Category: Monthly Picks

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Dividend Stocks Monthly Picks

February 2022 Dividend Stock Picks

Welcome to another monthly dividend stock pick post and welcome to the new year! Here I will explain my screening process for finding high-quality dividend stocks and using my charting and company analysis to determine if these stocks are a good buy this month. Please keep in mind, all suggestions or chart interpretations are all my opinion, I always highly advise you do your own research and make sure you understand a company before you invest in it.

Now let’s dive into the stock screening criteria and our picks for this month!

Stock Screening Criteria

My stock screening criteria contains a mix of hard stats combined with a few fundamental ratios that I use as rules of thumb in order to identify stocks that reliably pay increasing dividends while also identifying if the stocks are undervalued and poised for growth.

My criteria gave me a list of 25 stocks which I narrowed down to 2. As Warren Buffett once said, “Never invest in a company you don’t understand.” I adhere to this rule and take stocks out of my watchlist based on my comfortability with understanding the company and the attractiveness of their chart. Below are the criteria and why I use them.

Market Capitalization

Market Capitalization, also called market cap, shows us how much a company is worth as determined by the stock market. A company’s market cap is equal to the total value of a company’s outstanding shares of stock. For example, if a company has a total of 1 million shares selling for $10 each, that company’s market cap would be 10 million.

I screen for companies with a market cap of at least 10 billion. These are generally called large-cap companies. These companies are large, established, are the most common stocks to pay dividends, and are not generally at risk of going under any time soon. For a dividend portfolio, large cap stocks will be our bread and butter. These companies do not usually bring in huge gains in the short term, but in the long term they generally trend upward with consistent increases in share value and dividend payments, which is the name of game with a dividend portfolio.

I will do some experimenting with smaller companies; however, these monthly stock picks will be the majority of my portfolio and thus I will stick to screening for companies with a market cap of at least 10 billion.

Dividend Yield

The dividend yield is a financial ratio which shows how much a company pays out in dividends each year in relation to its stock price (annual dividends per share/price per share). For example, if a stock pays $5 per year and has a market price of $100, the dividend yield would be 5%.

As a dividend investor, you would think that the higher the yield the better because we want to maximize dividends. While that logic is correct, it is important to understand why certain stocks may have uncommonly high dividend yields. If a company has healthy finances, a high dividend yield may mean that the company is unnecessarily shelling out lots of money in the forms of dividends when it could be utilizing some of those funds instead to better position the company for long term success. Every dollar a company pays out as a dividend is a dollar the company is not using to generate capital gains. We want to see a healthy balance of dividends and capital growth and sometimes a high dividend yield indicates the opposite.

A high dividend yield could also mean the stock’s price is declining while the dividend payout remains the same. The stock’s price is the denominator in the equation, so if the stock is trending downwards and the dividend payout remains the same, it will inflate the yield. Take for example a stock that paid a $1 dollar dividend per share last year with a cost of $20 dollars per share. That results in a 5% dividend yield. Imagine this year that same stock still paid $1 but now the stock was worth $10. The dividend yield would now be 10%, which is an increase from last year at the expense of the stock going down 50%.

In summary, a high dividend yield is not always bad, it just calls to our attention that we should review other metrics of the stock to confirm that the company is healthy. With all those things in mind, I screen with a dividend yield of greater than 2.5%. The average dividend yield of the S&P 500 is 2.22%. This keeps us right at the average. We still may see some suspiciously high yields in our list, this just means we will dive into those stocks in more depth to understand why. We may also see some lower yields, but those low yields should be justified by strong dividend growth. In the long run, a mix of high yield and low yield/high growth dividend stocks will be good for our portfolio.

Consecutive Years of Dividend Growth

This criterion is straight forward. Past performance isn’t always a great indicator of future performance, but in the case of dividends I don’t think this mindset is overly risky. If a dividend has increased year over year for a substantial amount of time, it is fair to expect that it will continue to do so. That is why I screen for stocks that have grown their dividends consecutively for at least 7 years. Lots of companies pride themselves on attaining the status of a “Dividend King” or a “Dividend Aristocrat” as it is quite the impressive title and it attracts dividend investors which is good for the stock’s price in the long term. By screening for at least 7 years of consecutive increases we, at the least, may be able to find companies that are on their way to attaining those titles (if they aren’t achieved already) and we can benefit from their efforts to do so.

P/E Ratio

This criterion I use as a rule of thumb and not a hard stat. P/E ratio is the price-to-earnings ratio and is calculated by market value per share divided by earnings per share. This ratio is commonly used by investors and analysts to determine if a stock is relatively undervalued and overvalued. This is where Warren Buffett found lots of success, he was great at finding companies that had discounted stock prices.

There are many complex methodologies that one can use to determine a stock’s relative value, however I believe the P/E ratio is the quickest and most straightforward way to understand a stock’s relative value. Generally, a high P/E ratio means that a stock is overvalued, and a low ratio means it is undervalued.

Seems simple enough, but there are a few limitations to keep in mind. With earnings per share as the denominator, if a stock has a very small earnings per share or none at all the P/E ratio won’t give you a true understanding of the stock’s relative value. P/E ratios also vary greatly from industry to industry. Therefore, it is helpful to view a stocks P/E ratio year over year to see how it is trending relative to stock price. It is also helpful to understand the P/E ratio of the market or the industry a certain stock is in. This information can give you context clues to determine if a stocks P/E ratio is healthy or not.

The S&P 500 has averaged a P/E ratio of 15.95 since its inception. With the above information in mind, I like to look for P/E ratios that range from 15-30, but sometimes exceptions will be made for stocks that require further research.

D/E Ratio

The debt-to-equity ratio compares a company’s total liabilities to its shareholder equity which lets us know how much leverage they are using. It measures how much debt versus equity they are using to finance their operations. In general, a high D/E ratio means higher leverage which means the company is aggressively financing its growth with debt which is risky.

If a lot of debt is used to finance the business, the cost of that debt could outweigh the benefits of the increase in earnings that it produces, however the opposite can also be true in some cases. Cost of debt can vary with market conditions and D/E ratios can vary greatly depending on industry, so it’s not always clear if a company is over leveraged or not.

In general, a high D/E ratio usually means more risk, especially to stocks that pay dividends. If a company is needing to pay down its debts, it has less cash on hand to pay dividends. My general rule of thumb for D/E trailing 12 month average is less than 15. Best case scenario, the D/E is less than 2, but some stocks will be in industries that are capital intensive which generally require more debt, so I will not immediately remove a stock from this list if they have a high D/E, these stocks will just require further research.

