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Not 1, But 2 Dividend Gifts From The Market

Oct. 05, 2021 10:14 PM ETBMY, WBA30 Comments

Summary

  • Buying above-average companies at below-average prices is generally a winning strategy.
  • I highlight 2 such blue-chip companies whose stocks have been beaten down by the market.
  • They are both paying well-covered and historically high yields, and are set up for potentially strong returns.
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I would love to own stock in a company that has a moat, pays a decent dividend yield, has no uncertainties for the foreseeable future, and trades a cheap price. That would be wonderful, but guess what? Finding that type of opportunity is next to impossible, as

This article was written by

Gen Alpha profile picture
17.17K Followers

I am Gen Alpha. I have more than 14 years of investment experience, and an MBA in Finance. I focus on stocks that are more defensive in nature, with a medium- to long-term horizon.

I provide high-yield, dividend growth investment ideas in the investing group Hoya Capital Income Builder. The group helps investors achieve dependable monthly income, portfolio diversification, and inflation hedging. It provides investment research on REITs, ETFs, closed-end funds, preferreds, and dividend champions across asset classes. It offers income-focused portfolios targeting dividend yields up to 10%. Learn more.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of BMY, WBA either through stock ownership, options, or other derivatives. 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.

This article is for informational purposes and does not constitute as financial advice. Readers are encouraged and expected to perform due diligence and draw their own conclusions prior to making any investment decisions.

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 (30)

Stickgs profile picture
A stock yielding 2.31% or even 4.06% is nowhere near a high enough yield for my consideration. Thanks for the article anyways.
jgrever621 profile picture
Maybe.. Am long BMY and agree here, but NOT with WBA. This partly as my wife uses them for drugs, and I find them a bit difficult.

And I much prefer CVS as an investment, and am long CVS, as I rather like the combination they have onstructed. Once debt is reduced, hopefully by year end, dividends will resume growth.
i
Glad I decided to read your article, I never looked at BMY as a potential investment, but will definitely look into it further now!
j
BMY just went ex-dividend on September 29. So, for dividend investors who are unconvinced that BMY is going to run away to the upside (and more serious discussions about pharmaceutical price controls at the Federal level may hold down the price of BMY) those wanting to buy or add to BMY may not push shares out of the high $50s/low $60s until dividend hunters begin nibbling buys before the next ex-dividend date in late December.

WBA went ex-dividend on August 18. The stock price chart shown in the article shows no clear evidence of a reversal in the most recent share price decline. As mentioned in the article WBA is well off its share price highs and margins have been shrinking.

So, even though we're long both names I see no immediate catalyst to be materially adding to either position. JMHO.
K
I sold out of BMY earlier this year following the oracle of Omaha. BMY never seems to do anything. It is on my radar to buy back in closer to year end after tax loss selling season. I did the same with GILD last year and it's worked out well for a market beating return.
T
Walgreens has proved popular with educated Americans as they can see what a disgusting rat ship CVS is. CVS threw in with cynical, lying Obama - and banned cigarettes from its stores in a gross "politically correct" move to appease
the Leftist Lunatics. All they did was chase their "smoker" population away. Was this immoral? YES. The working class and lower class female population of our Country has less money than older men. These old women have smaller social security checks (from the days where they were low paid secretaries, or stay at home Moms). They depend on drug stores for a few small pleasures, some basic food stuffs, and their prescriptions. They walk to to the stores because they cannot afford a car - and they live as an older population (in their 70's, 80's and 90's in arthritic pain) When CVS banned cigarettes the millions of women had to go further (walk farther) to drugstores that did carry cigarettes. As such, old poor women, who are already suffering had to suffer even more because of the brain dead/heartless decision of a fat cat leftist CEO of CVS. Instead of walking three blocks to the local CVS many older women have to walk - as much as twenty or thirty blocks to a rival drugstore. (often a Walgreens - a Company that did not turn its back on the elderly female population of this Country). CVS deserves everyone's scorn. My elderly Mom smoked until she passed away at age 87. I wish she had not smoked but, she did. In her last two years she asked me to go out and get her cigarettes for her. So, I learned about what these older women need and go through. I have nothing but, contempt for leftist CVS. I have not gone into their stores since they made the decision to ban cigarettes. (a product that is bought by millions - in our free Country) I support freedom - not censorship, nor bans of legal products - nor the lies and hypocrisy of the politically correct Leftists.
L
@TheWallStreetKid wait a healthcare store banned a unhealthy, deadly product? Shocking. CVS is by far the superior investment, and their focus on the long term will have them handily outperforming WBA.
thirdcamper profile picture
@TheWallStreetKid Let me get this straight. A health care company that runs an insurer as well as stores decided no longer to sell a product proven to cause cancer and numerous other health problems? Yes, appalling.
thirdcamper profile picture
@Lindsay-fathand Oh, didn't see yours. Didn't need to post. Great minds...
rickevantodd profile picture
Very good article. Long both stocks highlighted.
P M D profile picture
My patience is growing thin with BMY. Been holding for almost three years, still in the red even after dividends.
thirdcamper profile picture
@P M D Hold on and it will surprise to the upside.
Money&Money,LLC profile picture
@P M D its not BMY's fault that the market has this stock very misvalued. The Market has gone stupid, overvalueing some stocks by up to 80% with no profit, shaky outlooks and manipuated trading. While solid companies such as BMY with great fundamentals go nowhere.
thirdcamper profile picture
@Money&Money,LLC On the mark. And when a bigger correction comes, guess which ones will come out of it better?
I agree with you on BMY. A lot of problems with WBA. No way would I buy it just for the dividend and that's basically all it has going for it.
thirdcamper profile picture
BMY is an exceptional bargain and a growing company, but I prefer CVS over WBA despite WBA's higher dividend.
L
@thirdcamper CVS is the much better investment long term IMO. I love their long term thinking. One of the few companies who actually puts the health of the company ahead of short term share price. Example, not raising dividend while carrying a large debt load. Even with a very low payout ratio and declining they have stayed focused on deleveraging and once they hit their target we can expect healthy dividend raises and share buybacks. Very Long CVS and adding
davidandersonlaw profile picture
Go into CVS or Walgreens and see how poor the service is. Stay away.
s
Agree with you on BMY.
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Related Stocks

SymbolLast Price% Chg
BMY--
Bristol-Myers Squibb Company
WBA--
Walgreens Boots Alliance, Inc.

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