October 2018 Stock Considerations

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Includes: D, HCP, KHC, SBRA
by: Divhut

Here we go again. A new month is upon us, which means one thing... time for me to outline my potential stock picks for October. I can hardly believe that we are now entering the final quarter of 2018, but here we are. Where does the time go? Whenever I reflect on how fast the days, weeks and months roll by, I am reminded of the importance to always stay "fully" invested in the stock market. By now you know that I make my purchases every single month no matter what domestic or foreign event is taking place. Believe me... nothing you read about in the news matters.

Time is fleeting, time is our greatest asset and time in the market trumps all. Just stay invested (always). No one can accurately predict a market crash, correction, run-up/melt-up/melt-down, etc. I will continue to buy as the market marches higher and higher and higher. Am I crazy? We're due for a correction, right? We're overvalued, right? Maybe yes and maybe no. Maybe we see Dow 30K before the year is up? Maybe Dow 12K? No one knows, and basically, it's all a guess. Want proof?

2017

All Signs Show the Market Is Overvalued. What's an Investor to Do?

A Closer Look At Valuations: Is The Stock Market Overvalued?

2016

By this measure, the S&P 500 is overvalued by 72%

Here's how you know the stock market is hugely overvalued

2015

The stock market is overvalued any way you look at it

2014

The Stock Market Is Overvalued By 100%

Is the Stock Market Overvalued? It All Depends on How You Measure It

2013

The Stock Market Is Overvalued

It's not just stocks; everything is overvalued

2012

The Stock Market Is Still 33-44% Overvalued

2011

Are stocks really overvalued?

It took me just a few short minutes to find these articles. Imagine going back to 2011 and reading about an overvalued market. Imagine heeding the advice from any of these headlines. You would have missed out on some great upside. Everything you read online is an opinion. And financial headlines can be the most influential, as they have an aura of legitimacy. Think about it. Pick any stock you want and you'll find an "analyst" that has a Buy, Hold or Sell rating for the same company. Who is right? They all read the same financial reports and come up with differing opinions, which is why I buy every month with blinders on. Building my portfolio, diversifying, collecting and reinvesting my dividends growing my passive income stream and accepting that one day my portfolio value may be cut in half. I'm OK with that as long as my dividends keep rolling in, because at the end of the day, no one can accurately predict where the market will be in the next year, month, week or day. And so, I buy. With that being said, let's take a look at my October 2018 stock considerations.

First up is a name I have bought in August and September. One of my favorite utilities, Dominion Energy, Inc. (NYSE:D). As the stock continues to languish around $70, it remains an attractive potential buy for my portfolio. Of course, a juicy yield just south of 5% doesn't hurt either.

Next, I'm looking at beaten-down consumer staple, The Kraft Heinz Company (NASDAQ:KHC), an unloved company in an unloved sector sporting a very attractive P/E and juicy yield. KHC has a safe payout ratio, which should mean the dividend appears to be safe.

Finally, like last month, I'll potentially be looking to add to a couple of my health care REITs that have been showing some signs of life when compared to their performance in early 2018. These buys will allow me to average down my cost basis, while continuing to enjoy some generous yield. It's been a while since I added to any of my current REIT holdings, and HCP, Inc. (NYSE:HCP) is starting to look OK to me once again. Seeing HCP well below a $30 price could finally compel me to trigger a Buy. Also, in the health care REIT space, I am looking to add to my holding in Sabra Health Care REIT, Inc. (NASDAQ:SBRA). The stock has climbed a lot from its lows of 2018, as this skilled nursing REIT play still demonstrates a difficult business environment. Of course, that generous yield, which highlights some of the risk involved with the stock, can justify the risk/reward scenario.

What do you think about my potential October buys? Are any of these names on your watch list? Please let me know below.

Disclosure: Long HCP, SBRA, D, KHC.