February Picks

Above is a table of the stocks, their data that meets my screening criteria, plus some other information that is beneficial for evaluating dividend strength and good times to buy. Next, we will look at each stock, go over a little bit about the company, and discuss their chart.

Best Buy Co. (BBY)

Best Buy Co. retails technology products in the United States and Canada. They provide computing, mobile phones, and many other consumer electronics and appliances. In addition, Best Buy also provides consultation, delivery, design, installation, memberships, protection plans, repair, set-up, and other technical support services. As of January 30th, 2021, Best Buy had 1,126 large-format at 33 small-format stores. The only concerning thing I saw about was their PE ratio of 9.9. This number is a little bit below my criteria, however, given the industry average of 11.96, their PE ratio is not bad.

Best Buy is a carry-over pick from last month. Their chart looks promising but didn’t give us the move I was expecting. It’s at a lower price now giving us a better opportunity to add.

Best Buy’s price action has bounced for the now the FOURTH time off of the channel support line at the $95 area. Last month it touched that area and bounced up, but didn’t have much steam to push higher off of the bounce. No material news had come within the last month, I believe the performance was simply muted due to the market movement we experienced in the last month. The first bounce happened in December of 2020 and quickly moved up to the $115 area. I am hoping for a similar move. Now that the last bounce proved to be weak, price action has stayed flat on the bottom bound of the channel and has stayed on it with some consistency. The longer it stays at this level, the stronger I believe a coming up trend will be. However, if we break this level, BBY will have a new 52 week low that could push us to the $88 support level and below. Watch for breaks at the $95 level, if the break is weak I plan on adding more, if the break is strong I will sit back and watch it play out.

Cummins (CMI)

Cummins designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power. The company offers diesel and natural gas powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets; and offers new parts and services, as well as remanufactured parts and engines. It also provides power generation systems, high-horsepower engines, heavy and medium duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services. The company also offers emission solutions; turbochargers; air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and electronic control modules, sensors, and supporting software, as well as new, replacement, and remanufactured fuel systems. The company sells its products to original equipment manufacturers, distributors, dealers, and other customers. Cummins was founded in 1919 and is a proven high-quality operator that is beginning to look attractive given the cyclicality of the business.

CMI’s chart looks like a wedge that also has an established support area around $220. The price first bounced off of $220 in last September and then broke under it in November. That support then turned into resistance which price action failed to break twice towards the end of 2021. Finally, towards the start of this year, the price broke through $220, making that area a support level again. Price has sat on that support level since and looks to be pushed upwards due to the narrowing of the wedge. I expect to see prices jump up and down around the $225 area before the wedge breaks. If it breaks up, we can see a strong move upwards. To me, I will be looking for buys on quick dips below $225 and $220.

Conclusion

In this article, I screened for stocks that look like they will provide regular growing dividends while also having potential for capital gains. My screening criteria found 25 stocks which fit the mold, I then narrowed that list down to 2 based on the attractiveness of the stock’s chart and my comfort with understanding the company.

I will watch these stocks play out through the month and add to them as opportunities present themselves, these chart analyses help us to be prepared for those buying opportunities. These stocks are suitable for further research and my article is not to be taken as financial advice. Thank you for reading and feel free to leave any replies or questions you may have on here or on my socials.

Categories
Dividend Stocks Monthly Picks

January Dividend Stock Picks

Welcome to another monthly dividend stock pick post and welcome to the new year! Here I will explain my screening process for finding high-quality dividend stocks and using my charting and company analysis to determine if these stocks are a good buy this month. Please keep in mind, all suggestions or chart interpretations are all my opinion, I always highly advise you do your own research and make sure you understand a company before you invest in it.

Now let’s dive into the stock screening criteria and our picks for this month!

Stock Screening Criteria

My stock screening criteria contains a mix of hard stats combined with a few fundamental ratios that I use as rules of thumb in order to identify stocks that reliably pay increasing dividends while also identifying if the stocks are undervalued and poised for growth.

My criteria gave me a list of 24 stocks which I narrowed down to 3. As Warren Buffett once said, “Never invest in a company you don’t understand.” I adhere to this rule and take stocks out of my watchlist based on my comfortability with understanding the company and the attractiveness of their chart. Below are the criteria and why I use them.

Market Capitalization

Market Capitalization, also called market cap, shows us how much a company is worth as determined by the stock market. A company’s market cap is equal to the total value of a company’s outstanding shares of stock. For example, if a company has a total of 1 million shares selling for $10 each, that company’s market cap would be 10 million.

I screen for companies with a market cap of at least 10 billion. These are generally called large-cap companies. These companies are large, established, are the most common stocks to pay dividends, and are not generally at risk of going under any time soon. For a dividend portfolio, large cap stocks will be our bread and butter. These companies do not usually bring in huge gains in the short term, but in the long term they generally trend upward with consistent increases in share value and dividend payments, which is the name of game with a dividend portfolio.

I will do some experimenting with smaller companies; however, these monthly stock picks will be the majority of my portfolio and thus I will stick to screening for companies with a market cap of at least 10 billion.

Dividend Yield

The dividend yield is a financial ratio which shows how much a company pays out in dividends each year in relation to its stock price (annual dividends per share/price per share). For example, if a stock pays $5 per year and has a market price of $100, the dividend yield would be 5%.

As a dividend investor, you would think that the higher the yield the better because we want to maximize dividends. While that logic is correct, it is important to understand why certain stocks may have uncommonly high dividend yields. If a company has healthy finances, a high dividend yield may mean that the company is unnecessarily shelling out lots of money in the forms of dividends when it could be utilizing some of those funds instead to better position the company for long term success. Every dollar a company pays out as a dividend is a dollar the company is not using to generate capital gains. We want to see a healthy balance of dividends and capital growth and sometimes a high dividend yield indicates the opposite.

A high dividend yield could also mean the stock’s price is declining while the dividend payout remains the same. The stock’s price is the denominator in the equation, so if the stock is trending downwards and the dividend payout remains the same, it will inflate the yield. Take for example a stock that paid a $1 dollar dividend per share last year with a cost of $20 dollars per share. That results in a 5% dividend yield. Imagine this year that same stock still paid $1 but now the stock was worth $10. The dividend yield would now be 10%, which is an increase from last year at the expense of the stock going down 50%.

In summary, a high dividend yield is not always bad, it just calls to our attention that we should review other metrics of the stock to confirm that the company is healthy. With all those things in mind, I screen with a dividend yield of greater than 2%. The average dividend yield of the S&P 500 is 2.22%. This keeps us right at the average. We still may see some suspiciously high yields in our list, this just means we will dive into those stocks in more depth to understand why. We may also see some lower yields, but those low yields should be justified by strong dividend growth. In the long run, a mix of high yield and low yield/high growth dividend stocks will be good for our portfolio.

