Three Stocks On My Watch List For March
I try to view the stock market like a store; a store filled with merchandise in the form of stocks. And some of these stocks might be near the front window draped over a well-shaped mannequin with a hefty sticker hanging off the bottom. I instead tend to drift to the back of the store near the clearance rack where the crowds are few and the deals are easier to spot.
While I’ll admit the clearance rack gets a bit lighter when the entire store is expensively priced based on historical averages (as it is now), that doesn’t stop me from shopping. It just means I need to look a little harder. Be a bit more diligent with my capital. Take an extra look at all the opportunities available.
So I’ve been making my list and checking it twice, as I now have a decent chunk of capital available to me after my monthly commission check from my day job cleared the bank today. I might just have enough cash to make two purchases this month, and it’s highly likely that at least one of the equity investments will involve one of the companies listed below.
General Electric Company (GE)
General Electric is a diversified energy infrastructure, financial services, and industrial products company. They serve customers in more than 100 countries.
I continue to view GE as a strong play for 2014. With a P/E ratio of 17.56, it’s not particularly expensive. It has a strong yield of 3.4%, and the recent history of dividend growth is impressive with a raise of 15.8% coming at the end of last year. With a payout ratio of 59.5%, there is still room for dividend growth roughly in line with earnings growth. Meanwhile, the company continues to work through a record $200+ billion backlog, which should ensure strong earnings growth for the foreseeable future. They’ve been making great moves for shareholders by divesting non-core businesses like NBCUniversal, and they’ll soon be selling off a large portion of GE Capital. In the process, they’ve freed up cash and improved the balance sheet.
I initially invested in General Electric in June of last year for $23.41 per share. I thought it was attractively priced then, and I think it’s still attractively priced now. The company is incredibly diversified between operating segments, and after a shocking dividend cut during the Great Recession, the company is well-positioned to make up for past mistakes and continue rewarding shareholders. S&P Capital IQ predicts a 3-year compound annual growth rate in EPS of 7%. However, I think there’s a decent chance GE can outstrip this growth rate over the next few years. GE remains very high on my watch list, and I’m willing to buy up to $27, depending on what other opportunities present themselves.
Orchids Paper Products Company (TIS)
Orchids Paper Products is an integrated manufacturer of tissue products. Its products are sold under customers’ private label brands or under its own value brands like My Size, Velvet, and Linen Soft.
I initially discussed my interest in this company back in December, and my interest actually grows as time marches on. With a market cap of $271.2 million, this isn’t the usual type of company I invest in. However, I think my portfolio that’s been built almost exclusively with stable, mature dividend growth companies can handle a little risk here with this one.
The company reported an extremely strong 4Q 2013, which closed out a great year. Although the company may appear a bit expensive here with a P/E ratio of 20.19, it’s actually not that expensive considering the growth this company has already experienced and the growth potential it possesses. Since 2008, EPS has grown at a compound annual rate of 16.15%, and the dividend has more than tripled since being initiated in 2011. It was $0.10 per share quarterly in 2011, and it’s now $0.35. With a yield of 4.14%, it’s a value stock, growth stock, and a high-yielding stock all in one. They remain well-managed with an attractive balance sheet and coming from a low base, I think strong growth is set to continue. The payout ratio is a bit higher than I like to typically see, at 84%, but it appears management has been targeting a high payout ratio. And with strong continued growth this should be manageable assuming the company continues to execute. There are special risks with an extremely small company like this, but I’m interested in buying shares here.
AT&T Inc. (T)
AT&T is a telecommunications company, providing telecommunication services in the United States and worldwide.
AT&T isn’t a sexy pick, but it’s a nice play for income here. Shares in T currently pay out $0.46 per share quarterly, which amounts to a 5.73% yield. And with a P/E ratio of 9.44, I think it’s hard to overpay for T here. I like the idea of boosting my overall portfolio yield, which allows me to reinvest the hefty income from T into other holdings that perhaps offer lower current yield but higher growth profiles. I like to think of higher yielding plays like T as the initial rocket that gets my portfolio into outer space before the lower yielding engines take over after years of heady growth. The payout ratio currently stands at 54.1%, which allows for plenty of future dividend growth. And with 30 years of dividend growth under its belt I see no reason this won’t continue. However, it look as though T is sticking to a one cent annual dividend raise for the foreseeable future. That’s a shame, because earnings growth has actually been rather strong with T, if a bit bumpy. Earnings have a CAGR of 9.48% since 2004, and S&P Capital IQ predicts a 3-year EPS CAGR of 7%.
While the price seems right and the yield is very attractive, the drawback with AT&T is the extremely competitive business landscape it operates in, which typically doesn’t allow for a lot of growth. In addition, the company basically provides a commodity which provides for no real brand strength or customer loyalty. So they’re neither a low-cost provider, nor do they offer a particular brand name strength. In light of that, it’s difficult for me to add to my small position in T here. However, if the price continues to stay weak I may pick up some additional shares for the income they provide. I like to think of telecommunication companies as essentially utilities because they typically operate with a large amount of debt due to huge infrastructure, but also provide a service that people require. And so I keep my utility exposure light and replace that exposure with telecoms.
