We rallied again this past week. The Dow Jones Industrial Average Index (DIA) was up 1.27% during the week while the S&P 500 (SPY) was up 1.56% and the Nasdaq was up 1.7%. This positive week marked the sixth straight one for the Dow and the S&P 500. Janet Yellen's testimony on her view of the Federal Reserve's directive provided the spark for the market during the week. She made it clear that she wants to stick to the path that Ben Bernanke laid out for keeping interest rates down to help the economy get stronger. As I stated last week, I still want to see three consecutive strong monthly jobs reports with no downward revisions from previous reports to believe the market is in actual growth mode.
For now, I will continue the course and purchase value stocks for my dividend portfolio. Value investing is the bread and butter how Warren Buffett made his money. The essence of value investing is basically purchasing a stock at less than market value based on certain metrics. My philosophy on dividend investing is to utilize the forward price to earnings ratio and use a one-year PEG ratio, along with a dividend. I don't necessarily look for a stock with a high yield because I like to see capital appreciation. Because the market is at all-time highs still I maintain that it is difficult to find good stocks these days. That's why I'm highlighting a select set of excellent value companies in my dividend growth portfolio, which have had ex-dividend dates or paid out a dividend during this past week or early next week that people should place on their radar.
Apple Inc. (AAPL)
Apple designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. On 28Oct13, Apple reported fiscal fourth quarter 2013 earnings of $8.26 per share. This result beat the consensus of the 47 analysts following the company by $0.30 and missed last year's fourth quarter results by 4.73%. Apple's P/E ratio is below the computer hardware industry average and signals that investors are not willing to pay a premium for this stock, making it a value story. However, during the past year, earnings growth has lagged its historical five-year growth rate.
The company went ex-dividend on 06Nov13 with a $3.05 per share dividend which was paid on 14Nov13 for a yield of 2.34%. During the week Gartner estimated that Samsung (OTC:SSNLF) sold 80.36 million smartphones versus 55 million from a year ago while Apple sold 30.33 million versus 24.62 million, showing evidence that Samsung widened the lead over Apple by almost 66%! Mike Walkley of Canaccord provided positive data about iPhone 5S sales saying it's the top selling smartphone at all four tier-1 U.S. carriers. During this past week quite a few of 13F filings came out, of which David Einhorn's Greenlight Capital still showed that Apple was its biggest position accounting for 21.1% of the portfolio. In other 13F filing news this week, Leon Cooperman closed his entire position in Apple.
Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle ground territory with a current value of 59.61, while the MACD chart below shows the black line below the red line with increasing divergence bars, meaning there may be some upward pressure on the stock price. I anticipate the stock to drop for now and then I will evaluate again before buying shares.
Abbott Laboratories (ABT)
Abbott Laboratories is engaged in the discovery, development, manufacture, and sale of a portfolio of science-based health care products, which operates in four segments: Diagnostics, Medical Devices, Nutritionals and Generic Pharmaceuticals. On 16Oct13, Abbott reported third quarter 2013 earnings of $0.55 per share. This result beat the $0.51 consensus of the 19 analysts covering the company. Abbott's P/E ratio is below the biotechnology & drugs industry average and signals that investors are not willing to pay a premium for this stock, making it a value story. Additionally, during the past year, earnings growth has outpaced its historical five-year growth rate.
The company went ex-dividend on 10Oct13 with a $0.14 per share dividend which was paid on 15Nov13 for a yield of 1.64%. It was a pretty quiet week in terms of news pertaining to the company specifically with no press releases being issued.
Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is near overbought territory with a current value of 66.74, while the MACD chart below shows the black line below the red line with downward trajectory and decreasing divergence bars, meaning there may be some downward pressure on the stock price. I anticipate the stock to drop for now and then I will evaluate again before buying shares.
Transocean LTD (RIG)
Transocean is an international provider of offshore contract drilling services for oil and gas wells. On 06Nov13, Transocean reported third quarter 2013 earnings of $1.37 per share. This result beat the $1.07 consensus of the 37 analysts covering the company and beat last year's third quarter results by 6.20%. Transocean's P/E ratio is among the lowest of any stock in the oil well services & equipment industry and signals that investors have not been willing to pay a premium for this company's business prospects, making it a value story. Additionally, during the past year, earnings growth has outpaced its historical five-year growth rate.