Consecutive Years of Dividend Growth

This criterion is straight forward. Past performance isn’t always a great indicator of future performance, but in the case of dividends I don’t think this mindset is overly risky. If a dividend has increased year over year for a substantial amount of time, it is fair to expect that it will continue to do so. That is why I screen for stocks that have grown their dividends consecutively for at least 7 years. Lots of companies pride themselves on attaining the status of a “Dividend King” or a “Dividend Aristocrat” as it is quite the impressive title and it attracts dividend investors which is good for the stock’s price in the long term. By screening for at least 7 years of consecutive increases we, at the least, may be able to find companies that are on their way to attaining those titles (if they aren’t achieved already) and we can benefit from their efforts to do so.

P/E Ratio

This criterion I use as a rule of thumb and not a hard stat. P/E ratio is the price-to-earnings ratio and is calculated by market value per share divided by earnings per share. This ratio is commonly used by investors and analysts to determine if a stock is relatively undervalued and overvalued. This is where Warren Buffett found lots of success, he was great at finding companies that had discounted stock prices.

There are many complex methodologies that one can use to determine a stock’s relative value, however I believe the P/E ratio is the quickest and most straightforward way to understand a stock’s relative value. Generally, a high P/E ratio means that a stock is overvalued, and a low ratio means it is undervalued.

Seems simple enough, but there are a few limitations to keep in mind. With earnings per share as the denominator, if a stock has a very small earnings per share or none at all the P/E ratio won’t give you a true understanding of the stock’s relative value. P/E ratios also vary greatly from industry to industry. Therefore, it is helpful to view a stocks P/E ratio year over year to see how it is trending relative to stock price. It is also helpful to understand the P/E ratio of the market or the industry a certain stock is in. This information can give you context clues to determine if a stocks P/E ratio is healthy or not.

The S&P 500 has averaged a P/E ratio of 15.95 since its inception. With the above information in mind, I like to look for P/E ratios that range from 15-30, but sometimes exceptions will be made for stocks that require further research.

D/E Ratio

The debt-to-equity ratio compares a company’s total liabilities to its shareholder equity which lets us know how much leverage they are using. It measures how much debt versus equity they are using to finance their operations. In general, a high D/E ratio means higher leverage which means the company is aggressively financing its growth with debt which is risky.

If a lot of debt is used to finance the business, the cost of that debt could outweigh the benefits of the increase in earnings that it produces, however the opposite can also be true in some cases. Cost of debt can vary with market conditions and D/E ratios can vary greatly depending on industry, so it’s not always clear if a company is over leveraged or not.

In general, a high D/E ratio usually means more risk, especially to stocks that pay dividends. If a company is needing to pay down its debts, it has less cash on hand to pay dividends. My general rule of thumb for D/E trailing 12 month average is less than 15. Best case scenario, the D/E is less than 2, but some stocks will be in industries that are capital intensive which generally require more debt, so I will not immediately remove a stock from this list if they have a high D/E, these stocks will just require further research.

December Picks

Above is a table of the stocks, their data that meets my screening criteria, plus some other information that is beneficial for evaluating dividend strength and good times to buy. Next, we will look at each stock, go over a little bit about the company, and discuss their chart.

Best Buy Co. (BBY)

Best Buy Co. retails technology products in the United States and Canada. They provide computing, mobile phones, and many other consumer electronics and appliances. In addition, Best Buy also provides consultation, delivery, design, installation, memberships, protection plans, repair, set-up, and other technical support services. As of January 30th, 2021, Best Buy had 1,126 large-format at 33 small-format stores. The only concerning thing I saw about was their PE ratio of 9.9. This number is a little bit below my criteria, however, given the industry average of 11.96, their PE ratio is not bad.

Best Buy’s chart looks promising. Within the last month, BBY has bounced for the third time off of the channel support line at the $95 area, with the first bounce happening in December of 2020 and quickly moved up to the $115 area. I would expect a similar move this bounce given the strong RSI and state of the market. If this fails, we could see yet another approach to the $95 area followed by yet another bounce or a break.

Allstate (ALL)

Allstate provides property and casualty, and other insurance products in the United States and Canada. They have a diverse line of products across a wide range of segments. They sell through their call centers, agencies, financial specialists, brokers, wholesale partners, affinity groups, and online and mobile applications. Given the economic uncertainty of 2022, insurance stocks make great picks for this watchlist due to their excellent long-term returns and necessity regardless of economic health. Like Best Buy, Allstate has a lower than desired PE ratio. But like Best Buy, Allstate’s PE ratio is not bad when compared to the industry average of 13.87

Allstate’s chart looks promising. It is working its way up a steep increasing channel and has reached resistance around the $120 area. Prices are coming close to the bottom of the narrow channel which could cause prices to push through the resistance and continue upward. If not, I see downside to the $114 area.

Aflac (AFL)

Aflac provides supplemental health and life insurance products. It operates in the United States and Japan, offering cancer, medical, income support, whole life, term life, child endowment, accident, critical care, dental, vision, among other insurance offerings. Aflac’s debt levels and earnings show me that their dividend is extremely healthy and is ready to continue with their growth. Like Allstate, Aflac’s insurance business will churn out profits regardless of the market which I find particularly attractive right now.

Aflac’s chart is in a gradually increasing channel which it has stayed within since mid-august of 2021. The price has tested both the higher and lower bounds of the channel multiple times, leading me to believe it will continue into the near futures. However, we do need to keep in mind that Aflac recently reached a 52-week high and will need to push through that in order to maintain its upward momentum. We may see more downside to the bottom of the channel before we see another push for a high.

Conclusion

In this article, I screened for stocks that look like they will provide regular growing dividends while also having potential for capital gains. My screening criteria found 24 stocks which fit the mold, I then narrowed that list down to 3 based off of the attractiveness of the stock’s chart and my comfort with understanding the company.

I am long on all the stocks on this list. I will watch this list play out through the month and open new positions as opportunities present themselves, these chart analyses help us to be prepared for those buying opportunities. All 3 stocks are suitable for further research and my article is not to be taken as financial advice. Thank you for reading and feel free to leave any replies or questions you may have on here or on my socials.