Although I didn’t highlight them here, I’m also interested in Bank of Nova Scotia (BNS) and Unilver Plc (UL). Furthermore, I actually think Philip Morris International, Inc. (PM) and Kinder Morgan Inc. (KMI) represent two of the best possible opportunities in the market, but I am already heavily allocated to both of them which is why I decided not to target them for possible purchases in March. However, if you are not as heavily allocated to these companies I think they represent pretty solid value here.
So that’s my list for March. I’m hoping for slightly better prices over the next few days, but I’m not going to try and time the market. If I think the valuation makes sense, and I do with the above companies, then I’ll likely pull the trigger even though the S&P 500 continues to break new records seemingly every couple days.
Full Disclosure: Long GE, T, BNS, PM, KMI
How about you? What’s on your watch list for March? Any particular equities have your eye?
Thanks for reading.
Photo Credit: bplanet/FreeDigitalPhotos.net
Good timing of this post. I’m currently trying to decide what company we want to purchase this month. I’ve thought about GE recently as well as T.
I was actually thinking about getting us a REIT and was looking into “O” but need to do some more research.
The hard thing with just starting out with our dividend portfolio is there are too many choices!
BJ
In March (three days ago) I have bought 20 shares of Philip Morris.
But now I have 22 percent from my portfolio in the tabacco branch.
The next purchases (in april) have to be in some other branches…
I think about AmerisourceBergen Corp., Suncor Energy and V.F. Corp.
Best regards
D-S
Excellent options. I am already invested in several of the stocks that you mentioned.
I actually purchased T and KMI today. I also added about 15 shares of JNJ as well. Its hard to beat a Titan like T at close to 6% IMO. GL
GE and T are both on my watch-list as they would help me diversify the industries I’m invested in. Your analysis has certainly pushed me to take a closer look at each of them. Unfortunately, I probably won’t have the cash available to buy them until the end of March, but I’m looking forward to it.
Great list. I too like PM, KMI, BNS. My next buy will be KO then KMI at theses level.
I know that feeling, but once you hit the 10 stock mark, it feels pretty good. Stick in there!
DM,
I have been loading up on T and GE during February. I will probably continue buying in March as well. XOM is starting to look good also.
I like GE at these values as well. I personally prefer VZ over AT&T because of their brand and market exposure. Most stocks on my watch list for March are in the financial sector. I think there is still a lot of solid potential and undervalued stocks there.
BJ,
I hear you. That’s actually the nice thing about just starting a portfolio. The world is full of choices! 🙂
I wish I would have purchased more O in the $38 range, but I initially invested at $44, so I don’t think you’ll go wrong here at today’s price if you’re ready to hold for the long haul.
Happy shopping!
Best wishes.
Dollar Bits,
Glad you enjoyed the list!
And also glad to have you as a fellow shareholder in some of the above companies.
Cheers.
Just a note to say the ticker symbol above for Kinder Morgan Inc shows (PM). Just picking nits 😉 These are great picks for this month!
Monty,
Wow. Look at you go! Nice job there!
I don’t know if I’ll have the opportunity to go on a shopping spree quite like that, but I’m anxious to get my feet wet this month.
Take care.
xiaphas,
Even the biggest snowball gets built one snowflake at a time. 🙂
I’m hoping we get some slightly cheaper prices over the coming week or so. I see some value, but I’d like to see even better value.
Have fun shopping later this month.
Cheers.
FFdividend,
I see we’re on the same page. I’d be all over both PM and KMI here, but I’ve already done that in the past and that’s how I ended up with large positions in both companies. 🙂
Have fun with KO and KMI! I hope you get some better prices.
Best wishes.
D-S,
I hear you on having a large allocation to tobacco. I do as well, and I’m aiming to lower that. I don’t anticipate buying any more shares in tobacco companies for the rest of the year. Actually, I’m thinking about reducing my exposure to Lorillard here only because of my heavy allocation to tobacco and my fears regarding the potential of menthol regulation here in the US.
I haven’t looked at Sunor or AmerisourceBergen, but V.F. Corp. is pretty solid.
Cheers!
My Dividend Pipeline,
I agree. XOM is starting to look attractive again here.
Great job loading up on both T and GE. I think I prefer GE by a small margin here, but if it keeps advancing I’ll be priced out of it.
I’m also quite interested in TIS. I’m hoping we get some pretty solid pullbacks over the coming trading days. I wish us luck. 🙂
Best regards.
Zach,
I agree with you on the financial sector. I noticed some banks had some pretty solid advances today, perhaps reflecting some of that value being recognized by the market.
I like BNS here, especially after the recent dividend increase. It seems like everything I’m looking at, however, has been advancing over the last couple days. Maybe we’ll get some better opportunities tomorrow or next week.
Cheers!
Tyler,
I appreciate the nit-picking, I really do. Thanks for pointing that out. I don’t know how it got past my editor, but I’m firing Jason tomorrow! 🙂
I edited it. Thanks again.
Hope all is well on your side of the planet.
Best regards.
