Dividend yield is an interesting investing metric. I have been reading many articles recently about YOC (yield on cost) and CY (current yield). I was asked by a reader to update my portfolio and want list article from last year. This article is about stock prices and getting your stock for a great value. Using fair value and getting a nice price, especially for a starter position, is important, but I want to get my current stock holdings at or near historic dividend high yields. I am not always successful, but I keep those numbers handy and always in mind before I do a purchase.
As dividend yield goes up, that usually means the stock price goes down and that is a trigger for me to identify why the price is down and if I should buy.
Buy & Hold2012, a frequent commenter, likes to buy ONLY when the S&P 500 is at all-time historic lows, that is his plan. I so agree when stock prices are low, it is time to buy. I, however, will buy on market dips or when stocks hit historic high dividend yields and therefore price lows. Some metric should be included in your plan, what it is or how you facilitate it is up to you and only you. This is what makes investing interesting, individual and for me fun.
I will do a quick update of my new purchases and sells at the end of these dividend yield and price charts for you to review. I have been rather busy and having FUN adjusting my portfolio for the better, in my opinion.
The stock dividend per share is a must-have to determine the dividend yield. My March Madness article contains those numbers for your reference.
Please note, yield is just one method to determine a price value to make a stock purchase. P/E and cash flow to name a few can also be used. Yield is just one way to attempt to find a nice buy range, which this article will address.
Dividend yield, just to be clear, is the current 1-year stock dividend paid usually in dollars divided by the current stock price expressed in dollars.
For an easy example, let's use Johnson & Johnson (NYSE:JNJ) with the current yearly dividend of $3.00, soon to rise. The current stock price is $113.32. (All prices in this article are for Friday, April 22nd, 2016 at closing).
Thus, the current dividend yield is $3 / $113.32 = .02647 or rounded to the percent equivalent of 2.6%
Now, if I would want JNJ @ 3% yield, I would calculate that price simply by dividing $3.00 (the dividend) by the desired yield fraction (.03) to get the price of $100. $102 is actually the fair value given for JNJ by M*.
I like to know the historic yield and try to buy as close to it as I can. Success is not always guaranteed but worthy of a try.
I include the historic dividend yields I determined from F.A.S.T. Graphs going back only about 10-12 years. I did notice, surprisingly enough, that 2015 was a historic year for buying many of these stocks. The Great Recession of 2008-10 also provided many higher yields.
The chart below shows the fair values by Morningstar (M*), NASDAQ 1-year target, and S&P IQ report information. Note that there are some empty spots as some of the stocks are not covered.
The chart below is for stocks I already own, and I have done my own due diligence for wanting to own them. (Some more happily now than others, but for the most part happy).
Yield, dividend growth rate, quality, valuation, balance, are all considerations for purchases as well.
These charts are only reflecting the use of dividend yield.
Curr = current price or yield (as of April 22nd)
|Stock Ticker & Name||M* FV||target||S&P IQ||HistoricYield||Curr price||curr yield|
|(NASDAQ:AAPL) Apple||133||130||130||(2013) 2.4||105.97||2|
|(NYSE:ABBV) AbbVie||65||75||84||(2012) 4.7||61.37||3.7|
|(NASDAQ:ADP) Automatic Data Processing||79||88||85||(2009) 3.6||89.35||2.4|
|(NASDAQ:AMGN) Amgen||194||183||202||(2015) 1.9||164.35||2.4|
|(NYSE:BA) Boeing||129||140||160||(2008) 3.8||131.08||3.3|
|(NYSE:BDX) Becton Dickinson||165||172||156||(2012) 2.3||159.88||1.7|
|(NYSE:CAT) Caterpillar||68||67||52||(2015) 4.4||78.32||3.9|
