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A Dividend Stock From Each Sector - May 2020

May 06, 2020 3:06 AM ETEMN, OMC, WHR, ADM, AMP, ORCL, GD, D, BMY27 Comments

Summary

  • We've entered a period of some recovery. As a result, the companies which only weeks ago were cheap, are no longer available at a good price.
  • We need to start either accepting a premium from a desired fair value, or look to different-tier companies, or the ones still available at a discount.
  • I choose the latter at this time - and I show you what companies these are.

During the past few weeks, the discounts we've been enjoying in key quality stocks have disappeared. Coca-Cola (KO) at 4% yield? Forget it. Johnson & Johnson (JNJ) at 3%+? No more. Even a few mid-range stocks in terms of quality have picked up steam, and the three-digit discounts that were available in some financial stocks have quickly turned into high double-digits, heading for low double-digits.

Countries are potentially opening things back up again. Things are, people hope, slowly and potentially starting to return to normal.

Now, I've no doubt that this may be a bit of a "fool's" rally, and that we're headed down again, at least to some extent. I'll admit though, that I have a hard time seeing the catalyst for a serious, 5-15% drop from these levels. I don't believe a higher corona case number will do it, nor higher mortality rates. The market has been conditioned to the bad news involving corona. I don't have a crystal ball, but two things make me continue investing at this time.

  • I don't know if the market is actually going to go seriously back down from these levels.
  • Even if it does, the companies I'm looking at at the prices I'm paying are still pretty amazing deals, all things considered, and in the very long run.
  • I try not to care about the overall market, but focus on individual companies.

So, that being cleared up, it's time to present some of the potential candidates for May, or at least these coming few weeks in May. For the sake of this article, I'll focus on the businesses in my watchlist and model which correspond to an NA geography rather than international. A few reasons for this, but for the most part I find it useful to keep these recommendations separate at this time.

This article was written by

Wolf Report profile picture
32.12K Followers

Wolf Report is a senior analyst and private portfolio manager with over 10 years generating value ideas in European and North American markets.

He is a contributing author for the investing group iREIT on Alpha where in addition to the U.S. market, he covers the markets of Scandinavia, Germany, France, UK, Italy, Spain, Portugal and Eastern Europe in search of reasonably valued stock ideas. Learn more.

Analyst’s Disclosure: I am/we are long ADM, AMP, CE, CMCSA, D, FRT, GD, JNJ, KO, LEG, LOW, MO, NUE, OMC, PFG, PM, TD, WHR, ORCL, ABC, BMY, AVGO, O, SPG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (27)

T
As an amatuer small time investor, I love these articles on SA, it's like going to financial $chool.
Thank you und keep up the great work.
T
Great article providing solid intel- Nice work
t
Thanks for the articles! Pleasure to read your thoughts and analysis!
T
Thanks for the due diligence. Will be doing some research myself and maybe pick some of these names up.
l
Thank you for your work here! Like the idea of the winner and the runner up.
Only own 3 of them at this time. Avg. div.= 3.85%
Expecting a downturn, then enter gradual buying. The average dividend could be 4% at that point.
b
Comparing AMP to BX is a chore.....Which to choose?
BM Cashflow Detective profile picture
@baary
AMP is heavily undervalued, more than BX. First AMP, then BX. But preferably both. Not a duty for me. Significantly more fun.
u
Thank you for the useful report, Wolf Report.

Retired dividend-growth investor
S
You have a very nice talent for writing and being easy to understand. Keep up the good work, love reading all your articles,
BM Cashflow Detective profile picture
As always, great articles and stock selection. I have shares in some. I'm currently making selective purchases. But I regularly run out of capital faster than investment ideas. Why is that? 🤔
R
Excellent article! You gave me some ideas to add to my own/watch list.
However, what about the energy sector? Thank you!
cemanuel profile picture
This is a good article. Unsurprisingly I agree with some and disagree with some of your recommendations. EMN has a debt to ebitda of 2.99, ADM 3.32, calculated before COVID started. That disqualifies either of them right now for me - I own ADM(not selling either), have had EMN on my watch list for a while. I have several investing rules right now. Except for limited sectors - GD and D are examples of two of them - my top three rules are balance sheet, balance sheet, balance sheet.
Mitridates profile picture
Good report, thank you
NeoContrarian profile picture
Great article:-) To-the-point and backed by numbers. Thanks!
Wolf Report profile picture
@NeoContrarian

Math or nothing ;).

All the best!
Jeff_22 profile picture
This article is one of the best articles I have read in a very long time. Thank you!
Wolf Report profile picture
@jescro
High praise - thank you! :)
NeoContrarian profile picture
Do we know the trailing past 4-years net debt figures for Archer Daniels Midland please?
buddyrow4 profile picture
👍
Eduard89 profile picture
Thank you for your insights!
Wolf Report profile picture
@Eduard89
Thank you for reading & commenting!
Lots of good prospects but I am in the camp of overpriced market in a global recession and 2nd quarter report cards will reveal how overhyped this market is.

Sitting on 55% cash and watching a bunch of these stocks you present.

Buy list for me is WHR and GD, but willing to wait.

Good article

🤙😷
Wolf Report profile picture
@hangloose Hawaii

Thanks hangloose! Can't deny that sitting on 55% cash at this time would make for an interesting situation - and you might be right, we'll see if we're on our way back down. Luckily, if that's the case i have plenty of potential cash coming in for more buys :).

GD and WHR - both excellent!
S
Hey @Wolf Report

Love these articles, great writing and some interesting takes on these companies for us with similar investing strategies. You mix objective facts with personal input and an interesting valuation based on your own fav metrics. Most importantly, you make it easy to read and understand for the average reader. Love it, keep it up!
Wolf Report profile picture
@Stenes
Thanks for the compliment! I try not to overcomplicate and include too much in terms of detailed analysis. if you're interested in more deep dives into financials, most of these companies have that in several articles :).

All the best!
V
Like the article and the logic behind the assumptions!
Wolf Report profile picture
@Victor Noborski
Thanks, love that you read and comment :).
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