The company went ex-dividend on 13Nov13 with a $0.56 per share dividend which will be paid on 18Dec13 for a yield of 4.11%. The stock jumped up during the week on news of a deal with Carl Icahn was reached to raise its dividend and move into the future as an MLP structure. In addition, the number of board seats has been reduced from 14 to 11 while an Icahn nominee will be re-elected another will be appointed.
Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in overbought territory with a current value of 74.72, while the MACD chart below shows the black line above the red line with decreasing divergence bars, meaning there may be some downward pressure on the stock price. I anticipate the stock to drop for now and then I will evaluate again before buying shares.
AbbVie Inc. (ABBV)
AbbVie Inc. is a research-based pharmaceuticals company, which discovers, develops and commercializes advanced therapies. On 25Oct13, AbbVie reported third quarter 2013 earnings of $0.82 per share. AbbVie's P/E ratio is below the Biotechnology & Drugs industry average and signals that investors are not willing to pay a premium for this stock, making it a value story.
The company went ex-dividend on 10Oct13 with a $0.40 per share dividend which was paid on 15Nov13 for a yield of 3.3%. It was a pretty quiet week in terms of news pertaining to the company specifically with no press releases being issued.
Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle-ground territory with a current value of 55.07, while the MACD chart below shows the black line below the red line with upward trajectory and increasing divergence bars, meaning there may be some upward pressure on the stock price. I anticipate the stock to increase for now.
Hasbro, Inc. (HAS)
Hasbro, Inc. is engaged in providing leisure time products with a portfolio of brands and entertainment properties ranging from Transformers to Monopoly and My Little Pony. On 21Oct13, Hasbro reported third quarter 2013 earnings of $1.31 per share. This result beat the consensus of the 13 analysts following the company by two cents and beat last year's third quarter results by 5.65%. Hasbro's P/E ratio is below the recreational products industry average and signals that investors are not willing to pay a premium for this stock, making it a value stock. However, during the past year, earnings growth has lagged its historical five-year growth rate.
The company went ex-dividend on 30Oct13 with a $0.40 per share dividend which was paid on 15Nov13 for a yield of 3.09%. It was also a pretty quiet week in terms of news pertaining to the company specifically with no press releases being issued.
Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in overbought territory with a current value of 65.49, while the MACD chart below shows the black line below the red line with upward trajectory and increasing divergence bars, meaning there may be some upward pressure on the stock price. I anticipate the black line to test the red line before picking up some more shares.
L-3 Communications Holdings Inc. (LLL)
L-3 Communications is a prime contractor in command, control, communications, intelligence, surveillance, and reconnaissance systems, aircraft modernization and maintenance, and government services. On 29Oct13, L-3 reported third quarter 2013 earnings of $2.23 per share. This result beat the $1.95 consensus of the 14 analysts covering the company and beat last year's third quarter results by 12.63%. L-3's P/E ratio is among the lowest of any stock in the aerospace & defense industry and signals that investors have not been willing to pay a premium for this company's business prospects, making it a value story. However, during the past year, earnings growth has lagged its historical five-year growth rate.
The company went ex-dividend on 14Nov13 with a $0.55 per share dividend which will be paid on 16Dec13 for a yield of 2.16%. It was also a pretty quiet week in terms of news pertaining to the company specifically with no press releases being issued.
Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in overbought territory with a current value of 72.89, while the MACD chart below shows the black line above the red line with flattening trajectory and decreasing divergence bars, meaning there may be some downward pressure on the stock price. I anticipate the stock to decrease for now.
Conclusion
I've highlighted these names, because they have all raised their dividend or initiated them within the past year and are poised to do so again in the coming years. It is important in this market to be able to hold onto companies, which raise their dividend rates or initiated them, because it is a sign that the underlying company is doing well financially. The importance of these stocks I've highlighted is that they are value plays while the broader market is at all-time highs. I believe we are at a point in the market where we have to look for value.
Disclaimer: This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!
Disclosure: I am long AAPL, ABT, ABBV, DIA, HAS, LLL, RIG, SPY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