Categories
Dividend Stocks Monthly Picks

December Dividend Stock Picks

Welcome to another monthly dividend stock pick post! Here I will explain my screening process for finding high-quality dividend stocks. I will highlight which stocks are currently in my portfolio as well as my favorite picks this month that I will be looking to add. Please keep in mind, all suggestions or chart interpretations are all my opinion, I always highly advise you do your own research and make sure you understand a company before you invest in it. Now let’s review last month’s picks (if you’re not interested in the breakdown of the screener than feel free to scroll down to this month’s picks)!

Now let’s dive into the stock screening criteria and our picks for this month!

Stock Screening Criteria

My stock screening criteria contains a mix of hard stats combined with a few fundamental ratios that I use as rules of thumb in order to identify stocks that reliably pay increasing dividends while also identifying if the stocks are undervalued and poised for growth.

My criteria gave me a list of 16 stocks which I narrowed down to 3. As Warren Buffett once said, “Never invest in a company you don’t understand.” I adhere to this rule and take stocks out of my watchlist based on my comfortability with understanding the company and the attractiveness of their chart. Below are the criteria and why I use them.

Market Capitalization

Market Capitalization, also called market cap, shows us how much a company is worth as determined by the stock market. A company’s market cap is equal to the total value of a company’s outstanding shares of stock. For example, if a company has a total of 1 million shares selling for $10 each, that company’s market cap would be 10 million.

I screen for companies with a market cap of at least 10 billion. These are generally called large-cap companies. These companies are large, established, are the most common stocks to pay dividends, and are not generally at risk of going under any time soon. For a dividend portfolio, large cap stocks will be our bread and butter. These companies do not usually bring in huge gains in the short term, but in the long term they generally trend upward with consistent increases in share value and dividend payments, which is the name of game with a dividend portfolio.

I will do some experimenting with smaller companies; however, these monthly stock picks will be the majority of my portfolio and thus I will stick to screening for companies with a market cap of at least 10 billion.

Dividend Yield

The dividend yield is a financial ratio which shows how much a company pays out in dividends each year in relation to its stock price (annual dividends per share/price per share). For example, if a stock pays $5 per year and has a market price of $100, the dividend yield would be 5%.

As a dividend investor, you would think that the higher the yield the better because we want to maximize dividends. While that logic is correct, it is important to understand why certain stocks may have uncommonly high dividend yields. If a company has healthy finances, a high dividend yield may mean that the company is unnecessarily shelling out lots of money in the forms of dividends when it could be utilizing some of those funds instead to better position the company for long term success. Every dollar a company pays out as a dividend is a dollar the company is not using to generate capital gains. We want to see a healthy balance of dividends and capital growth and sometimes a high dividend yield indicates the opposite.

A high dividend yield could also mean the stock’s price is declining while the dividend payout remains the same. The stock’s price is the denominator in the equation, so if the stock is trending downwards and the dividend payout remains the same, it will inflate the yield. Take for example a stock that paid a $1 dollar dividend per share last year with a cost of $20 dollars per share. That results in a 5% dividend yield. Imagine this year that same stock still paid $1 but now the stock was worth $10. The dividend yield would now be 10%, which is an increase from last year at the expense of the stock going down 50%.

In summary, a high dividend yield is not always bad, it just calls to our attention that we should review other metrics of the stock to confirm that the company is healthy. With all those things in mind, I screen with a dividend yield of greater than 3%. The average dividend yield of the S&P 500 is 2.22%. This screen keeps us higher than that average and higher than inflation while also not being too high that we must worry about unhealthy dividend yields. We still may see some suspiciously high yields in our list, this just means we will dive into those stocks in more depth to understand why.

Consecutive Years of Dividend Growth

This criterion is straight forward. Past performance isn’t always a great indicator of future performance, but in the case of dividends I don’t think this mindset is overly risky. If a dividend has increased year over year for a substantial amount of time, it is fair to expect that it will continue to do so. That is why I screen for stocks that have grown their dividends consecutively for at least 7 years. Lots of companies pride themselves on attaining the status of a “Dividend King” or a “Dividend Aristocrat” as it is quite the impressive title and it attracts dividend investors which is good for the stock’s price in the long term. By screening for at least 7 years of consecutive increases we may be able to find companies that are on their way to attaining those titles and we can benefit from their efforts to do so.

P/E Ratio

This criterion I use as a rule of thumb and not a hard stat. P/E ratio is the price-to-earnings ratio and is calculated by market value per share divided by earnings per share. This ratio is commonly used by investors and analysts to determine if a stock is relatively undervalued and overvalued. This is where Warren Buffett found lots of success, he was great at finding companies that had discounted stock prices.

There are many complex methodologies that one can use to determine a stock’s relative value, however I believe the P/E ratio is the quickest and most straightforward way to understand a stock’s relative value. Generally, a high P/E ratio means that a stock is overvalued, and a low ratio means it is undervalued.

Seems simple enough, but there are a few limitations to keep in mind. With earnings per share as the denominator, if a stock has a very small earnings per share or none at all the P/E ratio won’t give you a true understanding of the stock’s relative value. P/E ratios also vary greatly from industry to industry. Therefore, it is helpful to view a stocks P/E ratio year over year to see how it is trending relative to stock price. It is also helpful to understand the P/E ratio of the market or the industry a certain stock is in. This information can give you context clues to determine if a stocks P/E ratio is healthy or not.

The S&P 500 has averaged a P/E ratio of 15.95 since its inception. With the above information in mind, I like to look for P/E ratios that range from 15-30, but sometimes exceptions will be made for stocks that require further research.

D/E Ratio

The debt-to-equity ratio compares a company’s total liabilities to its shareholder equity which lets us know how much leverage they are using. It measures how much debt versus equity they are using to finance their operations. In general, a high D/E ratio means higher leverage which means the company is aggressively financing its growth with debt which is risky.

If a lot of debt is used to finance the business, the cost of that debt could outweigh the benefits of the increase in earnings that it produces, however the opposite can also be true in some cases. Cost of debt can vary with market conditions and D/E ratios can vary greatly depending on industry, so it’s not always clear if a company is over leveraged or not.

In general, a high D/E ratio usually means more risk, especially to stocks that pay dividends. If a company is needing to pay down its debts, it has less cash on hand to pay dividends. My general rule of thumb for D/E trailing 12 month average is less than 15. Best case scenario, the D/E is less than 2, but some stocks will be in industries that are capital intensive which generally require more debt, so I will not immediately remove a stock from this list if they have a high D/E, these stocks will just require further research.

December Picks

Above is a table of the stocks, their data that meets my screening criteria, plus some other information that is beneficial for evaluating dividend strength and good times to buy. Next, we will look at each stock, go over a little bit about the company, and discuss their chart.