Great list Jason! The value for KMI is pretty sweet, just not something I can dive into because of the overweight position I already have relative to my portfolio. Of the three highlighted, I like GE the best and have been eyeing them for a possible pickup should the capital become available.
TIS sounds interesting, I don’t think I’ve heard of it before. I’ll have to sit down and do my own due diligence. Thanks for the suggestions, now that the market is back near all time highs is good to have new positions in mind.
I plan on adding to my T position in the near term. It’s one of those rare companies these days that isn’t getting a lot of love, which, of course, presents a great opportunity for investors like us.
I have been reading here and other dividend blogs almost a year now.. Have 10 years of savings in vanguard 401k, but just starting dividend stocks. Have agnc, main, cvx, bought vz yesterday, maybe KMI tomorrow if price hits my buy price. What else to buy to level out portfolio? I have a few $K in loyal3 also… BRK.B, TGT, KO, MCD, WMT.. Looking for other low priced dividend stocks? I have cash proceeds from selling real estate that need a home…
I only put $500 in T and KMI. Not a lot, but every bit helps. I put more in JNJ. It should be one of my major positions, but I only have 50 shares at the moment. I have been mainly concentrating on VIG and VYM. I bounce all over the place when it comes to my investments. I probably need to focus a bit better. lol
Hi Jason,
Here is my 2 cents… You need to say focused and disciplined like you have been. TIS looks like a gamble and not an investment. Would you feel comfortable buying TIS and not being able to sell it for 10 years? Also you currently own a lot of companies maybe adding to GE or T might be the better choice. In the next three years or so your portfolio will break 300k so I would say its better to increase your current positions than to buy TIS. Your portfolio has to keep paying you the most reliable dividends 30 to 40 years from now and I don’t think TIS will make the cut.
I don’t this like GE but they did cut their dividends in 09 and it still isn’t back to their 08 pay out. But guess who didn’t cut their dividends in the great recession? Yup.. you guessed it. Mighty T. That’s who gets my vote. I have been buying T on margin over the last month. The plan is to have my dividends and weekly contributions pay off the margin. I am looking at it like a real estate investment. If I purchased a house to rent out, I would have to take out a mortgage since I don’t have enough to buy it outright.
I hope you enjoyed your vacation.
Frank
First time writing here. I’ve been following for awhile now and I’m thoroughly impressed with what you have been able to accomplish. I’ve been dangling in mutual funds for most of my investing career and have recently realized how much I’ve been paying in expense fees! You’ve opened my eyes to reconfigure my investing strategy and take control of my own portfolio. I have a ton of capital and trying to figure out what to do with it has been my ultimate challenge. I believe in investing in company’s that I use for my consumer lifestyle. So I’ve picked up T & GE and others recently. Hopefully there will be a market correction to pick up more great companies.
On another note, you should look into Merrill Edge where I can do 30 trades a month for free. I’ve been with them forever and never had any issues. Can help you save a little more to put more capital to work for you. 🙂
Warm regards
I agree with you. T is a monster. I know that the entire city here uses their fiber backbone for networks and it isn’t cheap. Their moat is their in bedded infrastructure IMO and it is gigantic. Heck there was even talk about them buying VOD. I happily have T as one of my ten titans! My 10 Titans are KO, PEP, XOM, CVX, PG, T, GE, JNJ, CL and SO. Walmart was ousted about one month back. I’m thinking about replacing SO with PM, since my SO position is already the smallest of the 10. I’m currently debating the ethics of owning PM. lol
Really appreciate you sharing this list. Glad to confirm and learn a few ideas. Happy to hear you might gear up for two purchases this month!!! Keep it up 🙂
Monty, I would add MCD to your Titans list – great list ,
Hi DM,
I wish you wisdom in your decision making 😉
I read somewhere that at one point you were looking into HCP, is it still on your watchlist?
I have been busy shopping too, in fact I am always shopping! I do manage my portfolio, I hold some core stocks names and some speculative’s ones… those “spec” stocks the like of DE and some oil plays like CLR, OAS and TPLM are bought and sold more frequently.
http://groxstocks.blogspot.ca/
Yeah I really like MCD. I’m a tad worried about it, because it has gone up something like 400% over the last 10 years. That was a bad sell call for Berkshire!
Long T, KMI and GE, happily DRIPing all of them 🙂
Good choices between those 3, T is certainly hard to beat. Been adding UL in my Loyal 3 of late, added KMI last month in my Roth, and have been eyeing GE & BNS for a while.
I also stepped in and added (in my Roth) DD – Dupont. They are definitely worth a look too.
– Gremlin
Today might be the day for people interested in O, it’s on my watchlist and down 2.5% today.
I thought this post would help me decide what to do. Now I’m confused, way too many great choices out there 🙂
Hey My Own Advisor, a quick question on KMI, i’d love to get some but i read that they withhold tax in canada on MLPs as the ‘payments’ aren’t considered dividends..they are considered business income so they hold 35%? Do you just hold it in a non-registered? thnx
Hey Jason, that’s a great list. Like the T as many have commented on. I’m going to stick my neck out a bit and say AIG for 2 reasons – although it doesn’t fall under your criteria of long term dividend payments since the recession crash, it is still undervalued by $10+ per share and the payout ratio is extremely low. They’ve done a dramatic turnaround. So yes, dividends have just been resumed but they have already raised once and i see that continuing years… i also think the risks have been reduced massively so to me that is very appealing.
cheers
Si
KMI is not an MLP, it is set up as a traditional corporation. KMP is the Kinder family MLP.
