At the beginning of every month, I reset my stock watch list and update my thoughts for the coming month. This may seem like an arbitrary cutoff to many but it seems to work well for me.
The overall market remained fairly flat throughout the month of July after the post Brexit run-up so many of the same values that were around a month ago are still around today.
Some stocks have either had positive or negative earnings reporting the last month as well too, so there actually has been more substantial movement in individual stocks than the actual market.
Last Month’s Watch List Review
If only I had listened to my own watch list last month and made some purchases before the stocks got more expensive I’d be sitting pretty right now. The following is the current standing of last month’s watch list:
CMI is up from $110.18 to $125.88 for an increase of 14.24%
SBUX is down from $56.77 to $55.20 for a decrease of 2.76%
JPM is up from $59.55 to $65.87 for an increase of 10.61%
PRU is up from $68.74 to $77.48 for an increase of 12.71%
AAPL is up from $94.99 to $108.81 for an increase of 14.55%
If I had invested $1000 in each of these stocks at the beginning of July, I would have $5,493.50 for a one-month or so return of 9.87%. Man if only that was how every month could go! And in more than just a hypothetical sense.
1) Starbucks Corporation – SBUX
A repeat watch list item from last month.
Stock Price: $55.20
Dividend Yield: 1.45%
Dividend Payout Ratio: 42.3%
Price-to-Earnings Ratio – TTM vs. 5-year avg: 33.59 vs. 473
As mentioned earlier SBUX went down almost 3% from the last month. This keeps it on my radar and hopefully it will continue down into my original target price of under $54.
Dividend Stacker Target Price: under $54 (same as last month)
2) Target Corp – TGT
Target has under gone a little mini stock collapse over the past few months as it is again dealing with some bad press. The last time I purchased TGT was after the credit card issue and it offered an excellent opportunity. I sold target a while back over $82 and now it is back in a more reasonable range again.
Stock Price: $72.61
Dividend Yield: 3.31%
Dividend Payout Ratio: 46.5%
Price-to-Earnings Ratio – TTM vs. 5-year avg: 13.70 vs. 15.18
The stock appears to be relatively well valued right now but I would love to get it under $70, hopefully the broader market will soften a little and provide the opportunity.
Dividend Stacker Target Price: under $70
3) Prudential – PRU
Prudential is another repeat customer from last month, and despite its large appreciation in share price the last month or so, I still remain interested in the company as interest rate increases loom.
Stock Price: $77.48
Dividend Yield: 3.61%
Dividend Payout Ratio: 30.1%
Price-to-Earnings Ratio – TTM vs. 5-year avg: 7.96 vs. 17.28
I missed the boat last month at a cheaper price but I still see great fundamentals and potential for huge income increases.
Dividend Stacker Target Price: under $75 (up from $65 last month)
4) JP Morgan Chase & Co - JPM
Wells Fargo and JP Morgan Chase are my two favorite big banks in the United States and I only hold Wells Fargo. This is another repeat from last month, and it hurts to see how much more expensive it now is, but I really want the bank in my portfolio.
Stock Price: $65.87
Dividend Yield: 2.91%
Dividend Payout Ratio: 34.2%
Price-to-Earnings Ratio – TTM vs. 5-year avg: 11.16 vs. 10.55
Despite the run-up I think that JPM still provides good value at this price point. It would be great if it could retreat to its price point from last month and provide a little cushion.
Dividend Stacker Target Price: under $60 (up from $57 last month)
5) Metlife – MET
Are you seeing a theme here? Financial sector continues to be a focal point of my dividend stock search. The low interest rates have worn on these businesses that require high cash reserves, but we all know the rates are not going to last forever.
Stock Price: $41.28
Dividend Yield: 3.88%
Dividend Payout Ratio: 31.1%
Price-to-Earnings Ratio – TTM vs. 5-year avg: 10.86 vs. 9.81
While PRU & JPM have seen some run up since last month’s watch list, MET has stayed relatively steady. Will be worth keeping an eye on for me and would love to see it get a little lower.
Dividend Stacker Target Price: under $40
What is everyone else looking into this month? Any other suggestions? Really would like to hear your thoughts!
Full Disclosure: I am long WFC & AAPL.