Exciting times everyone. The stock market was up in April with a plethora of dividend stock increases. However, the month of May has showed promise for undervalued dividend stocks, as always. The weather in Ohio cannot make up its mind. I literally have seen a notification say something on my phone that baffles me. One evening, the weather notification stated, "It will be 33 degrees warmer tomorrow". I'll take the heat, but hate the swings! Sounds like the rollercoaster of the stock market, right? Time to check out my dividend stock watch list.
Dividend stock watch list
Here is what the market did in the last 30 days (from the screen shot below):
The market went up another 2.7%+ during the month of April! Happy to see May 1st took a slight at the end, but this has been nothing but up. Though the market has been on a tear, that doesn't mean there aren't hidden gems. Therefore, you have to be up to the challenge. What does it take?
It takes patience. It also takes sticking to your strategy. Further, using our Dividend Diplomat Stock Screener helps identify those opportunities. It also scopes out those that aren't undervalued.
1.) Occidental Petroleum (NYSE:OXY) - OXY remains on my dividend stock watch list. Here are my reasons on why it is on my watch list. First, there is a bidding war with Chevron (NYSE:CVX) on acquiring Anadarko (NYSE:APC). This has sent the price downward, as in acquisitions (usually), someone overpays. Further, Warren Buffett wants to commit $10 billion to this event, ultimately to OXY.
What has the stock price done in the first days of May? The stock has dropped an additional 2.5% within two days. They currently are yielding over 5.40%, which is well above their five-year dividend yield average. Price to earnings for 2019 has dropped to the 15 range. Dividend payout ratio is supported at 82%, but is definitely on the higher side.
2.) United Parcel Service (NYSE:UPS) - What happened to UPS over the last 30 or so days? It is down 5.6% from the end of March through May 2nd. The company slid primarily due to missing earnings estimates during its first quarter. However, even with the earnings miss, UPS still has a guidance around $7.50 for the year. What is the price-to-earnings ratio there? Well, that equates out to 14.1 on a share price of $105.51, everyone. UPS sports a dividend yield of 3.6%. Seems like a stock that sits nicely on a dividend watch list!
3.) LyondellBasell Industries (NYSE:LYB) - A stock that I wish I had more of already! I first purchased LYB back on March 18, 2019, at $87.45. It is now down to $85.96 or has declined 1.7% since then. Not too drastic, but a decline nonetheless. LYB yields a heavy 4.65%, has a price to earnings of 8.2, and is in an industry (chemicals/basic materials) that I do not have too much exposure to.
Further, LYB is one of the biggest chemical companies in the world. My initial investment was close to $1,500, and I wouldn't mind doubling down on it. I usually like to do so, though, after a 5% drop. That would put the company in the $83 range. That may be too greedy/hopeful; I may have to adjust that approach. Either way, it is on my dividend stock watch list and would love to own more!
Dividend Stock Watch List Conclusion
Interesting, right? I have three solid companies in three completely different industries. Further, the dividend yield has a solid glide along the spectrum. I say this because from a dividend yield perspective, UPS has 3.6%, LYB at 4.65%, and then OXY over 5.4%. Further, all three stocks are in my dividend portfolio. Out of all three stocks, my smallest stock position is currently LYB, and it just happens to be in the sweet spot on the dividend yield spectrum. I'd love to make a move by the end of next week or May 10th.
What is your favorite of the three? Do you go for longevity, and with the consumer shopping spree and load up on UPS for being on the road? Do you go for high yield and big oil with OXY? Or, do you simply stick it boring and big with LYB? All three have dividend investment metrics I like. I believe UPS and LYB have more dividend stock metrics I like compared to OXY. Decisions, decisions. What do you do? As always, good luck and happy investing everyone!
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.