Hope that helps clear up any confusion.
ah my bad, need more coffee 🙂 thanks for clearing that up.
cheers
T
I learn so much from these posts! And, my compliments to Jason for such well written articles.
Jason, thank you for sharing your watch list with the world. I’m also watching GE, T, KMI, UL, BNS, and PM. I’ll probably pull the trigger on GE, KMI and PM within the next week or so depending on how Mr. Market affects these stocks. If you were shopping for energy companies, would you buy XOM, CVX, TOT or BP? XOM is looking attractive again. Please continue to post any thoughts you have on future buying opportunities.
Regards
Just added KMI earlier in the week. Otherwise my watch list looks similar: UL, BAX, T, and the whole canadian bank scene.
The canadian banks are interesting. Their financials are all very similar and everybody seems to have a different favorite.
Thank you for the well thought out presentation of companies that are on your radar. I am 37 and have a very small taxable account (under $1,000), but have well over $110k in roth 403(b) accounts. I am starting to build (along with my 403(b)) a taxable account that would allow me to retire early before I can access the tax favored accounts. One of the holdings that I have been following is Aqua America (WTR). If you have not researched this company, I would love to see your take on it. Thanks for sharing your thoughts with us. I appreciate the motivation and hope that you share, showing that FI can be attained.
I know very little about GE or the paper company, but your analysis there looks great. I am a bit worried about telecom providers like AT&T, especially as MNVOs and mavericks like T-Mobile are turning the screws on price. But maybe their numbers are so good that they can weather the storm, so to speak.
It’s scary just starting up. Long term 401k investor here but poking my head into DGI the last 2 years with any disposable income i can come by. Especially now that certain nastiness is over in my personal life that set me back a bit.
The run-ups in the market lately have been so crazy that I’m mentally preparing myself for a 10-30% correction. It’s so easy to say that (abstractly) until its your blood dripping. Its equally hard to continually dollar cost average into high-value plays since in the back of your head all you think is “its gonna tank, its gonna tank”. The rational side knows that the strategy works but the emotional side is like riding the bull!
Doubled down on DLR a while ago (like Mr. Mantra) and i have to say that actually felt pretty good. Even had a few good opportunities elsewhere where i bought in, it dipped lower and i bought again.
I personally have to stop looking at those capital gains numbers. It’s hard not to when they show up on the main page of your brokerage accounts!!! I wish they showed me dividends collected and YOC without having to do my own calcs. Once i do that i go “oh, yes, remember idiot thats why you are doing this?”
Wonder how many fellow DGI’s will panic sell given a serious correction. I pledge not to be one of them 🙂
Initially it’s one hell of a slow rolling snowball though. The flakes do add up though. Especially when you start doing calculations such as “my dividend income was almost as much as my annual raise, my dividend income equals X per hour, my dividend income grew faster than inflation, ect”
I just purchased 30 some shares of KMI this morning. I, too, am in the same boat regarding PM. It’s going to be a behemoth in my portfolio for at least another year.
I think you are right. This will be a 10 banger IMO. GL
Just curious, why KMI instead of KMP? KMP has a better yield (7 vs 5), lower P/E (19.9 vs 27.9), and slightly lower Price/book (2.4 vs 2.6).
Z,
I know how you feel. It’s tough not to look at gains and think about cashing out.
What I do is try not to log into my brokerage account too often. When I first started investing I felt a little lump in my throat when my brokerage account fluctuate by more than a couple hundred dollars. That was a lot of money to me back then, and still is. Nowadays, my brokerage account fluctuates by thousands of dollars fairly often and it doesn’t even phase me.
Try to focus on the income, and how much of it you’re generating against your expenses. Seeing the income rise slowly month after month makes things a lot easier. Every stock purchase is a freedom ticket for me, and I know that once I collect enough of them I’ll be financially independent and able to do whatever I want with my life.
It takes time, but I’m confident you can get there! 🙂
Best regards.
W2R,
I hear you. I’m in the same position regarding KMI. Owning too much KMI is certainly NOT a bad place to be in! 🙂
GE is probably tops on my list right now. I didn’t get a chance to even check the market today until late in the afternoon and seen it was down a bit. I’m going to take another look at it Monday, and if it’s down again I’ll probably pull the trigger there. I totally agree with what management is doing right now and I think it has a ton of potential.
Thanks for stopping by!
Cheers.
Spoonman,
If you decide to take a look at TIS I’d be interested to hear your take. I find it interesting, but a piece of me is a bit concerned. The small size, high payout ratio, and lack of diversification in product lines is just a little too much to worry about, even with all the potential. I’m 50/50 on it right now.
