1 Dividend Stock To Buy Now And 3 To Wait For

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 |  Includes: CSCO, RYN, T, UNP
by: Abba's Aces

Summary

Cisco is an undervalued tech name paying a nice dividend.

AT&T is a huge yielding communications company.

Union Pacific keeps America moving with its dividend during this period of jobs growth in America.

Rayonier is a high yielding timber real estate investment company which completed a spin-off of its materials business.

New highs after new highs, are you getting tired of it? Probably not. But it makes you wonder. This time the new highs are courtesy of the June jobs report. This by far is the one of the most important reports that anyone should pay attention to. This past week was rather strong again with Dow gaining 1.32% for the week while the S&P 500 was up 1.44% and the Nasdaq gained 2.44%. It seems like all stocks have been rising without any discrimination. We seem to be hearing less about Iraq these days and that is probably what's causing the markets to move higher, but unless we hear an absolute all clear the situation can potentially escalate and the market may give back a lot of the gains. In times like these I love picking up some more shares of value dividend stocks.

Call me a pessimistic optimist, but for now I will continue the course and purchase value stocks for my dividend portfolio. Value investing is the bread and butter of Warren Buffett's money-making strategy. 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 may be correcting itself from all-time highs 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 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.

Cisco Systems, Inc. (CSCO)

Cisco designs, manufactures and sells internet protocol-based networking and other products related to the communications and information technology industry, and provides services associated with these products and their use. On 14May14, Cisco reported third quarter 2014 earnings of $0.51 per share. This result beat the $0.48 consensus of the 37 analysts covering the company and was the same as last year's third quarter results. Cisco's PE ratio is below the communications equipment industry average and signals that investors are not willing to pay a premium for this stock, making it a value stock. Additionally, during the past year, earnings growth has outpaced its historical five year growth rate.

The company went ex-dividend on 02Jul14 with a $0.19 per share dividend which will be paid on 23Jul14 for a yield of 3.02%. In terms of news pertaining to the company during the week, it announced that it bought Assemblage to fortify its collaboration toolkit.

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 68.9, while the MACD chart below shows the black line crossing above the red line with divergence bars increasing in height, meaning the bullish momentum is still strong. The trend for the stock has been upwards since the end of June so I'm going to play this one cool and not buy a position here.

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AT&T, Inc. (NYSE:T)

AT&T is a provider of telecommunications services in the U.S. and worldwide. On 22Apr14, AT&T reported first quarter 2014 earnings of $0.71 per share. This result beat the consensus of the 24 analysts following the company by a penny and beat last year's first quarter results by 10.94%. AT&T's PE ratio is among the lowest of any stock in the communications services industry and signals that investors have not been willing to pay a premium for this company's business prospects, making it a value story.

The company goes ex-dividend on 08Jul14 with a $0.46 per share dividend which will be paid on 01Aug14 for a yield of 5.13%. In terms of news pertaining to the company, it was announced the company will receive $5.6 billion by selling its shares in America Movil (NYSE:AMX) to Carlos Slim.

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 67.87, while the MACD chart below shows the black line above the red line with slowly increasing divergence bars, meaning there is bullish momentum on the stock. This stock has rallied a bit during the week along with every other name, I'm going to wait it out and not put any additional capital to work right now but definitely have it on the radar.

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Union Pacific Corp. (NYSE:UNP)

Union Pacific Corporation owns transportation companies, of which its principal operating company, Union Pacific Railroad Company, connects 23 states in the western 66% of the United States. On 17Apr14, Union Pacific reported first quarter 2014 earnings of $1.19 per share. This result was in-line with the consensus of the 24 analysts following the company and beat last year's 1 quarter results by 17.24%. Union Pacific's PE ratio is below the railroads 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 12Jun14 with a $0.455 per share dividend which was paid on 01Jul14 for a yield of 1.8%. In terms of news pertaining to the company, no alerts were released this week.

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 approaching overbought territory with a current value of 60.8, while the MACD chart below shows the black line just below the red line with increasing divergence bars, meaning there's bullish momentum in the name right now. Because there is momentum upwards in the name, I believe it can continue to move up but maybe only until it gets closer to overbought territory on the RSI index. However, I'm not going to buy anymore of it right here because I believe it's just going to be a small move up.

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Rayonier, Inc. (NYSE:RYN)

Rayonier is compared to real estate investment trusts and is an international forest products company primarily engaged in activities associated with timberland management, the sale and entitlement of real estate, and the production and sale of specialty cellulose fibers and fluff pulp. On 29Apr14, Rayonier reported first quarter 2014 earnings of $0.36 per share. This result missed the $0.46 consensus expectations of the six analysts following the company and missed last year's first quarter results by 54.43%. Rayonier's PE ratio is among the lowest of any stock in the real estate operations 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 12Jun14 with a $0.49 per share dividend which was paid on 30Jun14 for a yield of 5.52%. In terms of news pertaining to the company, the company completed its spin-off of Rayonier Advanced Materials (NYSE:RYAM).

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 53.12, while the MACD chart below shows the black line below the red line with increasing divergence bars, meaning there's bullish momentum in the name right now. I'm going to place an additional purchase in the name right now because I think it can move upwards after the spinoff.

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Conclusion

I've highlighted these names because they are poised to increase their dividends in 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 choppy. 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: The author is long CSCO, T, UNP, RYN, RYAM. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.