We recently wrote an article highlighting 8 core dividend stocks retirees should buy on a pullback. This article discusses specific "buy zones" for those 8 must-own stocks.
As discussed in the previous article, The global economy will continued to be weighed down by a debt problem that took over two decades to create. The leverage that has built up in the system will not unwind for years to come and it will continue to provide significant uncertainty and market volatility.
As central banks drive down short-term rates to deal with high debt levels and low growth rates, investors have been flocking to dividend stocks in search of yield. That said, any pullback in the market should be an opportunity to add to your low-beta dividend stock positions.
In the current market environment, it is important for income investors to choose their dividend stocks wisely as they are putting new money to work. As volatility increases (especially downside volatility), investors may want to add some low-beta stocks to their holdings to help dampen overall portfolio volatility. In general, companies with low betas will tend to be less volatile than the general market.
Below is a list of 8 dividend stocks that we think should be a core part of any income investor's portfolio.
Current "Buy Zones"
Due to the current market rally (which we believe will be short-lived), investors should consider waiting for a pullback in these stocks to enter a new position or to add to an existing position.
Most of the stocks above are currently in a positive uptrend. As such, investors should be looking for near-term areas of support as potential entry points.
Abbott (ABT) should get some decent support at the $54.00 level. As shown in the chart above, the upward trend line and the 50-day moving average converge around the $54.50 level. Additional support will likely be found at the 200-day moving average ($51.83).
Buy Zone: $52.00-$54.00
Altria (MO) has been trading in an upward range the past few months, and we believe that this trend will continue for the stock as investors continue to seek good risk-adjusted yield in a low interest rate environment. That said, the stock should get downward support around the 50-day moving average ($28.39), and we think that investors should consider buying MO on any further dips. As of today, MO is hovering around the high end of our "Buy Zone."
Buy Zone: $27.25-$28.25
Annaly Capital Management (NLY) recently broke above the top part of its recent trading range. This breakout was driven by the Fed's recent announcement to keep interest rates low through the end of 2014, which is positive for mREITs. The stock should get near-term support from its 50-day ($15.99) and 200-day ($16.20) moving averages.
Buy Zone: $15.75-$16.25
While AT&T (T) has been range-bound the past few months, the stock traded back above $30.00 a few weeks ago for the first time since July. Even though the stock has now dipped back below $30.00, we think that AT&T will continue its long-term uptrend, and we would be a buyer on any further dips. The 50-day and 200-day moving averages are converging around the $29.00 level, and we think that the stock will get very strong support here.
Buy Zone is $28.25-$29.25.
Consolidated Edison (ED) is in a very strong uptrend, and we think that it should continue on this path for the foreseeable future. The stock has recently pulled back below the 50-day moving average, and we would be a buyer on any further pullback.
Buy Zone: $55.00-$57.00
Although Johnson & Johnson (JNJ) is still in a long-term uptrend, the stock has been trading in a range the past few months. On a market pullback, we expect JNJ to test the bottom part of its recent range again, and we would look to enter a position around this level.
Buy Zone: $61.00-$62.00
Kinder Morgan Energy Partners (KMP) has been in a very strong uptrend since breaking out in mid-October. While we think that this uptrend will continue, the stock was technically overbought and is in the midst of a healthy pullback right now. That said, we optimistically waiting for KMP to enter our "buy zone." The 50-day moving average ($80.44) should provide near-term support, and we would be a buyer if the stock dips below this level.
Buy Zone: $77.00-$79.00
Southern Company (SO) is in a very strong uptrend, and we think that it should continue on this path for the foreseeable future. The stock is currently getting support at the 50-day moving average ($44.62) and we would be a buyer on any further pullback.
Buy Zone: $42.00-$43.00