Lanny's March Dividend Stock Watch List
Summary
- Given I own over 120+ shares, I wouldn't mind adding another 25 shares to the portfolio and creating an even more powerful dividend engine from Pfizer.
- I have invested ~$4,000 into VIAC and I could see myself doing another $1,000 in the future.
- Definitely I am eager to be active during March, as I make the march towards Financial Freedom.
Originally published February 24, 2020
February has been interesting. Some days/weeks they are down and others, the market is up. You just never know what the stock market will do, on any given day, based on economics and news that hits global publications. Therefore, it is time to pour a hot cup of coffee and begin my dividend stock research. Time to tune in for Lanny's Dividend Stock Watch List - March Edition.
Dividend stock watch list
During January, the market was almost at 3,360 at one point. Then, the S&P 500 index slid approximately 100 points towards the end. However, February appears to be similar, but different. First, the highs almost hit 3,400 but slowly has declined back down. However, the 3,300 mark appears to be a zone the stock market hasn't broken below in a few weeks.
What has been happening? First, the coronavirus has been hitting and impacting global operations. Apple (AAPL) reported softer-than-expected first-quarter figures, due to manufacturing slowing, as workers are unable to go in and to continue to make products. Therefore, that caused a bit of the shock to the system. As always, I turn off the loud noise and invest as usual, when there is opportunity.
As the saying goes, one can always find diamonds in the rough. Therefore, using the Dividend Diplomat Stock Screener, there is always an undervalued dividend stock up for grabs, that's where Financial Literacy and Research pays off.
Here is a display of what the market did in the last 30 days:
In addition, capital is necessary to make any dividend stock purchase that is on this watch list. How do I do it?
I save anywhere from 60-85% of my take-home pay and strongly believe Financial Freedom does not happen by hitting a home run on an investment. Nothing matters more than your savings rate on your journey to Financial Freedom, plain and simple.
Therefore, I work my butt off to make sure expenses remain in check and that my savings rates are meeting our investment and financial independence goals! Then, you rinse and repeat.
Pfizer
Pfizer (PFE) has been one of my long-term holdings in my Dividend Portfolio, but everyone may already know that. I've owned them for what could be almost 10 years. If you don't know them, they are a massive pharmaceutical company with products such as, but not limited to, Advil, Viagra, Xanax, EpiPen and Zoloft.
Why else has Pfizer caught my attention again? 1 year ago, they were at $42.88 and now they are trading at $35.72 or a 17% decline in the last 52 weeks. How about the other stats of Pfizer when put through the Dividend Diplomat Stock Screener?
Price to Earnings (P/E) Ratio: Analysts of Pfizer are projecting $2.91 in earnings per share for 2020. This represents a price to earnings ratio of 12.27, which is insanely low and is far more undervalued than the S&P 500 index or stock market as a whole.
Dividend Yield and Dividend Growth: Pfizer is paying $1.52 in dividends per year. At a share price of $35.72, this dividend yield calculates to be 4.25%, well above the S&P 500 dividend yield and my portfolio's overall yield. Pfizer is going on 10 years of dividends, loving it. The most recent increase, which has been standard, is $0.02 per quarter and the recent raise came out to be 5.56%. Continuing that trend, 5.3% would be the next dividend increase.
Dividend Payout Ratio: In addition, given the projection is $2.91 in earnings, the annual dividend is $1.52 per year. Therefore, the dividend payout ratio ends up at 52%. The dividend payout ratio ends up in the sweet spot of the 40-60% range.
Given I own over 120+ shares, I wouldn't mind adding another 25 shares to the portfolio and creating an even more powerful dividend engine from Pfizer.
ViacomCBS
ViacomCBS (VIAC) was on my February Dividend Stock Watch list and was trading at $34.13, at the time of that article. Given the stock price is currently (as of 2/23) $28.26, the 17% decline is hard to ignore. Now, I won't bore you with the details of who they are, but in short, they are a multi-channel/multi-content owned business, formed from the merger of Viacom and CBS.