T is another one I go back and forth on. The high yield, coupled with the low payout ratio offers a lot to like. However, competition remains extremely strong and T doesn’t really have much of an economic moat. Certainly they have a lot of infrastructure, but when you’ve got competition renting space at wholesale rates and undercutting you because they don’t have the high CapEx to build out spectrum it’s worrisome. However, numbers-wise T looks good here.
Best regards.
katojoe,
Sounds like you’ve got a very high quality portfolio there! Congrats. 🙂
I don’t know if you’re going to find any steals in this market, but I think there are certainly some reasonable options out there. I mentioned seven stocks in total that I think make sense here, but specifically pointed to KMI and PM as fantastic opportunities here. Since you just sold real estate you may want to consider some REITs to balance your portfolio back out. For instance, I think you could do much worse than Realty Income Corp. (O) at today’s price.
Best of luck to you!
Cheers.
Frank,
Thanks for stopping by and offering your perspective. I really appreciate it!
I hear you on TIS. It’s certainly much riskier than the usual companies I invest in. The small size, lack of diversification between products, short dividend history, and high payout ratio are all a bit concerning. And these concerns are weighed against the vast potential this company has. I like this company more and more as time goes on, but I’m still a bit leery here. Of course, every company has to start somewhere and TIS looks like it might be at the start of a great journey.
As far as GE goes, they’re a different company now than the one that had to cut the dividend. As always, we can’t make or lose money on past decisions. Every dollar we invest can only be affected by what will happen in the future. And I think GE’s future looks much brighter than its recent past. But, of course, I could be wrong.
I’m going back and forth right now on T. I love the yield and the dividend growth history, but competition remains fierce and the dividend growth for the past few years has been rather anemic and it doesn’t look like that’s going to change for the foreseeable future.
Thanks again for the thoughts!
Take care.
Trev,
Thanks so much for following along! I appreciate it. I hope you’re able to stay in touch.
You’re in a great position there to have a lot of capital. That’s certainly a position many of us would love to be in. However, I agree it’s tough to find many places to put a lot of capital to work. I think you’re doing a great job by focusing on companies that provide products and/or services that you use every day. I do the same exact thing. Although it’s not true for all of my holdings, there’s certainly many companies in my portfolio that provide products I personally use often. And once I own a piece of a company I find myself using their products even more often. It feels good to contribute a little to my own dividend. 🙂
And thanks for the suggestion regarding the brokerage account I looked into that a while back and it required $25k in cash in either a BofA account or your brokerage account. But my fees aren’t that high anyway, and they’ll be even less once I’m financially independent.
Cheers!
Ryan,
Thanks! Yeah, I wasn’t sure if I’d have enough capital for two transactions this month after a hefty tax bill, but I’m trying to watch every dollar right now so I have as much to invest as possible. I’ve never felt more focused. 🙂
Thanks for stopping by. Best of luck with your goals this year!
Take care.
Grox,
Thanks. I certainly face first world problems when choosing which stocks to buy. I try to never lose perspective of how blessed I really am.
HCP is still there, but I’m trying to not load up too much on REITs right now. I went on a spree at the end of last year, and I only want REITs to represent about 5% of my portfolio.
Glad to see you’ve been shopping! Fun, isn’t it? 🙂
Take care!
Mark,
I’m a very happy shareholder as well! It’s good to be us. 🙂
Thanks for stopping by.
Best wishes.
tales,
W2R is correct. Glad that helped.
Thanks W2R! 🙂
Take care.
Gremlin,
Great job on buying UL. It’s been on my watch list for months now and I keep missing out. I’ll eventually snag some shares, I promise! 🙂
I’ll take a look at Dupont. Thanks for the suggestion!
Best wishes.
Matt,
I noticed that drop on O. Thanks for bringing that up. If it drops back below $40 I might add a little more here. I’m allocated to REITs about as heavy as I want to be right now, but certainly wouldn’t mind a little more O if the price is right and I have room for it.
Sorry to confuse you! If it’s any consolation I’m confused too. 🙂
Happy shopping!
Best regards.
talesfromthetape,
Hmm, I’ll have to take a look at AIG. I like insurance companies, although I typically like to stick with those that have great dividend growth records because that proves solid management and excellent use of capital even as claims roll in. I’d eventually like to expand my insurance holdings beyond AFL, and TRV, CB, and HCC are companies I’ve looked at before. I’ll add AIG to the due diligence list. 🙂
Thanks for stopping by.
Cheers!
Toronto Gal,
Thanks for the kind words! I’m really glad you enjoy these posts.
I hope you stick around! 🙂
Take care.
luckydog17,
Sounds like you and I have a very similar watch lists! 🙂
I’m pretty confident GE is going to be my first buy of the month sometime next week, depending on what the price looks like. I’m just happy to be in the position to add to a high quality company here!
Per your question on energy companies I might be looking at CVX if I were to buy just one today. BP is compelling, but the recent judgement against them was a blow. XOM is starting to get interesting, and if it breaks below $90 I’d be very interested in adding more.
Best of luck!
Cheers.
Justin,
I’d be right there with you adding to KMI here if I weren’t already so heavily invested. I think it offers a great opportunity here.
