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Lanny's September Dividend Stock Watch List

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Includes: ADM, CMI, LYB
by: Dividend Diplomats
Summary

What has happened in the last 30 days? Interest rate cut of 0.25, trade tariffs and Target showing the stock market and dividend community that retail is not dead.

There are three solid dividend growth stocks listed. Now, they aren't the most popular names in the world, but they have sound balance sheets, safe payout ratios and are starting to really be hard to not make a move.

Out of all three, I believe I would be more interested to invest within Cummins, based on where my current position stands.

What has happened in the last 30 days? Interest rate cut of 0.25, trade tariffs and Target (NYSE:TGT) showing the stock market and dividend community that retail is not dead. As we all know, the market can be a very, very volatile ride and each month brings potentially new opportunities. Industries are hot or cold depending on the place and time of the year, or an earnings beat here or there. Time for us to dive in and see what I'm cooking for my September 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 is down 1.75% from July 21st through August 21st. The Fed did it! They announced the 0.25% rate cut, this sent the markets up, but then the trade-war tariff talk picked up with China, which has caused the roller coaster that you see throughout the last 3 weeks in August. Talk about not being able to ever predict the future.

Since the rates dropped, this has sent the markets shuddering downward, and I have seen the 30-year mortgage rate at 3.35% and the 15-year at 2.85%. This is one of the BEST times for you to re-finance your mortgage. If you aren't at least analyzing, talking to a mortgage banking or your financial institution, you are not providing a service to yourself or your family. I recommend exploring the option, as it can save you money per month with a lower mortgage rate, which would equal a lower payment (typically). This can save you thousands of dollars in the long run, as well.

However, there is always an opportunity. It takes patience. It also takes sticking to your strategy.

Cummins Inc. (NYSE:CMI)

Who is Cummins? Well, linked below is my purchase on this classically boring dividend income stock. They have a 10-year and going dividend growth streak, with the latest clocking in at 15%.

They have an approximate 35% payout ratio, with a price to earnings of ~9.37. Further, their yield is now over 3.55%, which is far higher than where they are at historically. In addition, their price point of $147.76 represents an approximate $19 price drop or 11.11% lower than my initial purchase. I just may have purchased them a time or two during August.

LyondellBasell (NYSE:LYB)

I have purchased LYB on quite a few occasions, including twice in May and AGAIN in July, only $10 too high, based on today's price of $73.13. They continue to hover around that $73 stock price point, which causes their dividend yield to be closer to 6%. Further, their dividend increase this last go around was a solid 5%. They are in the chemical industry and the competition is obviously Dow (NYSE:DOW) as well as Eastman (NYSE:EMN).

The price to earnings is a little over 7 and the payout ratio is around 40%. Therefore, they still have room to expand their dividend going forward. I've invested ~$5,000 and I could see myself adding another $1,000 to the position, to average down.

Archer-Daniels-Midland (NYSE:ADM)

The dividend aristocrat is back on the list. Hard to keep them off, to be honest. If you haven't read on the blog yet about them, ADM is an American global food processing and commodities trading corporation. They help fuel the food that we eat on an everyday basis.

They are currently trading at $37.93, which is barely $1 away from their 52-week low. Archer's last dividend increase was ~4.5%, which is a little on the lighter side. Now that ADM has slid into the $37 range, however, their yield has juiced up to 3.71%, based on their forward dividend of $1.40 per share.

Analysts still are expected $2.83 in earnings this year, equating to a price to earnings ratio of 13.40, so not the lowest, but definitely FAR below the market, on average. In addition, I believe the trade tariff discussion is hurting them quite a bit.

Needless to say, this is an undervalued dividend aristocrat that is approaching the 4% range. If they drop below $36.00 per share, I think I'll be adding to my position.

Dividend Stock Watch List Conclusion

The trifecta, you betcha! These are three solid dividend growth stocks listed above. Now, they aren't the most popular names in the world, but they have sound balance sheets, safe payout ratios and are starting to really be hard to not make a move. The move I am referring to is buying shares in these fundamentally sound companies.

Out of all three, I believe I would be more interested to invest within Cummins, based on where my current position stands. Then, I'd love to average down on LyondellBasell, as long as prices stay down. Lastly, but definitely not least, Archer-Daniels-Midland will bring up the rear for me.

As you have noticed, I have trickled many articles on this page to hopefully educate new dividend investors out there, or to sharpen the terminology for current dividend investors. As always, stick to your investment strategy and dividend stocks will be there. Thank you, good luck and happy investing everyone!

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.