|(NYSE:CL) Colgate-Palmolive||71||71.5||69||(2010) 2.5||69.06||2.3|
|(NYSE:CLDT) Chatham Lodging||24.75||(2011) 6.5||20.99||6.6|
|(NYSE:CLX) Clorox||114||120.5||109||(2012) 3.4||122.45||2.5|
|(NYSE:CMI) Cummins||118||95||120||(2015) 4||116.11||3.4|
|(NYSE:CNP) CenterPoint Energy||21||21||18||(2015) 6||20.81||4.9|
|(NASDAQ:CSCO) Cisco||27||29.5||30||(2014) 3.4||28.15||3.7|
|(NYSE:CVS) CVS Health||104||114||107||(2012) 1.6||101.44||1.7|
|(NYSE:CVX) Chevron||107||100||95||(2015) 6.1||102.1||4.2|
|(NYSE:D) Dominion||70||78||67||(2009) 6.4||70.06||4|
|(NYSE:DEO) Diageo||118||119||110||(2009) 5.8||109.49||3.2|
|(NYSE:DLR) Digital Reality Trust||88||(2013) 7.2||86.17||4.1|
|(NYSE:GIS) General Mills||57||62||62||(2009) 3.7||60.56||3|
|(NYSE:GPC) General Parts||83||100||95||(2009) 6,4||96.78||2.7|
|(NYSE:GWW) W.W. Grainger||230||205||252||(2015) 2.4||229.13||2|
|(NASDAQ:HAS) Hasbro||77||88||87||(2012) 4.5||87.43||2.3|
|(NYSE:HCN) Welltower||75||67.5||65||(2008) 9||68.27||5|
|(NYSE:HCP) HCP, Inc.||41||30.5||31||(2008)12.7||33.76||6.8|
|(NYSE:HSY) Hershey||103||92||88||(2008) 3.9||90.55||2.6|
|(NASDAQ:HTGC) Hercules Technology||14||(2008) 29.3||12.17||10.2|
|(NYSE:IBM) International Business Machines||145||155||150||(2016) 4.2||148.5||3.5|
|Johnson & Johnson||102||117||133||(2010) 3.7||113.32||2.6|
|(NYSE:KMB) Kimberly-Clark||109||144||128||(2010) 4.5||126.88||2.9|
|(NYSE:KO) Coca-Cola||43||47||45||(2008) 4.1||44.54||3|
|(NYSE:LMT) Lockheed Martin||193||240||197||(2012) 5.2||226.83||2.9|
|(NYSE:LNT) Alliant Energy||63||73||67||(2009) 7.4||69.1||3|
|(NYSE:LXP) Lexington Realty Trust||9||(2008) 39||8.72||7.8|
|(NYSE:MA) MasterCard||120||107||90||(2015) 0.9||97.45||0.8|
|(NYSE:MAIN) Main Street||33||(2009) 16.7||31.44||8|
|(NASDAQ:MAT) Mattel||28||35||25||(2015) 7.8||32.02||4.7|
|(NYSE:MCD) McDonald's||128||128||140||(2014) 3.7||125.5||2.8|
|(NYSE:MMM) 3M||160||162||145||(2008) 4||168.66||2.6|
|(NYSE:NHI) National Health Investors||67||(2015) 6.3||66.97||5.4|
|(NYSE:NKE) Nike||57||72||73||(2009) 2.5||59.44||0.9|
|(NYSE:NSC) Norfolk Southern||97||84||95||(2012) 3.5||91.33||2.6|
|(NYSE:O) Realty Income||50||61||(2013) 6%||59.37||4|
|(NYSE:OHI) Omega Healthcare Investors||36.5||(2011) 11||34.4||6.6|
|(NYSE:OXY) Occidental Petroleum||53||76||78||(2015) 4.7||75.85||4|
|(NYSE:PG) Procter & Gamble||90||85||84||(2015) 4||80.95||3.3|
|(NASDAQ:PNNT) PennantPark||7||(2015) 19.1||6.48||17.3|
|(NASDAQ:SBUX) Starbucks||65||68||68||(2014) 1.6||57.68||1.4|
|(NYSE:SO) Southern Co.||48||50.5||47||(2015) 5.2||49.26||4.5|
|(NYSE:STAG) Stag Industrial||20||(2015) 8.2||19.96||7|
|(NYSE:T) AT&T||33||40||42||(2015) 6.1||38.07||5|
|(NYSE:TGT) Target||77||83||82||(2015) 3.2||82.33||2.7|
|(NASDAQ:TROW) T. Rowe Price||77||77||80||(2015) 3.2||77.58||2.8|
|(NYSE:UBA) Urstadt Biddle||23.5||(2016) 6||20.29||5.1|
|(NYSE:UL) Unilever||44||49.35||46||(2015) 3.4||45.99||2.9|
|(NYSE:UNP) Union Pacific||95||87||95||(2015) 2.9||89.63||2.5|
|(NYSE:V) Visa||104||87.5||80||(2014) 0.9||79.11||0.7|
|(NYSE:VFC) VF Corp.||78||68||70||(2009) 5.1||64.07||2.3|
|(NYSE:VLO) Valero||68||78||82||(2016) 4||61.24||3.9|
|(NYSE:VTR) Ventas||63||59||65||(2015) 6||60.49||4.9|
|(NYSE:VZ) Verizon Communications||50||53||51||(2015) 5.8||50.55||4.5|
|(NYSE:WEC) Wisconsin Energy Corp.||50||57||52||(2015) 3.9||56.65||3.5|
|(NYSE:WFC) Wells Fargo||61||57.5||57||(2016) 3.4||50.62||3|
|(NYSE:WPC) WP Carey||60||(2015) 6.8||60.8||6.4|
|(NYSE:WPG) WP Glimcher||8.75||(2015) 10.1||10.11||9.9|
|(NYSE:XOM) Exxon Mobil||79||85||88||(2015) 4.4||87.53||3.3|
|(NYSE:PM) Phillip Morris||92||109||99||(2015) 5.3||96.92||4.2|
|(NYSE:MO) Altria||59||66||59||(2012) 6||60.52||3.7|
|(NYSE:XEL) Xcel Energy||33||39.25||37||(2013) 4||39.05||3.5|
Want to buy prices and yields
The next chart shows the want-to-buy (WTB) prices for my future purchases, and I include some of the prices I did pay for the most recent buys. I have included National Retail Properties (NYSE:NNN) at the end of the list. It is a stock I would like to own at the right yield.