Why am I big on them, right now? The war on streaming is real. You have Netflix (NFLX), Amazon (AMZN), Disney (DIS) and others in the space. ViacomCBS provides another competitive edge with their streaming from the companies they own, such as CBS, Paramount, MTV, BET, VH1, Nickelodeon, to name a few. Therefore, once all services are integrated, post-merger, the streaming package will pack a powerful punch and could offer additional competition in the space.
In addition, Paramount Pictures has quite the line-up for 2020. Movies include Sonic the Hedgehog (Currently doing well in the box office), A Quite Pace PT II, The SpongeBob Movie, Top Gun: Maverick with Tom Cruise, Coming 2 America with Eddie Murphy. Talk about potential to have a plethora of hits and this should increase revenue quite a bit, without even considering streaming services.
Therefore, the 17% drop has opened up quite a bit of opportunity for dividend investors. Using the Dividend Diplomat Stock Screener, here are the stats based on the close price of $28.26:
Price to Earnings (P/E) Ratio: Analysts are projecting $5.98 (lower from last article) in earnings per share. Taking the share price and dividing that price by this expectation, the P/E ratio is 4.73. That doesn't even make sense. Since they are below the S&P 500 index and below the 15-20 threshold, this is a sign of undervaluation for ViacomCBS.
Dividend Yield: Based on the $28.26 share price and a go-forward dividend of $0.96 per share, ViacomCBS now yields 3.40%, which is higher than the S&P 500 index, as well as my overall portfolio dividend yield. This means that for every $1,000 invested, $34 is added in forward dividend income. Not too shabby if you ask me.
Dividend Payout Ratio: Since analysts are projecting $5.98 in earnings per share for 2020, you take the dividends per year of $0.96 and divide that over $5.98. That means, their dividend payout ratio is a minor 16%. Dividend increases should be large and plentiful in the future, no doubt.
In addition, ViacomCBS recently increased their dividend in December by 33.33%, post-merger close. Talk about an insane jump! I anticipate a dividend increase once every 3 years. Therefore, I do not anticipate receiving one again until 2022.
I have invested ~$4,000 into VIAC and I could see myself doing another $1,000 in the future.
Armanino Foods of Distinction
Armanino Foods (OTCPK:AMNF) is back on my watch list, since they were recently showcased on my December 2019 version.
Here is a brief background: Officially a corporation in 1986, their primary products are Pesto, Pasta and Meatballs. What's not to love?
Armanino's stock price has declined recently and is now trading at $3.32, down from their high of $3.79. This could partly be due to 3rd quarter sales and income figures falling slightly behind last year's 3rd quarter, primarily due to business in Asia. AMNF stated this has been due to timing and limited ability to determine spending patterns on that side of the world. We'll have to see how the 4th quarter does, which hasn't still yet been released.
Price to Earnings (P/E) Ratio: Earnings per share through 3 quarters came in at $0.1579 for an annualized figure of $0.21. Based on a share price of $3.32, this equates to a price to earnings of 15.80, which is below the stock market on average. I still wish I would have bought more back in 2018, to say the least.
Dividend Yield and Dividend Growth: Why do I like them right now? Their dividend yield currently is at 3.01%, based on their $0.10 per year or $0.025 per quarter dividend, and they recently grew their dividend 11% in 2019. That is a great combination of yield and dividend growth, to say the least. In a year where dividend growth has slumped, AMNF has come through. In addition, their growth history is looking down at 6 years in 2020, and their 5-year dividend growth rate is steady at double-digits recently. I would anticipate a dividend increase from $0.025 to $0.0275 in 2020 or 10%, keeping up with the quarter of a cent raise.
Dividend Payout Ratio: Further, their payout ratio is at 47.6%, which is in the middle of the 40-60% sweet spot.
I wouldn't mind picking up another 60-100 shares of Armanino at current prices.
Dividend Stock Watch List Conclusion
The best part about all 3 companies above is that they all are currently part of my dividend income portfolio. Prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.
Out of all 3 dividend stocks above, Pfizer may be the first up there, then ViacomCBS, wrapped up by Armanino. Definitely I am eager to be active during March, as I make the march towards Financial Freedom.
As you have noticed, I have trickled many articles on this page. The goal is to 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. What do you think of these stocks above? Thank you, good luck and happy investing everyone!
- Lanny
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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