The Canadian banks are interesting in that they form an oligopoly. I like BNS for their international exposure and TD for their US assets. RY also looks good.
Best regards!
David,
You’re at an exciting juncture there with building your taxable account. I wish you the best of luck with building up the snowball that will be easier to access earlier in life if need be!
I’ll take a look at WTR. I remember looking at it briefly about six months ago and found rather slow growth. However, it seems like it would behoove one to own a piece of a company that controls one of the most valuable resources on this planet.
And thanks for the kind words. Appreciation from readers like you makes this all worth it!
Best wishes.
DB40,
I hear you on telecoms. I’m also concerned. You have the MNVOs basically renting spectrum at wholesale rates while being freed from the need to spend a lot of money to build up the infrastructure in the first place. It certainly creates a very interesting business model, both for the MNVO and the consumer.
I think T will be okay for quite a while here, as they have healthy free cash flow and have a comfortable dividend payout ratio. However, I think they’ll have to expand on what they already offer to survive for the long haul. I’m hopeful they can get a deal done to acquire VOD at some point in the future. I think that would be a really interesting company with wireless and media assets across both sides of the pond.
Cheers!
walletengineers,
Nice job on KMI. Glad to have you as a fellow shareholder!
We’re both in a great spot regarding PM. It’s great to own a piece of wonderful companies, isn’t it?
Keep up the great work!
Best wishes.
Chris,
Great question.
I’ve discussed this a few times before, but KMI should see much better growth going forward because of what’s called IDR – Incentive Distribution Rights. KMI is the General Partner, and has an agreement with the underlying MLP to receive ever-higher distributions based on a tiered structure that accelerates payments to the GP once certain levels are met.
In addition, KMI operates as a C corporation, and as such is much easier to understand and manage. Taxes are simpler, and the dividends from KMI are qualified.
I would encourage you to read up a bit on how MLPs and GPs work. 🙂
Best regards!
Nice post DM.
I just bought some T. Nice dividends. Im from Sweden but got some US-stocks:
JNJ
PG
KO
PEP
T
NLY
O
LLY
PM
CTL
EXC
GIS
INTC
Also have some Canadian stocks:
Enbridge
Fortis
Telus
Do you hane any Europeans stock on your watchlist? There are some nice dividend paying companies here in good old europe. They only pay annual dividends though.
My portfolio is about $120k. I wish I started earlier – Im 44 years old. My plan is to give my son and daughter the portfolio when they are 40, so I got 30 more years to save. I save about 800$ a month. They dont know this, and Im looking forward to give it to them at their birthday when they are 40.
Keep up the good work. I have been following you since the day you started this blogg.
Cheers/The Swede
It is hard to choose! i know!
Because you just want to own all of them 🙂
The only question is witch order you want to buy them?
Actually had one similar post on my draft, just released it, there is actually one stock you should take a look if you consider investing in smaller companies by “Mcap”
cheers!
Seems i cant get all my thoughts on one comment.
Just a small question Why Unilever PLC (UL) Why not Unilever NV (UN)?
bye bye again.
I’ve recently added to T for that very reason. I’m encouraged by their transition from a land line to a mobile phone infrastructure. Although they still have a long way to go and their land line infrastructure obligations will be weighing them down in the foreseeable future, I think T has the long term vision that will keep it a major competitor in telecommunications. My biggest concern is their seeming inability to improve their nation wide mobile cell coverage. People who stay mostly local love the network but those who do any traveling say it stinks compared to verizon. AT&T needs to improve on this.
For now, I don’t see AT & T going the way of Eastman Kodak but I’m keeping an eye on them. I don’t think T will ever be one of my “10 core positions” but I see their lack of significant dividend increases as a wise move considering the long term transition they’re making.
Take care!
Steve
Hi Dividend Mantra,
Great read. I was particularly happy to see that we are both eying the same stocks for March, considering your performance, it shows me that I am on the right track. Of course it might be that I am bias due to reading your blog for all this time. By the way, I did end up creating a blog to document my journey, if you can take a look, it would be really great to have some feedback from you 🙂
Best Regards!
DividendVenture
The Swede,
That’s a great looking portfolio you have there! And that’s very sweet of you to build it for your children. I’m positive they’ll be very grateful for that! $120k is a very large portfolio. Although we get kind of numb to these numbers when we’re browsing around investing sites, that’s still a lot of money when compared to what the average global citizen has. 🙂
I do have European stocks on my watch list. I listed Unilever Plc (UL) in the article, and I’m hopeful that I snag a piece of the company very soon. In addition, I’m always on the lookout for opportunities to add to some of my current European holdings, like Royal Dutch Shell Plc (RDS.B).
Thanks for following the blog. Without readers like you it wouldn’t exist. I do appreciate it!
Keep up the great work.
Best wishes.
investingidiot,
I completely agree. So many stocks, yet so little capital! It’s a good problem to have, but a problem nonetheless. I’m almost positive GE will be my next purchase sometime next week as long as the price doesn’t pop too much.