Chevron (CVX)

Chevron started in 1879 through the discovery of an oil field near Los Angeles that produced 25 barrels of oil per day. Now, Chevron is one of the largest oil companies in the world and produces over 3 million barrels of oil or oil-equivalent materials each day. Chevron makes most of its profits by exploring for and producing oil, gas, and liquefied natural gas, but they also own refineries that use crude oil to make petroleum products. Despite operating in a highly cyclical industry, Chevron has managed to pay uninterrupted dividends since 1912 through adept management of costs and smart capital allocation decisions. Chevron acquires rivals during downturns and continuously reinvests profits into more exploration and production. Through these activities, Chevron has achieved huge scale which gives them a lasting advantage over competition. Chevron’s diverse asset base (heavy oil, deepwater, natural gas, conventional oil, shale, and their vast network of vertical integrated refineries) helps them to optimize profitability across a diverse portfolio of resources without sacrificing financial flexibility. The only concerning thing I saw about Chevron was their high payout ratio, however, given their extremely low leverage, that is a pretty mute issue.

Chevron’s chart looks promising. Within the last month, CVX price pushed through $113 resistance area that it failed to break twice this year. However, it hasn’t broken through that level with strength, and I am not certain that the resistance level has now turned into a support level. I will keep watching around the $113 area, if it breaks down again, we may see some great buying opportunities, if it holds support we could see upside to roughly the $120 price area that we saw in 2019.

J. M. Smucker (SJM)

J.M. Smucker’s was founded in 1897 when its founder began selling apple butter from his horse-drawn wagon (I freakin’ love apple butter). Since then, the company has grown to being one of the leading vendors of consumer-packaged goods found in most U.S. homes. The company’s portfolio of well-known products is balanced across at-home coffee (Folgers, Dunkin’), pet foods (Nutrish, Milk-Bone), and consumer foods (Smucker’s jams, Jif). Smucker’s industry has several strong barriers to entry including brand recognition, huge advertising budgets, retailer relationships, economies of scale, and the finances to be able to adapt to changes in consumer taste. Smucker’s size and recognizability allows them to outspend and outperform smaller rivals which has allowed them to obtain solid profit margins over the years. Their high cost of building Smucker’s brands’ awareness drives their growth and keeps new food producers from creeping into their territory. Smucker’s business has a strong moat which should allow them to continue to generate healthy cash flows and support their dividend which has been paid every year since 1972 and increased every year since 2002. Their products are recession resistant and the company is built to last for the foreseeable future.

SJM looks like a primed cup and handle pattern. The handle has formed at a depth of about ½ of the depth of the cup and has closed higher for the 3 days following that bottom. If we can see the handle break above the edge of the cup around the $130 area, we can see this pattern play out with upside to the highs of the year to date around the $140 area. However, given the state of the market, a failed pattern may be more realistic, and we could see prices come down to support at the $122 area. If it breaks down, I’ll watch and wait for downward pressure before adding. If we see the pattern play out, I will add shares as it breaks the upper line of the handle.

Lockheed Martin (LMT)

Lockheed Martin is a repeat watchlist pick from last month. They are the world’s largest defense contractor and supplier of fight aircraft. Lockheed’s business spans various combat aircraft, missile defense systems, military helicopter, and satellite systems, though they are best known for their F-35 fighter. A majority of their business is with the US government, which is trust that is hard to win. Few, if any, other companies have as much experience and capacity as Lockheed to win and deliver decade-long defense contracts that earns the trust of the world’s most powerful governments. Lockheed invests heavily each year into research and development to keep them on the cutting edge of technology that other smaller rivals can’t match. Much of Lockheed’s R&D is partly funded by government entities which makes their integrated relationships even more difficult to disrupt. Barriers to entry has caused the defense industry to consolidate over the years which limits the number of competitors that Lockheed has to bid against. This keeps Lockheed’s backlog full and in many ways puts them in a position where they are too big and too important to fail, regardless of political and social opinions on defense spending.

LMT is practically at the same level that it was at a month ago for the last stock pick. LMT bounced and established a bottom around the $330-$325 area. This month, the play is essentially the same. We can bounce and see upside to the upper $340 area or it could break support and head towards 52 week lows at $320. I think the upside is more likely now that we have a tried and true support area from last month. In my opinion, it is a good time to add as I think the strength of the bounce is evident depending on the direction of the market these next few weeks.

Conclusion

In this article, I screened for stocks that look like they will provide regular growing dividends while also having potential for capital gains. My screening criteria found 16 stocks which fit the mold, I then narrowed that list down to 3 based off of the attractiveness of the stock’s chart and my comfort with understanding the company.

I am long on all the stocks on this list. Of the picks, I already have a position in LMT. I will watch this list play out through the month and will either open new positions or add to current positions at key levels if my capital allows.

I do also take into account what months these stocks pay their dividends and I try to balance my portfolio so that I am earning roughly the same amount of dividends every month. This goal may influence my timing and decisioning when it comes to purchasing some of the stocks on this list.

All 3 stocks are suitable for further research and my article is not to be taken as financial advice. Thank you for reading and feel free to leave any replies or questions you may have on here or on my socials.

Categories
Dividend Stocks Monthly Picks

November Dividend Stock Picks

Welcome to another monthly dividend stock pick post! Here I will explain my screening process for finding high-quality dividend stocks. I will highlight which stocks are currently in my portfolio as well as my favorite picks this month that I will be looking to add. Please keep in mind, all suggestions or chart interpretations are all my opinion, I always high advise you do your own research and make sure you understand a company before you invest in it.

Now let’s dive into the stock screening criteria and our picks for this month (or scroll down to see the picks if you’re already familiar with the screen)!

Stock Screening Criteria

My stock screening criteria contains a mix of hard stats combined with a few fundamental ratios that I use as rules of thumb in order to identify stocks that reliably pay increasing dividends while also identifying if the stocks are undervalued and poised for growth. My criteria gave me a list of 19 stocks which I narrowed down to 3 based on the attractiveness of the chart and my general comfort with understanding the company.

Market Capitalization

Market Capitalization, also called market cap, shows us how much a company is worth as determined by the stock market. A company’s market cap is equal to the total value of a company’s outstanding shares of stock. For example, if a company has a total of 1 million shares selling for $10 each, that company’s market cap would be 10 million.

I screen for companies with a market cap of at least 10 billion. These are generally called large-cap companies. These companies are large, established, are the most common stocks to pay dividends, and are not generally at risk of going under any time soon. For a dividend portfolio, large cap stocks will be our bread and butter. These companies do not usually bring in huge gains in the short term, but in the long term they generally trend upward with consistent increases in share value and dividend payments, which is the name of game with a dividend portfolio.