I have purchased CVS, BDX, CSCO, UBA, and WPG just recently and was more generous in buying them to get the starter position. I now have lower dream prices, and have become more frugal in the chase. There are many stubborn investors, and I used to be one, that would just want to wait for the perfect lowest price. I have found it most often doesn't really happen. I most often do look for the best time to buy. I believed this was the correct time, price and yield for these newer buys.
You might notice I also sold COP, CRC, NOV, GILD and EMR. Discussion of these purchases and sells to follow.
All prices are in $ and the yield is %
***Please note LMT was bought @ $214 and not 114 as this chart indicates, my entry error.
|Stock Ticker & Name||WTB||Yield||Recent Buy|
|Automatic Data Processing||72||3|
|Amgen||138- 133||2.9 -3||140|
|Becton Dickinson||132 -139||2 -1.9||149|
|CVS Health||89.50-94||1.9 -1.8||102.9|
|Digital Reality Trust||75 -72||4.7 -5||72|
|International Business Machines||100||5.2|
|Johnson & Johnson||100||3.1|
|Lexington Realty Trust||6.75||10||7.6|
|National Health Investors||58||6.2||60|
|Omega Healthcare Investors||32||7.1||31|
|Procter & Gamble||70||3.9|
|T. Rowe Price||68||3.2|
|Wisconsin Energy Corp.||50||4|
|Exxon Mobil||73-78||4 -3.7|
|(NASDAQ:KHC) Kraft-Heinz Co.||65||3.5|
|National Retail Properties||38-40||4.5-4.3|
New additions and sales
These choices filled openings for the portfolio in healthcare, tech and made my equity REITs a bit more diversified. I found some of them, happily, on the C/C/C list by David Fish, as mentioned in the commentary below.
For my Healthcare Spot:
13-year Dividend Challenger. 1-year dividend raise (DGR) of 27.3% and 5-year DGR of 32%. Dividend of $1.70 and 1.7% yield. It has a nice growing share price.
It has earnings growth projected of 13.5%. Easily beats the Chowder Rule @ 33.7.
Becton Dickinson and Co.
42-year Dividend Champion. 1-year DGR of 10.1% and 5-year of 10.7%. Earnings growth of about 10-12%. Dividend of $2.64 and yield of 1.7%. The Chowder number is 12.4. I would like it higher, but accept it for this new purchase.
Sold Gilead (NASDAQ:GILD)
GILD also has a newer dividend that yields 1.7%. It has a very flat growth chart. It, however, holds plenty of cash where it can buy revenue. I decided I didn't like following the drama and price fluctuations for this biotech and moved to a less volatile healthcare environment. Just me. I still own AMGN and I have been increasing my position in it.
Cisco is a 6-year dividend payer. 1-year DGR of 10.8% and 5-year DGR not available. Dividend is $1.04 with a yield of 3.7%. It passes the Chowder rule if not using the 5-year DGR. Earnings growth of ~5% and currently near or at fair value.
Sold Emerson Electric (NYSE:EMR)
I do not want another spin-off, which EMR plans to do with its electrical unit. I do not see any earnings growth (actually -4.2% in F.A.S.T. Graphs) for the near future. I sold because I could make some capital gains in my Roth. It is a quality company in tough times, but I will move out and away and watch from the side lines for now.
Sold some Energy:
My short-sighted long vision sees tough times still ahead and into 2017 for oil/gas. Time to get out and move on.
These 2 are fighting the trends and COP still shows a declining cash flow into 2017. I want less energy holdings and have now sold all of the position. I lost money on this company, but not a lot. CRC was in the way and I sold it. Too small a holding to have any major effect in the portfolio. I did get a some positive cash from selling it.
I did recently add VLO, 4% yield, a refiner to keep the energy sector in balance, along with CVX and XOM, I still own. Please refer to a recent article I wrote about VLO if you wish more information.
Bought some equity REIT stocks:
This is an interesting play for me. It is a 22-year Dividend Contender, a retail equity REIT with 5.1% yield. It has a steady 1% dividend raise for 5 years. Not as great as AT&T nor Verizon, but still diversifies my eREIT sector. I should have listened to Bill Stoller in an article in 2015 last year and bought it around $17.50 and got that bigger yield (5.8%), but for now I am pleased. Gosh, even Brad Thomas said it was dirt cheap and Bill mentioned it in his article. So you can read about it all in that article. I woke up, but a bit late, and will wait for that great yield to hopefully happen again. I will not be afraid to average down on it.
WP Glimcher is also an eREIT, but in RETAIL malls. Washington Prime Group Inc. operates independently of Simon Property Group Inc. (NYSE:SPG) as of May 28, 2014. It was spun-off, and Brad Thomas in a recent article has mentioned it as an alternative to the expensive, yet known quality storage REITs for a value play. I am playing.
That's all folks and I will welcome any thoughts you might wish to convey.
Disclosure: I am/we are long I OWN ALL THE STOCKS LISTED EXCEPT NNN.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.