Monthly Stock Report: 31 May 2019

In response to the ongoing trade and tariff battle between the US and China, the stock market turned down in May, correcting around 7% at month’s end.  As such, numerous “on sale” dividend stocks are beginning to appear.

*All values and prices presented below are based on split adjusted prices only and do not include dividend adjusted prices.  As a result, prices presented which involve past prices in calculations might not match those found in other sources.  Here a two discussions concerning “adjusted” prices.

https://www.investopedia.com/terms/a/adjusted_closing_price.asp

https://www.investopedia.com/articles/stocks/07/dividend_implications.asp

**RSI – Relative Strength Index.  RSI is a price momentum technical indicator.  RSI values can be reported as differing values due to different periods and smoothing factors employed in their calculation.  The RSI presented here is for 14 months and smoothed (weighted) for 14 periods.  Here is a discussion of RSI.

https://www.investopedia.com/terms/r/rsi.asp

 

Category 1 (Industrial Products)

3M Company (MMM)

  • Diversified industrial products
  • Close:  $159.75
  • Dividend yield:  3.6%
  • Dividend yield is 42% above 5 year median
  • 60 consecutive calendar year dividend increases
  • 7 year dividend growth:  +14%
  • 7 year price growth:  +10%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 3 years
  • RSI (14):  28.1  (< 30 oversold)
  • C/M:  -12% to the 60 month moving average (< 0% on sale)
  • 29% correction from 5 year high monthly close (January 2018)
  • 3M Co has underperformed the SPDR S&P 500 ETF (SPY) by 18% over the last year
  • 18% below the 60 month high-low monthly close midpoint buy price of $195.70

3M Company, a Dow Jones Industrial Index component, is a Dividend King (50 years or more of dividend increases) that has been trending lower since January 2018 with the May 2019 closing price now below the 60 month moving average, marking the stock as “on sale.”   Its dividend yield of 3.6% is 42% above the 5 year median and well above the current S&P 500 yield of 2.0%.  3M Company has a reported free cash flow per share of $8.65 versus a forward dividend of $5.76 creating a free cash payout ratio of 67%, which supports the safety of its dividend going forward.

3M Company is at an attractive entry point for those looking to collect and reinvest dividends.

 

Category 2 (Utilities & REITs)

AT&T (T)

  • Diversified telecommunications & entertainment media
  • Close:  $30.58
  • Dividend yield:  6.7%
  • Dividend yield is 22% above 5 year median
  • 34 consecutive calendar year dividend increases
  • 7 year dividend growth:  +2%
  • 7 year price growth:  -2%
  • 7 year div growth > 7 year price growth is an on sale factor
  • RSI (14):  41.8  (< 50 on sale)
  • C/M:  -14% to the 60 month moving average (< 0% on sale)
  • 29% correction from 5 year high monthly close (July 2017)
  • AT&T has underperformed the SPDR S&P 500 ETF (SPY) by 3% over the last year
  • 15% below the 60 month high-low monthly close midpoint buy price of $35.93

AT&T, a leading US telecommunications provider, is a Dividend Aristocrat (25 years or more a dividend increases) that has moved up from its December 2018 low monthly close of $28.56 but still has an attractive dividend yield with numerous other “on sale” values as well.   AT&T is working its way through its merger with Time Warner and has incurred significant debt as a result.  AT&T has a reported free cash flow per share value of $4.49 versus a forward dividend of $2.04 creating a free cash payout ratio 45%, which supports the safety of its dividend going forward.

AT&T is at an attractive entry point for those looking to collect and reinvest dividends.

 

Category 3 (Industrial related & Energy)

Exxon Mobil (XOM)

  • Integrated Oil, Gas, & Petrochemicals
  • Close:  $70.77
  • Dividend yield:  4.9%
  • Dividend yield is 68% above 5 year median
  • 36 consecutive calendar year dividend increases
  • 7 year dividend growth:  +8%
  • 7 year price growth:  -1%
  • 7 year div growth > 7 year price growth is an on sale factor
  • RSI (14):  38.2  (< 50 on sale)
  • C/M:  -15% to the 60 month moving average (< 0% on sale)
  • 30% correction from 5 year high monthly close (April 2014)
  • Exxon has underperformed the SPDR S&P 500 ETF (SPY) by 10% over the last year
  • 16% below the 60 month high-low monthly close midpoint buy price of $84.44

Exxon Mobil, the world’s largest publicly traded oil company, is a Dividend Aristocrat (25 years or more a dividend increases) that has moved up from its 8 year low monthly close of $68.19 in December 2018 but still has an attractive dividend yield with numerous other “on sale” values as well.   Exxon Mobil has a current reported dividend to earnings payout ratio of 76%, which supports the safety of its dividend going forward.

Exxon Mobil is at an attractive entry point for those looking to collect and reinvest dividends.

