, with GILD catching my attention in the last days. And now that you have mentioned them again, i will have to consider investing in these two.Enjoy your June!

  163. Chella,

    Definitely some great companies up there. I’d be glad to own any/all of them. 🙂

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

    Cheers!

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