1 Domestic Dividend Stock To Buy Now And 2 To Put On The Radar

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Includes: AAPL, ED, WFC
by: Abba's Aces

Summary

With the global uncertainty taking place right now I think it is a good time to invest in domestic stocks which pay bountiful dividends.

ConEd is an electric utility company which pays a hefty 4.43% yield and I believe to be a good buy right now.

Apple is very well known for its iPhones and iPads, pays a low yield of 1.98%, and I believe I'm going to wait before buying anymore shares.

Wells Fargo is a domestic banking stock which pays a good 2.8% yield but I think I will wait on buying some more shares right now.

As the Russia/Ukraine crisis goes, so go the markets. On Friday the markets went up on reports that the Russian military exercises along the Ukraine border have softened. This has been a great earnings season thus far; I can't even count how many of my stocks are up significantly on earnings alone. But the overall market continues to be driven by the headline news in Russia right now. But Russia has been retaliating against the rest of the world by imposing sanctions in response to sanctions imposed on them. It has been a volatile time, as there has been a flight to safety in US treasuries. This past week was rather strong again with Dow gaining 0.4% for the week while the S&P 500 gained 0.3% and the Nasdaq gained 0.4%. Continued geopolitical issues with no resolutions from Europe to the Middle East continue to weigh on the markets and 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.

Apple Inc. (NASDAQ:AAPL)

Apple designs, manufactures, and markets mobile communication and media devices, personal computers, portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. On July 22, 2014, Apple reported third quarter 2014 earnings of $1.28 per share. This result beat the consensus of the 46 analysts following the company by a nickel and beat last year's third quarter results by 19.95%. Apple'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. However, during the past year, earnings growth has lagged its historical five year growth rate.

The company went ex-dividend on August 7, 2014 with a $0.47 per share dividend which will be paid on August 14, 2014 for a yield of 1.98%. In terms of news pertaining to the company during the week, it is speculated that Apple will be holding an iPhone event (nothing has been published on the Apple website as of yet) on September 9, 2014. In other news though, the company has agreed with Samsung (OTC:SSNLF) to end all patent suits taking place outside of the US.

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 50.6, while the MACD chart below shows the black line below the red line with divergence bars flattening in height, meaning the bearish momentum on the stock may be coming to an end. The trend for the stock has been downward since the end of July and I'll continue to wait until I see momentum increase.

Click to enlarge

Wells Fargo & Co. (NYSE:WFC)

Wells Fargo is a bank holding company which operates in three segments: Community Banking, Wholesale Banking and Wealth, Brokerage and Retirement. On July 11, 2014, Wells reported second quarter 2014 earnings of $1.01 per share. This result was in-line with the consensus of the 30 analysts following the company and beat last year's second quarter results by 3.06%. Wells' PE ratio is among the lowest of any stock in the regional banks industry and signals that investors have not been willing to pay a premium for this company's business prospects, 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 August 6, 2014 with a $0.35 per share dividend which will be paid on September 1, 2014 for a yield of 2.8%. In terms of news pertaining to the company during the week it raised its estimate of unreserved legal costs and it was the only bank left off of the living wills rejection list by the FDIC and the Fed.

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 41.08, while the MACD chart below shows the black line below the red line with divergence bars increasing in height, meaning bullish momentum may start sometime soon. The trend for the stock has been downwards since the beginning of July so I'm going to play this one cool wait for a bit more bullish momentum.

Click to enlarge

Consolidated Edison Inc. (ED)

ConEd is a holding company that owns Consolidated Edison Company of New York and Orange & Rockland Utilities. On August 7, 2014, ConEd reported second quarter 2014 earnings of $0.65 per share. This result beat the $0.54 consensus of the 13 analysts covering the company and beat last year's second quarter results by 18.18%. ConEd's PE ratio is among the lowest of any stock in the electric utilities 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 will go ex-dividend on August 11, 2014 with a $0.63 per share dividend which will be paid on September 15, 2014 for a yield of 4.43%. In terms of news pertaining to the company during the week it stated that it still has not accrued any liability for the Manhattan explosion which took place in mid-March.

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 54.68 and upward trajectory, while the MACD chart below shows the black line below the red line with divergence bars increasing in height, meaning bullish momentum is strong now. The trend for the stock has been upwards since the beginning of August so I think it might be a good time to buy the stock.

Click to enlarge

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 AAPL, ED, WFC. 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.