Summer time is here! Tariff news have been relentless lately, and the stock market is behaving as expected. We are riding big hills up, and we are experiencing deep dives down. 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 down 6.6%+ during the month of May! I am sure we were all happy to see the downturn happen in May, opening up more opportunities to deploy our hard-earned and saved capital. Not only has it dropped, but it was also a complete MUDSLIDE on May 31st, to say the least. Who is buying baby?! This watch list has tweaks and is slightly different and showcases dividend powerhouses, that's for certain.
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.
Let's get the party started with a dividend aristocrat - 3M. It is currently pushing over 61 straight years of consecutive dividend increases, a feat that is not held by many, but the damn tape dispenser company is doing it. We know the brands, Scotch Tape, Scotch-Brite sponges and not to mention all of the air filters for your HVAC system. However, they are much more than that, considering they are 95+ BILLION dollar company.
The forward earnings expectations are $9.52, producing a price to earnings ratio of 17.4. Further, the yield is at 3.47% with a very pleasing dividend growth rate of 5.9%. MMM's payout ratio looks even better at 60%. This dividend powerhouse will be able to increase dividends going forward, no doubt. I would be interested in buying once the yield gets closer to 3.60%. It's no surprise why it's one of Bert's 5 ALWAYS buy stocks.
United Parcel Services (NYSE:UPS)
Online shopping and delivery is almost as common as brushing your teeth twice per day. United Parcel Services has been loving it, right? Further, UPS is a beast of a company. It has a market capitalization over 80 BILLION and is yielding over 4%, as the stock price has teetered below $96.00 per share. It is going on 10 years of consecutive increases; damn you financial crisis, and I anticipate that streak to continue.
The forward earnings expectations are $7.46 and the price to earnings is below 13, at 12.87. It is currently yielding ~4.00% and the recent dividend increase stood at 5.50%. Therefore, the combination is getting close to 10%, a spot that I love! I would anticipate at least a 5%+ dividend growth rate going forward, as the payout ratio is still solid at 51%, boom. Looking forward to adding more at the current price levels of $96 and below.
Leggett & Platt (NYSE:LEG)
What's not to love about another dividend aristocrat in the mix. It has been paying dividends for over 45+ years and is now yielding over 4.35%, based on price activity during May 23rd. Leggett & Platt is in almost every bedding product, and it also is in quite a bit of product for the automotive industry. The company has been through all economic cycles and one has to like that type of experience for a company.
The forward earnings expectations are $2.47 and its price to earnings is below 15, at 14.88. It is rocking a 4.35% dividend yield and the recent dividend increase was at 5.26%. However, I believe that dividend growth rate will be the same, if not less, for a few years. The reason being, the payout ratio is over 60%, which we try to stay away from.
I would be interested in the company in the $35 range. For a more full analysis, I wrote a piece on them on Seeking Alpha.
Dividend Stock Watch List Conclusion
I currently only own two of the three, as I do not own 3M. However, any dividend aristocrat has a spot in my portfolio when they pass through the Diplomat screening metrics!
Ready to invest? There are ripe opportunities out there. Save your cash and get ready for deployment. As always, good luck and happy investing everyone!
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.