A Dividend Stock From Each Sector - May 2020

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.

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.