I will do some experimenting with smaller companies; however, these monthly stock picks will be the majority of my portfolio and thus I will stick to screening for companies with a market cap of at least 10 billion.

Dividend Yield

The dividend yield is a financial ratio which shows how much a company pays out in dividends each year in relation to its stock price (annual dividends per share/price per share). For example, if a stock pays $5 per year and has a market price of $100, the dividend yield would be 5%.

As a dividend investor, you would think that the higher the yield the better because we want to maximize dividends. While that logic is correct, it is important to understand why certain stocks may have uncommonly high dividend yields. If a company has healthy finances, a high dividend yield may mean that the company is unnecessarily shelling out lots of money in the forms of dividends when it could be utilizing some of those funds instead to better position the company for long term success. Every dollar a company pays out as a dividend is a dollar the company is not using to generate capital gains. We want to see healthy balance of dividends and capital growth and sometimes a high dividend yield indicates the opposite.

A high dividend yield could also mean the stock’s price is declining while the dividend payout remains the same. The stock’s price is the denominator in the equation, so if the stock is trending downwards and the dividend payout remains the same, it will inflate the yield. Take for example a stock that paid a $1 dollar dividend per share last year with a cost of $20 dollars per share. That results in a 5% dividend yield. Imagine this year that same stock still paid $1 but now the stock was worth $10. The dividend yield would now be 10%, which is an increase from last year at the expense of the stock going down 50%.

In summary, a high dividend yield is not always bad, it just calls to our attention that we should review other metrics of the stock to confirm that the company is healthy. With all those things in mind, I screen with a dividend yield of greater than 3%. The average dividend yield of the S&P 500 is 2.22%. This screen keeps us higher than that average while also not being too high that we must worry about unhealthy dividend yields. We still may see some suspiciously high yields in our list, this just means we will dive into those stocks in more depth.

Consecutive Years of Dividend Growth

This criterion is straight forward. Past performance isn’t always a great indicator of future performance, but in the case of dividends I don’t think this mindset is overly risky. If a dividend has increased year over year for a substantial amount of time, it is fair to expect that it will continue to do so. A lot of dividend investors like to look for 10 years of growth, but I prefer to cut that short by a couple of years so that I am able to benefit earlier from the stocks that aspire to hit that mark of 10 years of increases. That is why I screen for stocks that have grown their dividends consecutively for at least 7 years.

P/E Ratio

This criterion I use as a rule of thumb and not a hard stat. P/E ratio is the price-to-earnings ratio and is calculated by market value per share divided by earnings per share. This ratio is commonly used by investors and analysts to determine if a stock is relatively undervalued and overvalued. This is where Warren Buffett found lots of success, he was great at finding companies that had discounted stock prices.

There are many complex methodologies that one can use to determine a stock’s relative value, however I believe the P/E ratio is the quickest and most straightforward way to understand a stock’s relative value. Generally, a high P/E ratio means that a stock is overvalued, and a low ratio means it is undervalued.

Seems simple enough, but there are a few limitations to keep in mind. With earnings per share as the denominator, if a stock has a very small earnings per share or none at all the P/E ratio won’t give you a true understanding of the stock’s relative value. P/E ratios also vary greatly from industry to industry. Therefore, it is helpful to view a stocks P/E ratio year over year to see how it is trending relative to stock price. It is also helpful to understand the P/E ratio of the market or the industry a certain stock is in. This information can give you context clues to determine if a stocks P/E ratio is healthy or not.

The S&P 500 has averaged a P/E ratio of 15.95 since its inception. With the above information in mind, I like to look for P/E ratios that range from 15-30, but sometimes exceptions will be made for stocks that require further research.

D/E Ratio (TTM)

The debt-to-equity ratio compares a company’s total liabilities to its shareholder equity which lets us know how much leverage they are using. It measures how much debt versus equity they are using to finance their operations. In general, a high D/E ratio means higher leverage which means the company is aggressively financing its growth with debt which is risky.

If a lot of debt is used to finance the business, the cost of that debt could outweigh the benefits of the increase in earnings that it produces, however the opposite can also be true in some cases. Cost of debt can vary with market conditions and D/E ratios can vary greatly depending on industry, so it’s not always clear if a company is over leveraged or not.

In general, a high D/E ratio usually means more risk, especially to stocks that pay dividends. If a company is needing to pay down its debts, it has less cash on hand to pay dividends. My general rule of thumb for D/E trailing 12 month average is less than 15. Best case scenario, the D/E is less than 2, but some stocks will be in industries that are capital intensive which generally require more debt, so I will not immediately remove a stock from this list if they have a high D/E, these stocks will just require further research.

November Picks

Above is a table of the stocks, their data that meets my screening criteria, plus some other information that is beneficial for evaluating dividend strength and good times to buy. LMT is highlighted yellow because that is one stock that I already have in the portfolio. Next let’s look at each stock.

Cardinal Health (CAH)

Cardinal Health, Inc. is a healthcare services and products company, which engages in the provision of customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices. It also provides medical products and pharmaceuticals and cost-effective solutions that enhance supply chain efficiency. Cardinal Health was founded in 1971 and is headquartered in Dublin, OH. CAH has a good dividend yield, P/E, D/E and history of continued to grow their dividends.

Cardinal’s chart looks promising. CAH has been in a downtrend for the last three months but is looking like it is going to bounce a second time at this $47.80 level which was the start of CAH’s big run at the start of the year. If it bounces off of this level and then breaks through the down trend, we could see prices return to the +$52 area. However, keep in mind, it is always risky to play around with prices near 52-week lows, which is where CAH is. If it breaks down it will break down hard. So watch for confirmation of bounce.

Altria (MO)

Altria Group, Inc. operates as a holding company, which engages in the manufacture and sale of cigarettes in the United States. They have smokeable and smokeless product segments. Between the two segments, they produce just about any tobacco product you can think of. They also own a wine segment. I personally have qualms with supporting the tobacco market, however, I don’t have any qualms with profiting off of it. The tobacco industry is seeing the global number of users has been rising and expect it to continue. over the next decade. MO has a good dividend yield, P/E, and D/E ratios. Their payout ratio is fairly large; however tobacco products can be lumped into the consumer staples category and the payout ratio for that industry tends to run high. It is a stable and consistent industry.

MO’s chart took a hit last week with their recent earnings report, going down nearly 10%. Great opportunity for us to grab some cheap shares! I do see that the chart could go back to previous resistance turned support levels around the $42 area. With reactions to earnings being so volatile, it would be good to wait for more downside before entering. If it bounces early, great, I’ll buy! If it keeps going down, I’ll keep watching for a bounce to get in at.