As far as UL vs. UN, UL are the shares based in the UK, while UN shares are the Dutch shares. It’s a dual-listed company, much like Royal Dutch Shell. The UL shares allow me to receive the entire dividend because we have a tax treaty with the UK. Otherwise, as far as I’m aware they operate the same with the same ownership rights.
I hope this helps!
Cheers.
Dividend Venture,
Thanks for the support. And glad to see you started up a blog. It looks great, and I wish you nothing but the best both with it and your journey!
And I’m glad that we’re on the same page regarding stocks. I think they all represent opportunity here, albeit in different ways.
Best of luck!
Take care.
Steve,
I appreciate you stopping by. And I always love hearing from fellow shareholders.
Are you concerned at all about the competition? Especially with the price war we’ve got going on right now, and the mobile virtual operators? I don’t mind a few big players, but I am concerned about all the small businesses popping up that don’t need to worry about building out infrastructure and spectrum.
Best regards!
GE is always on top of my watchlist whenever funds become available. I look to get in at a 3.5% yield. It currently makes up 35% though, looking to diversify but won’t pass up owning more if it is the best value. I am also looking to get in soon with MCD, XOM and CL.
Thanks for the articles as they always teach me something, as well as the comments offered by others.
Josh
HI Dividend Mantra
I have been following your blog for the last 6 months. I always enjoy you articles and your take on investing and your financial goals.
I do a combination of DGI and value investing myself with a like growth mixed for fun. I bought GE a couple weeks ago at $25.30 and I doubled down on my holding of TGT in the upper 50’s. It is fun and interesting to see someone else making similar trades at similar times.
Keep up the great work on your road to financial freedom!
Peter
Hey Montoya, i know the feeling right? However, the stuff you are doing now will really kick into high gear in a few years, i thought i was way behind aswell but you’re not. I know way too many people who don’t care and have >0<, that's right 0, don't care. It's madness. Anyway just wanted to say hi and think your kids will be super happy with what you are doing. DividendMantra's site is a great spot to pick up lots of useful info while we all navigate our way on this journey.
I recently purchased GE as well and am happy to get in at these price levels. Thanks for pointing them out, as they hadn’t gotten on to my radar. Management is moving in the right direction & between the good yield and EPS growth prospects, it’s a no-brainer. TIS and T don’t fit my own particular specs, but there are plenty of good reasons to look at them.
The first time I bought GE it was like 10 per share or something. Crazy world. Great choice for a purchase IMO DM. GE is a true Jugernaut…
tales,
Thanks for the kind words! 🙂
And I agree. His kids are really blessed.
Cheers.
Peter,
Thanks so much for your readership. I really appreciate you following along and I hope you continue to find some value here. 🙂
Great job there with GE and TGT. Sounds like we’re definitely on the same page. I think they’re both great companies with really bright futures. although I hope TGT continues to expand its online presence.
Stay in touch!
Best regards.
Josh,
35% of your portfolio? You’re a braver man than I.
I really like GE here, however. I think they’re doing some great things. Management is clearly articulating their plan, and they continue to execute on it.
And I’m glad you find some value in the articles, although I would argue that the comments offer a lot more. 🙂
Best wishes!
Chris,
Glad to see we’re on the same page regarding GE. I agree that management is moving the company in the right direction. Selling off non-core assets and reducing the financial footprint is wise, in my view.
I hear you on TIS and T. I can certainly see how some investors wouldn’t be a fan. I think they both offer unique rewards, but also rather unique risks as well.
Take care!
Monty,
Wow, nice! GE at $10 is a dream. My first ever stock purchase was GE at $16, but I promptly sold it (along with the mutual fund I bought) because I didn’t really have a clear idea of what I was doing. After researching investing for a few months and settling on the dividend growth strategy I wasn’t sold on GE. Of course, at that time they had like $500 billion in debt and they were a different company. However, I’m glad I’ve come full circle and own GE again. 🙂
Cheers!
Dividend Mantra,
Thanks for stopping by and I’m glad you like it!
Will keep learning from your posts, may our portfolios prosper!
Take care,
DividendVenture
I should have clarified more…my Roth value is nearing $9,000. The rest of it is in KO, PFE, O and PSEC.
PSEC is at about 7% and the rest are roughly equal. We are working more on eliminating debt than building the snowball but occasionally contribute to it.
Josh
I think dividend investing might not be the best strategy for people who have no interest in monitoring their portfolios. For those people, I’d recommend a portfolio consisting of a small handful of index funds, but if you have the time and the interest, dividend stocks are certainly the way to go.
Having the goal of living off of your dividend is an excellent goal!
Hi Everyone,
I don’t think you have to worry about competition or small players all that much. It’s going to be very hard for small players to catch up or gain any real traction on T and VZ. It takes a lot of money\debt to build out a 4G network. This whole T Mobile is eating T’s lunch is a joke. For 1. Large company’s aren’t going to switch to T Mobile or any other discount wireless company and 2. If you have a family plan, T is actually in line or cheaper than T Mobile’s prices… DM, I can understand you not wanting to increase your T position since its a little over 1 percent of your portfolio but giving your watch list, I think T is the best bet.
