Hi all,
There’s never a dull moment for the stock market. Recent concerns about the state of inflation, the economy (recession or not), and the long-running inverted yield curve claiming its first bank causality (SVB) has created a sell-off in shares of just about everything this past week. Will this act as a contagion and spread to other companies?
There is little doubt that this kind of environment will produce great value for those choosing to add shares of great companies. The trick is always choosing which shares to add to, wisely.
Stocks that I’m watching closely include:
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Most |
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Return to |
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Current |
Recent |
Dividend |
Interest |
Payout |
4 Yr. Payout |
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Years |
4 Yr |
4 Yr Yield |
| Symbol |
Company Name |
Yield |
Increase |
5 Yr. CAGR |
Coverage |
Ratio |
Ratio |
M* Sector |
Growth |
Avg. Yield |
Upside |
| AMGN |
Amgen Inc. |
3.74% |
9.8% |
10.0% |
7.7 |
42% |
40% |
Healthcare |
11 Years |
2.87% |
30.34% |
| WEC |
WEC Energy Group Inc. |
3.56% |
7.2% |
7.1% |
4.1 |
65% |
65% |
Utilities |
19 Years |
2.79% |
27.64% |
| PEP |
PepsiCo Inc. |
2.94% |
10.0% |
9.5% |
6.6 |
67% |
68% |
Consumer Defensive |
50 Years |
2.79% |
5.40% |
| HD |
Home Depot Inc. |
2.92% |
10.0% |
15.2% |
16.2 |
46% |
49% |
Consumer Cyclical |
13 Years |
2.22% |
31.53% |
I own shares in all, except for HD.
What looks interesting to you (not necessarily limited to those tickers)?
Rich
4 Likes
With the sudden announcement of SVB’s take-over by FDIC, some of the large banks went on sale, with their preferreds getting close to fire sale prices, with yields of the TBTF National Banks rising above 6%…something we haven’t seen since the early 2000s. So I picked up 6 JPM, SCHW, USB and BAC preferreds. All prices have rebounded nicely. However, I decided to go out a ways on the risk limb and bought 100 shares of FRC-PM at around $10. Well, it continued its downward progression and is now just a bit over $5. My concern is if FRC, which suspended its common dividend, will continue its 7 preferred dividends. I reason they would not suspend the preferred dividend unless they expect to be bought or anticipate bankruptcy, as suspending it would likely forever tarnish their ability to issue new preferreds in the future, and these large banks tend to rely on Preferred stock as part of the capital structure. They are currently paying about $40MM per quarter for their preferred dividends but not sure how much operational cash they’ll be able to generate to cover this, although they’ve got over $4,200MM in C&CE
3 Likes
@RetiredRich62
I have had a career and saved for retirement, and I have recently taken the leap into retirement. My portfolio has mainly had growth stocks but in 2021 I have converted some of the growth into dividend stocks so I can get in addition to harvesting retained earnings as (long term) capital gains, those dividends. The long term capital gains are certainly more tax efficient than dividends but I figure I should have some of those quality businesses that can responsibly throw out dividends and grow them over time as well.
I did not have many dividend stock prior to 2021. Most of my portfolio is still in stocks that do not give out dividends. I have gotten a bit away from growth and I am glad of doing that especially after what we experienced in 2022. However, I still have a good portion of it in growth stocks. Regardless being a dividend payer or not, I need quality and durable businesses that can give me an income in the short term and continue to grow my portfolio in the long term.
What do you think of Wesco? and Watsco? What is your thesis for these?
tj
3 Likes
Hi tj,
Welcome to the world of dividend growth!
I’m not familiar with Wesco (WCC) but according to it’s profile on Yahoo it sounds like an asset-light business that I generally like. It is not in my universe of followed stocks, The current yield is less than 1% and the dividend growth has been lacking over the last 5 years so its not very interesting to me right now.
Watsco (WSO) on the other hand I own. It sports a dividend yield north of 3% and has grown that dividend by greater than 10% per year over the last 5 years. This is the type of dividend payer that I seek. The following article is a good introduction to the business:
Happy hunting,
Rich
5 Likes