 

Category 4 (Consumer related)

Kraft Heinz (KHC)

  • Branded Packaged Foods
  • Close:  $27.65
  • Dividend yield:  5.8%
  • Dividend yield is 81% above 5 year median
  • Quarterly dividend reduced to 0.40¢ from 0.625¢ in March 2019
  • 7 year dividend growth:  +2%
  • 7 year price growth:  -6%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 6 years
  • RSI (14):  15.6  (< 30 oversold)
  • C/M:  -61% to the 60 month moving average (< -30% oversold)
  • 70% correction from 5 year high monthly close (May 2017) [> 50% oversold]
  • Kraft Heinz has underperformed the SPDR S&P 500 ETF (SPY) by 50% over the last year (> 40% oversold)
  • 56% below the 60 month high-low monthly close midpoint buy price of $62.54 (> 30% oversold)

Kraft Heinz, a leading branded packaged foods company, revalued some its brands (most notably Oscar Meyer) in February 2019 by 15 billion dollars and reduced its dividend by 35% as well.   As a result, the stock has declined sharply in the following months.  An ongoing SEC investigation has put more presurre on the price over the last month.

Kraft Heinz, which is still strongly supported by super investor Warren Buffett, may very well fall into the “be greedy when others are fearful” category about which he so often speaks.  If an investor believes that Kraft Heinz can weather and overcome these events in the years that follow, then its 5.8% dividend yield looks very attractive, especially for those looking to reinvest dividends.  Those with a more conservative outlook and approach may want to wait until things play out further before making any investments. 

 

Kellogg Company (K)

  • Branded packaged foods
  • Close:  $52.56
  • Dividend yield:  4.3%
  • Dividend yield is 41% above 5 year median
  • 14 consecutive calendar year dividend increases
  • 7 year dividend growth:  +4%
  • 7 year price growth:  +1%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 6 years
  • RSI (14):  29.1  (< 30 oversold)
  • C/M:  -22% to the 60 month moving average (< 0% on sale)
  • 36% correction from 5 year high monthly close (July 2016)
  • Kellogg has underperformed the SPDR S&P 500 ETF (SPY) by 21% over the last year
  • 24% below the 60 month high-low monthly close midpoint buy price of $69.48

Kellogg, a leading branded packaged foods company, is a Dividend Champion (10 years or more a dividend increases) that has made a series of significant low monthly closes since December 2018.   The situation with Kraft Heinz has put pressure on most companies within the packaged foods industry and Kellogg has suffered as a result.   Kellogg has a reported dividend to earnings payout ratio of 57%, which supports the safety of its dividend going forward.

Kellogg is at an attractive entry point for those looking to collect and reinvest dividends, and may provide a substitute to Kraft Heinz for those looking to invest in the packaged foods industry. 

 

Archer Daniels Midland (ADM)

  • Processed farm products, packaged foods
  • Close:  $38.32
  • Dividend yield:  3.7%
  • Dividend yield is 55% above 5 year median
  • 43 consecutive calendar year dividend increases
  • 7 year dividend growth:  +10%
  • 7 year price growth:  +3%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 3 years
  • RSI (14):  32.7  (< 50 on sale)
  • C/M:  -13% to the 60 month moving average (< 0% on sale)
  • 27% correction from 5 year high monthly close (May 2015)
  • Archer Daniels has underperformed the SPDR S&P 500 ETF (SPY) by 19% over the last year
  • 12% below the 60 month high-low monthly close midpoint buy price of $43.32

Archer Daniels, the world’s largest processor of seeds for cooking oils, is a Dividend Aristocrat (25 years or more a dividend increases) that declined 14% from its April 2019 close.   Archer Daniels has a reported free cash flow per share of $3.45 versus a forward dividend of $1.40 creating a free cash payout ratio of 41%, which supports the safety of its dividend going forward.

Archer Daniels Midland is at an attractive entry point for those looking to collect and reinvest dividends.

 

Walgreens Boots Alliance (WBA)

  • Retail – pharmacy & prescription services
  • Close:  $49.34
  • Dividend yield:  3.6%
  • Dividend yield is 81% above 5 year median
  • 43 consecutive calendar year dividend increases
  • 7 year dividend growth:  +10%
  • 7 year price growth:  +7%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 5 years
  • RSI (14):  28.9   (< 30 oversold)
  • C/M:  -35% to the 60 month moving average (< -30% oversold)
  • 49% correction from 5 year high monthly close (July 2015)
  • Walgreens Boots has underperformed the SPDR S&P 500 ETF (SPY) by 35% over the last year
  • 34% below the 60 month high-low monthly close midpoint buy price of $75.10

Walgreens Boots, a leading US pharmacy, is a Dividend Aristocrat (25 years or more a dividend increases) that has closed at the lowest monthly close in 5 years in both April and May.   Walgreens Boots has a reported free cash flow per share of $4.38 versus a forward dividend of $1.76 creating a free cash payout ratio of 40%, which supports the safety of its dividend going forward.

Walgreens Boots Alliance is at an attractive entry point for those looking to collect and reinvest dividends.

Create your own Dividend Collection Machine

 

 

Author: The Dividend Collector

Searching for dividends on sale.

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