- The S&P 500 is up over 185% since troughing in March 2009.
- It's slim pickings out there...but there are still a few stocks trading at reasonable valuations.
- Patience is of the essence and investors should only buy good stocks in stages (as the markets could certainly turn lower soon).
What Is The DIY Dividend Investors Club?
As fellow do-it-yourself investors, we appreciate the power of collective thought. In fact, the primary reason we love contributing articles on Seeking Alpha is the privilege of discussing and analyzing the market with like-minded individuals. To achieve long-term success, investors must keep an open mind and continuously educate themselves and there is a wealth of knowledge to be gained from fellow contributors, commentors and readers on Seeking Alpha.
The DIY Dividend Investors Club series is dedicated to the open discussion and analysis of building and managing a long-term dividend portfolio.
There's really no right or wrong answer when it comes to stock picking methodology. For those of you that are interested, you can read about our investment philosophy here. That said, to help facilitate the stock picking process we are going to build our portfolio "watchlist" by sector (based on the 9 major sectors in the S&P 500 as well as alternative sectors like MLPs, REITs and BDCs). Below is a tentative schedule of the entire series.
Please make sure to "follow" us so that you will be notified when each new article is published and PLEASE participate as much as you can in the comment section below. Often times just as much value is derived from the comments section as the article itself.
- Part 1: Introduction/Portfolio Parameters
- Part 2: Stocks That You Could Buy Today
- Part 3: Consumer Staples
- Part 4: Utilities/Telecom
- Part 5: Healthcare
- Part 6: Consumer Discretionary
- Part 7: Financials
- Part 8: Technology
- Part 9: Industrials
- Part 10: Materials
- Part 11: Energy
- Part 12: Master Limited Partnerships ("MLP")
- Part 13: Real Estate Investment Trusts ("REIT")
- Part 14: Business Development Companies ("BDC")
- Part 15: Unveiling the Portfolio
Stocks That You Could Buy Today
There is certainly a dearth of good bargains out there right now. Most high-quality dividend stocks have rallied significantly with the rest of the market and it is getting very difficult to find reasonably priced stocks to invest new money in.
That said, we suggested in Part 1 (see link above) that there were a few stocks off the top off our heads that investors could consider buying right now: International Business Machines (NYSE:IBM), Target (NYSE:TGT), and Mattel (NASDAQ:MAT). We also asked for readers to suggest some other dividend stocks that they felt were currently fairly valued.
In addition to IBM, TGT, and MAT, below are a few other stocks that were suggested by readers that are also close to (or in) our respective "Buy Zones".
AT&T is down about 6% from its 52-week high and the stock just broke into the upper part of the Buy Zone!
AT&T seems to go in and out of favor with dividend investors, mainly because of the company's choppy revenue and earnings growth and its borderline dividend growth (only 2.4% on average over the past 5 years). That said, many investors succumb to the high dividend yield (5.3%). We view AT&T as "utility-like" and think it certainly warrants consideration in a long-term dividend portfolio.
AFL is down 8% from its 52-week high, but the stock is still about 4% above our "Buy Zone".
AFLAC is one of only a handful of stocks that has a sub-rating over 80 for Dividend Track Record (93), Financial Stability (84) and Dividend Sustainability (90). AFLAC has grown dividends at a compound annual rate of 16% over the past 10 years and it still has a very low payout ratio of 21.3%. The company announced a 5.7% increase in the quarterly cash dividend this year, which marks the 31st consecutive year in which the dividend has been increased.
Aqua America (NYSE:WTR)
WTR is down about 12% from its 52-week high and the stock just broke into the upper part of the Buy Zone!
While Aqua America has a relatively low dividend yield for a utility, the company has increased its dividend at a compound annual rate of 7.9% over the past 10 years. WTR recently increased its quarterly dividend by 8.9%, which was its 23rd dividend increase in 22 years. Aqua has paid a consecutive quarterly dividend for more than 65 years.
Before we get into each sector individually, we wanted to suggest some stocks that investors could consider buying today (which is a question weighing on all DIY investors' minds right now). That said, we always suggest buying in stages so that you can buy more if the price drops further.
Please make sure to "follow" us so that you will be notified when each new article is published. Next up on the agenda is taking a deeper dive into the Consumer Staples sector.