Lockheed Martin (LMT)

Lockheed Martin Corp., founded in 1961 and headquartered in Bethesda, MD, operates as a global security and aerospace company, which engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services. Their defense business has a great backlog of guaranteed work and their expansion into the space realm is very enticing. I think LMT has a great long term future.

Like Altria, they had an earnings report last week that knocked the stock down from $377 all the way down to $325. In last week’s portfolio update, I wrote a paragraph reviewing the report, read that article here. Unlike Altria, however, LMT has already bounced and established a bottom on this knife. I caught a share last week at $327. I’ll keep watching how this plays out by chance I want to add some more. If this bounce proves to be significant, I see potential upside towards the $332 area. If not and this support level at $330 breaks, then there is potential downside to the 52 week low at $320. I feel good about the bounce, but if you don’t, it is always good to wait for a better confirmation as selling strength is still evident in these candles.

Conclusion

In this article, I screened for stocks that look like they will provide regular growing dividends while also having potential for capital gains. My screening criteria found 22 stocks which fit the mold, I then narrowed that list down to 3 based off of the attractiveness of the stock’s chart and my comfort with understanding the company.

I am long on all the stocks on this list. Of the picks, I already have a position in LMT. I will watch this list play out through the month and will either open new positions or add to current positions at key levels if my capital allows.

I do also take into account what months these stocks pay their dividends and I try to balance my portfolio so that I am earning roughly the same amount of dividends every month. This goal may influence my timing and decisioning when it comes to purchasing some of the stocks on this list.

All 3 stocks are suitable for further research and my article is not to be taken as financial advice. Thank you for reading and feel free to leave any replies or questions you may have on here or on my socials.

Categories
Dividend Stocks Monthly Picks

Dividend Stock Picks – October 2021

Welcome to the first edition of Dividend Dollar’s stock picks! Here I will explain my screening process for finding high-quality dividend stocks. I will highlight which stocks are currently in my portfolio as well as my favorite picks this month that I will be looking to add. Below are my picks for this month. The tickers in blue text are stocks I already have in my portfolio. Please keep in mind that I am not a financial advisor, everything below is simply my opinion.

TickerAT&T (T)Amgen (AMGN)3M (MMM)Walgreens Boots Alliance (WBA)Realty Income (O)Coca-Cola Co (KO)

Stock Screening Criteria

My stock screening criteria contains a mix of hard stats combined with a few fundamental ratios that I use as rules of thumb in order to identify stocks that reliably pay increasing dividends while also identifying if the stocks are undervalued and poised for growth. My criteria gave me a list of 15 stocks which I narrowed down to 6 based on the attractiveness of the chart and my general comfort with understanding the company. Below is a breakdown of my screening criteria, the specifics of the criteria are underlined.

Market Capitalization

Market Capitalization, also called market cap, shows us how much a company is worth as determined by the stock market. A company’s market cap is equal to the total value of a company’s outstanding shares of stock. For example, if a company has a total of 1 million shares selling for $10 each, that company’s market cap would be 10 million.

I screen for companies with a market cap of at least 10 billion. These are generally called large-cap companies. These companies are large, established, are the most common stocks to pay dividends, and are not generally at risk of going under any time soon. For a dividend portfolio, large cap stocks will be our bread and butter. These companies do not usually bring in huge gains in the short term, but in the long term they generally trend upward with consistent increases in share value and dividend payments.

I will do some experimenting with smaller companies, however, these monthly stock picks will be the majority of my portfolio and thus I will stick to screening for companies with a market cap of at least 10 billion.

Dividend Yield

The dividend yield is a financial ratio which shows how much a company pays out in dividends each year in relation to its stock price (annual dividends per share/price per share). For example, if a stock pays $5 per year and has a market price of $100, the dividend yield would be 5%.

As a dividend investor, you would think that the higher the yield the better because we want to maximize dividends. While that logic is correct, it is important to understand why certain stocks may have uncommonly high dividend yields. If a company has healthy finances, a high dividend yield may mean that the company is unnecessarily shelling out lots of money in the forms of dividends when it could be utilizing some of those funds instead to better position the company for long term success. Every dollar a company pays out as a dividend is a dollar the company is not using to generate capital gains. We want to see healthy balance of dividends and capital growth and sometimes a high dividend yield indicates the opposite.

A high dividend yield could also mean the stock’s price is declining while the dividend pay out remains the same. The stock’s price is the denominator in the equation, so if the stock is trending downwards and the dividend payout remains the same, it will inflate the yield. Take for example a stock that paid a $1 dollar dividend per share last year with a cost of $20 dollars per share. That results in a 5% dividend yield. Imagine this year that same stock still paid $1 but now the stock was worth $10. The dividend yield would now be 10%, which is an increase from last year at the expense of the stock going down 50%.

In summary, a high dividend yield is not always bad, it just calls to our attention that we should review other metrics of the stock to confirm that the company is healthy. With all of those things in mind, I screen with a dividend yield of greater than 3%. The average dividend yield of the S&P 500 is 2.22%. This criteria keeps us higher than that average while also not being too high that we have to worry about unhealthy dividend yields. We still may see some suspiciously high yields in our list, this just means we will dive into those stocks in more depth.

Consecutive Years of Dividend Growth

This criteria is fairly straight forward. Past performance isn’t always a great indicator of future performance, but in the case of dividends I don’t think this mindset is overly risky. If a dividend has increased year over year for a substantial amount of time, it is fair to expect that it will continue to do so. That is why I screen for stocks that have grown their dividends consecutively for at least 10 years.

P/E Ratio

This criteria I use as a rule of thumb and not a hard stat. P/E ratio is the price-to-earnings ratio and is calculated by market value per share divided by earnings per share. This ratio is commonly used by investors and analysts to determine if a stock is relatively undervalued and overvalued. This is where Warren Buffett found lots of success, he was great at finding companies that had discounted stock prices.

There are many complex methodologies that one can use to determine a stock’s relative value, however I believe the P/E ratio is the quickest and most straightforward way to understand a stock’s relative value. Generally, a high P/E ratio means that a stock is overvalued and a low ratio means it is undervalued.

Seems simple enough, but there are a few limitations to keep in mind. With earning per share as the denominator, if a stock has a very small earnings per share or none at all the P/E ratio won’t give you a true understanding of the stock’s relative value. P/E ratios also vary greatly from industry to industry. Therefore it is helpful to view a stocks P/E ratio year over year to see how it is trending relative to stock price. It is also helpful to understand the P/E ratio of the market or the industry a certain stock is in. This information can give you context clues to determine if a stocks P/E ratio is healthy or not.

