We launched a new series of articles last month with the premise of building a dividend portfolio from scratch by leveraging the collective knowledge and opinions of the Seeking Alpha community. In parts 1 and 2, we highlighted the investment plan and strategy for the portfolio and parts 3-13 will highlight each sector in the S&P 500, including high-rated stocks within each sector to consider for the portfolio. Readers can either vote on the stocks we suggested for the portfolio or "write in" their own stocks to vote on. Majority will rule.
Below is a schedule of the entire series. Please make sure to "follow" us so that you will be notified when each new article is published.
- Part 1: Introduction
- Part 2: Establishing A Buy Zone and Watch List
- Part 3: Consumer Staples (3a) / "Buy Zones" (3b)
- Part 4: Utilities (4a) / "Buy Zones" (4b)
- Part 5: Healthcare (5a) / "Buy Zones" (5b)
- Part 6: Consumer Discretionary (6a) / "Buy Zones" (6b)
- Part 7: Portfolio Update (The First 9 Stocks Are In!)
- Part 8: Financials (8a) / "Buy Zones" (8b)
- Part 9: Technology (9a) / "Buy Zones" (9b)
- Part 10: Industrials
- Part 11: Materials
- Part 12: Energy
- Part 13: Unveiling the Portfolio
Picking Technology Stocks For The Portfolio
As you know, our goal is to build a watch list of great stocks by sector that we can use to build the portfolio over time (purchasing shares when the prices are right).
We suggested five great Technology stocks for folks to vote on in Part 9: Apple Inc. (AAPL), CA Technologies (CA), Microsoft Corp. (MSFT), Seagate Technology (STX), and Verizon (VZ). Readers also suggested some great "write-in" votes, including Cisco Systems (CSCO), Intel (INTC), International Business Machines (IBM), Qualcomm Inc. (QCOM), and Microchip Technology (MCHP).
Well, we tallied up the votes and the most popular stocks among the group were AAPL, MSFT, and QCOM (in that order). The Honorable Mention awards go to CSCO, INTC, and IBM.
Let's put all 6 of these stocks on our watch list and patiently wait for their respective Buy Zones.
Which Technology Stocks Are In The "Buy Zone?"
The current Fed-induced rally has expanded P/E multiples across the board, including many Technology stocks. That said, several of our watch list stocks are creeping closer to their respective Buy Zones. Let's take a look at the current charts for each and compare where they trade in relation to their respective Buy Zones.
AAPL currently trades 8.2% above its Buy Zone. Ideally, we recommend purchasing AAPL under $480.00 (which would equate to a forward P/E ratio around 11.0x and a forward yield around 2.5%).
MSFT currently trades 11.3% above its Buy Zone. Ideally, we recommend purchasing MSFT under $33.00 (which would equate to a forward P/E ratio around 12.5x and a forward yield around 3.5%).
QCOM currently trades 8.8% above its Buy Zone. Ideally, we recommend purchasing QCOM under $66.00 (which would equate to a forward P/E ratio around 13.0x and a forward yield above 2.0%). That said, we expect QCOM to raise its dividend significantly in the coming quarters...so keep it on your radar!
CSCO is down almost 20% from its 52-week high and the stock currently trades in the Buy Zone! We think that there is more upside than downside with the stock at current levels. CSCO is trading below 11.0x forward earnings and it currently has a respectable yield of 3.2%.
INTC currently trades 6.9% above its Buy Zone. Ideally, we recommend purchasing INTC under $23.00 (which would equate to a forward P/E ratio around 12.0x and a forward yield around 4.0%).
IBM is down over 15% from its 52-week high and the stock currently trades in the Buy Zone! IBM's current yield is below our minimum target yield of 2.5%, but we still consider Big Blue a "Buy" at these levels.
Of the watch list stocks highlighted above, CSCO and IBM are the only ones currently in the Buy Zone. As such, we will look to start positions in these stock in the coming days.
Dividend investing is a marathon, not a sprint. Identifying good stocks is easy... patiently waiting for the right price is the hard part.
We'll send around updates throughout the entire process so please follow along and participate as much as you can. The next sector on the agenda will be Materials. Please make sure to "follow" us so that you will be notified when each new article is published.