Today I opened up a fortune cookie. My fortune read... Good things come to those who wait. Being a value investor with a special emphasis towards dividend reinvestment and compounding dividends, I couldn't have agreed more. But wait...
Isn't the S&P is up about 9.5% year-to-date and the market has been on a pretty good run lately? Aren't pundits coming out of the woodwork to bend over backwards, telling us to expect a pullback? Being a conservative guy myself, I don't really feel comfortable predicting which way the market will go over the next few months, but, with that said, I don't mind spilling the beans while letting you in on what I plan to purchase over the course of the week with my dividend income. A relatively modest jump in the S&P doesn't scare me because I'm in this for the long haul.
Here's what's been on my mind lately:
Shares of Exelon Corporation (NYSE:EXC) are looking currently looking mighty ripe for the picking. EXC is trading so close to its 52 week low with a dividend yield approaching 5.5% and a moderate payout ratio of 56%. I'm having a hard time believing I'm the only one out there who wants to jump on board, am I right? Of course, there's a good amount of uncertainty revolving around EXC's short term prospects with the Constellation (NYSE:CEG) merger and long term prospects in relation to inevitable changes in energy policy. (Exelon's main source of income is nuclear power and that's not exactly held in the highest regard at the moment.) However, I feel confident EXC will continue to prove to itself as a leader in its respective industry and will continue to diversify its sources of energy generation, including wind, solar and natural gas. This is a company I feel is poised to continue rewarding investors with massive dividend payouts for decades to come. I look forward to plowing more of my dividend disbursements into EXC while the dividend yield hovers above 5%. I'm crossing my fingers the share price will not make a bullish run over the next week.
I'm not exactly Uncle Moneybags over here, but I might just have enough capital to make an additional purchase next week. If so, I have my sights set on Sysco Corporation (NYSE:SYY). Sysco is a leader in food service and, for argument's sake, let's just say I wouldn't want to be one of their competitors. In addition, SYY is boasting a 3.7% dividend yield and a super modest payout ratio of 53%. Better yet, with 42 years of consecutive dividend increases, SYY is about as consistent and productive as you can hope a food service company to be. I look forward to reinvesting my hard-earned cash on Sysco Corporation stock for years to come because I trust the business and their reputation. In light of Exelon's merger with Constellation, I would expect SYY's share price to appreciate quicker than EXC's, but I'm also hoping I'll be able to jump in this upcoming week at a nice, attractive price with the intent on holding onto shares for many decades to come.
We may not all be so lucky to open up a fortune cookie that helps us decide which stocks to buy, but I think it's safe to say taking the long-term approach to investing is a much safer route than the alternative. I've decided to reinvest my dividend income in stocks that reward the long term investor. If you feel I'm wrong with this approach, feel free to roast me in the comment section below. I always look forward to an intelligent discussion.