The S&P 500 has averaged a P/E ratio of 15.95 since its inception. With the above information in mind, I like to look for P/E ratios that range from 15-30, but sometimes exceptions will be made for stocks that require further research.

D/E Ratio (TTM)

The debt to equity ratio compares a company’s total liabilities to its shareholder equity which lets us know how much leverage they are using. It measures how much debt versus equity they are using to finance their operations. In general, a high D/E ratio means higher leverage which means the company is aggressively financing its growth with debt which is risky.

If a lot of debt is used to finance the business, the cost of that debt could outweigh the benefits of the increase in earnings that it produces, however the opposite can also be true in some cases. Cost of debt can vary with market conditions and D/E ratios can vary greatly depending on industry, so it’s not always clear if a company is over leveraged or not.

In general, a high D/E ratio usually means more risk, especially with stocks that pay dividends. If a company is needing to pay down its debts, it has less cash on hand to pay dividends. My general rule of thumb for D/E trailing 12 month average is less than 15. Best case scenario, the D/E is less than 2, but some stocks will be in industries that are capital intensive which generally require more debt, so I will not immediately remove a stock from this list if they have a high D/E, these stocks will just require further research.

October Picks

TickerPayment ScheduleDividend YieldPayout Ratio3 Year Div. GrowthMarket CapP/E RatioD/E (TTM)Average VolumeConsensus RatingConsensus PTPrevious Close
AT&T (T)Quarterly7.68%63.22%6.12%$191.14 B–1.9337.09MHold$30.78$26.77
Amgen (AMGN)Quarterly3.37%41.98%39.13%$118.65 B21.265.642.62MHold$245.21$208.95
3M (MMM)Quarterly3.33%59.34%25.11%$102.39 B17.42.553.11MHold$195.58$176.95
Walgreens Boots Alliance (WBA)Quarterly3.99%39.58%19.35%$40.98 B17.953.185.04MHold$53.80$47.38
Realty Income (O)Monthly4.17%202.88%10.41%26.17B67.880.864.05MBuy$77.14$67.20
Coca-Cola Co (KO)Quarterly3.12%73.45%10.81%$233.35 B28.943.1616.5MBuy$61.53$54.12

All of my criteria gave me a watch list of 15 stocks. I then narrowed that list down to these 6 stocks based on attractiveness of the chart and my general comfort and understanding of the company. Above is a table of the stocks, their data that meets my screening criteria, plus some other information that is beneficial for evaluating dividend strength and good times to buy. Next lets look at each stock.

AT&T (T)

 AT&T, founded in 1983 in Dallas, TX, engages in the provision of telecommunications media and technology services through their communications and WarnerMedia segments. The communications segment provides services to businesses and consumers globally. The WarnerMedia segment develops, produces, and distributes entertainment products.

AT&T has a good dividend yield and D/E ratio. They do not have a P/E which means they have little to no earnings this year. If adding AT&T to your portfolio, keep an eye on it due to the lack of a P/E ratio. AT&T’s chart is coming to a key support area in its current long term trend. I expect it to bounce, making it an attractive buy at current prices. However, there is always the possibility that it breaks support, thus it would be smart to wait for a bounce before buying.

Amgen (AMGN)

Amgen Inc. is a biotech company that engages in the discovery, development, manufacturing, and marketing of human therapeutics. Amgen has a large and diverse product line within the industry. It was founded in 1980 and is headquartered in Thousand Oaks, CA.

AMGN has a decent dividend yield and a great dividend growth rate. AMGN has the highest D/E of the picks this month, however I am not too concerned about that because that is somewhat normal for companies within their industry. AMGN’s chart shows that it is at a support area, this is the third time it has reached this level during the pandemic. If it breaks $205 it looks to be fairly bearish, but the opposite is true if it bounces on this level with upside to the $260’s. Again this is one that needs to be watched, wait for confirmation of a reversal before entering.

3M Company (MMM)

3M is a tech company which manufactures industrial, safety, and consumer products that are used in many markets including transportation, electronics, healthcare, consumer, industrial, and safety. The company was founded in 1902 and is headquartered in St. Paul, MN.

3M has a decent dividend yield, P/E, D/E, and great dividend growth. MMM has been in a down trend for the last 5 months. It had a strong week last week and the RSI shows that the downtrend is losing momentum. There is possibility for a reversal with upside to $185+.

Walgreens Boots Alliance Inc (WBA)

Walgreens is in the drug store business as most of us know. They are engaged in retail pharmacy and wholesale pharmaceuticals both in the US and internationally. Walgreens was founded in 1901 and is headquartered in Deerfield, IL.

WBA has all around decent dividend yield, P/E, and D/E. WBA’s chart has been in a short term down trend for about a month. The price is testing the upper limits of the channel as well as previous resistance. If price can break above the $48 level the stock can see some upside to $52+.

Reality Income (O)

Reality Income is a real estate company which is known for generating dependable monthly dividends. O is the only monthly dividend on our list. O was founded in 1969 and is headquartered in San Diego, CA.

O has a good yield, decent dividend growth, and a terrific D/E. O has a wild P/E ratio, however that is not uncommon for real estate stocks, so I won’t let that concern me too much. O’s chart has a wide upward trending channel that the price has been in for the last year. Last week we saw a good bounce off of the bottom trendline. RSI shows strong upward momentum with moving averages looking promising.

Coca-Cola (KO)

Coca-Cola is a nonalcoholic beverage company with a huge global presence and a large product line. The company was founded in 1886 and is headquartered in Atlanta, GA.

KO has all around decent statistics. The KO chart shows a good week as the price bounced off of a well-supported area that formed toward the beginning of April this year. It is currently in a resistance area that was formed in July. If prices break through we could see potential upside to $56+.

Conclusion

In this article I screened for stocks that look like they will provide regular growing dividends while also having potential for capital gains. My screening criteria found 15 stocks which fit the mold, I then narrowed that list down to 6 based off of the attractiveness of the stock’s chart and my comfort with understanding the company.

I am long on all of the stocks on this list. I already have positions in T, KO, AMGN, and O. I will watch this list play out through the month and will either open new positions or add to current positions at key levels if my capital allows.

I do also take into account what months these stocks pay their dividends and I try to balance my portfolio so that I am earning roughly the same amount of dividends every month. This goal may influence my timing and decisioning when it comes to purchasing some of the stocks on this list.

All 6 stocks are suitable for further research and my article is not to be taken as financial advice. Thank you for reading and feel free to leave any replies or questions you may have on here or on my socials.