Check Value Lines financial strength for both company’s (GE and T) in the bottom right corner.
http://www3.valueline.com/dow30/f7800.pdf
http://www3.valueline.com/dow30/f3807.pdf
Hey Monty – Nice portfolio, I like your titans… I recently purchased PM and MO during the last selloff. I wasn’t a big fan of tobacco for the same reason. Its hard to build a dividend growth portfolio without including one of the major tobaccos. I warmed up to the idea after following DM’s blog. His research is really thorough, hats off to DM for his quality writing. I also bought into Target after his amazing write up of the company.
Take care,
Frank
Frank,
Thanks for sharing that. I appreciate the VL links. I mostly concur with their analysis.
I’m not particularly worried about T-Mobile taking away a ton of business. Rather, I’m more concerned about the pricing war squeezing margins. And as far as subscriber loss, I’m actually more worried about the smaller virtual operators that have been cropping up. And that’s because they don’t have to spend the money to build out a network. They simply pay money to have bulk access to a network, and then build their subscriber base at a cheaper rate.
We’ll see. I’d love to add T here because I would love to have the dividends which can pad my cash flow and allow me to reinvest elsewhere, but I remain concerned.
Hopefully next week we get a Mr. Market that’s in a sour mood. 🙂
Cheers!
Valid concerns. I don’t know a whole lot about how the smaller telecoms get access to networks so they can offer their service however, I still think, at least for the foreseeable future, T has several advantages over the little guys–
1. Pricing power. T has the financial resources to win a pricing war with any small carrier for at least a short period of time. They have billions in assets that can be sold or mortgaged.
2. Marketing and Name recognition. T has the ability to make mega deals such as with the Apple iphone. I believe smaller companies would have a harder time convincing a major phone maker that their network will be around for the next 10-20 years. T doesn’t have that problem.
3. Access to broad markets. I don’t have numbers handy showing T’s access to nationwide networks but I do know that T has a natural inroad to corporate market share just by the fact that many business have used their land line services for decades. Transitioning to a corporate cell phone plan with T is a more natural process than going with a new and possibly unfamiliar company just because they may be a bit cheaper. Most businesses will not risk the loss of productivity if the smaller company turns out to be a dog.
Again, nothing is certain and T has a hill to climb for sure but I think for now, it is not speculative to think they will still be around for the next 30 years. If the telecom landscape does change too quickly for T to adapt then I think there will be time for DGIs to get out before a complete meltdown occurs. After all it only takes about ten seconds to sell out of a position. The key will be not holding on to false hope. Also, if your allocation in T is not out of balance with the rest of your portfolio (as I’m confident yours won’t be) then even taking a loss at the point of sale won’t be very painful. Its the guys who have too much invested that have a hard time cutting their losses.
Personally, my gut tells me that ten years from now we’ll be looking at T like people looked at MCD in early 2012 reflecting back on where it was in 2002. I think many DGI will be kicking themselves saying “why didn’t I buy more?” Of course, if you want the real acid test–Buffet isn’t buying T. 🙂
Anyway, just my 2 cents. Thanks for letting me contribute to the discussion.
Take care.
Steve
I own both GE and T.
GE I bought under $20 which was awesome, but I’d love to add to my position if I just had more cash!
T is almost back down to where I bought it; I’m a little bit up. It goes up and down a lot (as telecoms are wont to do) but I do love the high dividend payout. That has made it a profitable hold for me over the past few years.
Money After Graduation,
Nice buy there on GE under $20. I think you’ll be very happy with holding for the long haul here. Glad to have you as a fellow shareholder!
I’m mixed on T. I don’t expect much capital appreciation, and that’s fine; the high yield makes up for that. However, I’m concerned about wireless saturation and competition. However, revenue should be stable with the hefty subscriber base.
Thanks for stopping by!
Take care.
Yikes TIS down 20% in 2 days!!! Still interested? Buying opportunity? Probably glad you got GE instead. 😉
Trev,
If I was interested before, you can only imagine my thoughts now. Of course, if you know anything about me you’d know I had to act on an opportunity like this.
This pullback, however, is not without warrant:
http://finance.yahoo.com/news/faruqi-faruqi-llp-announces-investigation-232600952.html
The potential dilution as a % of market cap has already been well exceeded by the pullback. And while I find the compensation egregious, I’m hopeful that the upcoming vote goes against management.
It’s still a very small company with a lot of potential. We’ll see!
Best regards.
Hi DM,
Bought some GE yesterday. I wanted to make a last march contribution and GE seemed to be a good new entry for my portfolio. In April I may again buy in energy even though heavy on it since I cannot find much good value elsewhere. Thanks for the post.
Regards.
FabSavings,
Great to have you as a fellow shareholder. I’m confident that GE will serve us well over the long haul, or else I wouldn’t be investing my own hard-earned money here. 🙂
I hear you on energy. I think there’s some value there, although I’ve been shying away from it as my portfolio was quite heavy on the sector not too long ago. I’ve been rotating out of it by diversifying in other sectors – notably retail and consumer – but I’m sure I’ll pick up some opportunities there again very soon.
Thanks for stopping by.
Cheers!