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

 

 

Monthly Stock Report: 30 April 2019

Overall the stock market continues to edge higher with the S&P 500 moving beyond its previous high of 2940.91 over the last few days.  As such, most stocks have moved higher as well, leaving very few dividend stocks in the “on sale” zone.

*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 (Utilities & REITs)

AT&T (T)

  • Diversified telecommunications & entertainment media
  • Close:  $30.96
  • Dividend yield:  6.5%
  • Dividend yield is 18% above 5 year median of 5.5%
  • 34 consecutive calendar year dividend increases
  • 7 year dividend growth:  +2%
  • 7 year price growth:  -1%
  • 7 year div growth > 7 year price growth is an on sale factor
  • RSI (14):  42.5  (< 50 considered on sale)
  • C/M:  -13% to the 60 month moving average of $35.78  (< 0% on sale)
  • C/M value of -13% is less than the 5 year median of -11%
  • 28% correction from 5 year high monthly close of $43.29 (July 2017)
  • AT&T has underperformed the SPDR S&P 500 ETF (SPY) by 9% over the last year
  • 14% below the 60 month high-low monthly close midpoint price of $35.93

AT&T 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 2 (Industrial Finished Products)

NONE

 

Category 3 (Industrial Related Products and Services)

Albemarle Corp (ALB)

  • Specialty chemicals, precursors & minerals for industrial manufacturing
  • Close:  $75.06
  • Dividend yield:  1.8%
  • Dividend yield is 29% above 5 year median of 1.4%
  • 25 consecutive calendar year dividend increases
  • 7 year dividend growth:  +10%
  • 7 year price growth:  +2%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 2 years
  • RSI (14):  32.1  (< 50 considered on sale)
  • C/M:  -9% to the 60 month moving average of $82.08  (< 0% on sale)
  • 47% correction from 5 year high monthly close of $140.89 (Oct 2017) [≥ 30% on sale]
  • Albermarle has underperformed the SPDR S&P 500 ETF (SPY) by 22% over the last year
  • 19% below the 60 month high-low monthly close midpoint price of $92.50

Albemarle has moved lower from its December 2018 low monthly close of $77.02 and has a moderately attractive dividend yield with numerous other “on sale” values as well.   Albemarle has a reported  total cash per share value of $21 which is significantly higher than its forward dividend of $1.47, providing a large degree of dividend safety.

Albemarle is at an attractive entry point for those looking to collect and reinvest dividends, especially for those with a long term time frame.

 

Category 4 (Consumer Necessities)

Walgreens Boots Alliance (WBA)

  • Pharmacy & consumer health services
  • Close:  $53.57
  • Dividend yield:  3.0%
  • Dividend yield is 58% above 5 year median of 1.9%
  • 43 consecutive calendar year dividend increases
  • 7 year dividend growth:  +11%
  • 7 year price growth:  +6%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 5 years
  • RSI (14):  32.8  (<50 considered on sale)
  • C/M:  -30% to the 60 month moving average of $76.33  (≤ -30% oversold)
  • C/M value of -30% is less than the 5 year median of -9%
  • 45% correction from 5 year high monthly close of $96.63 (July 2015) [≥ 30% on sale]
  • 45% correction is greater than the 5 year median of 35%
  • Walgreens has underperformed the SPDR S&P 500 ETF (SPY) by 38% over the last year (≤ -30% oversold)
  • 31% below the 60 month high-low monthly close midpoint price of $77.95 (≥ 30% oversold)

Walgreens is making a significant new low close with a correction that is near the 50% level from its 5 year high monthly close.  The current dividend yield is very attractive versus the recent 5 year median.  Walgreens has a reported free cash flow per share value of $4.40 versus a forward dividend of $1.56 creating a free cash payout ratio greater than 100%, which solidly supports the safety of its dividend going forward.

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

 

Bristol-Myers Squibb (BMY)

  • Pharmaceuticals & diversified consumer health
  • Close:  $46.43
  • Dividend yield:  3.4%
  • Dividend yield is 13% above 5 year median of 3.0%
  • 12 consecutive calendar year dividend increases
  • 7 year dividend growth:  +3%
  • 7 year price growth:  – 0.5%
  • 7 year div growth > 7 year price growth is an on sale factor
  • Lowest monthly close in 5 years
  • RSI (14):  30.6  (< 0 considered on sale)
  • C/M:  -21% to the 60 month moving average of $58.80  (< 0% on sale)
  • C/M value of -21% is less than the 5 year median of -18%
  • 38% correction from 5 year high monthly close of $74.81 (July 2016) [≥ 30% on sale]
  • 38% correction is greater than the 5 year median of 31%
  • Bristol-Myerss has underperformed the SPDR S&P 500 ETF (SPY) by 26% over the last year
  • 24% below the 60 month high-low monthly close midpoint price of $61.26

Bristol-Myers is currently pursuing a merger with the biopharmaceutical company Celgene (CELG), which has put downward pressure on the stock.  Bristol-Myers has a reported free cash flow per share value of $2.57 versus a forward dividend of $1.64 creating a free cash payout ratio of 57%, which solidly supports the safety of its dividend going forward.

Bristol-Myers Squibb is at a very attractive entry point for those looking to collect and reinvest dividends.

 

CVS Health (CVS)

  • Pharmacy services, consumer health, and health insurance plans
  • Close:  $54.58
  • Dividend yield:  3.5%
  • Dividend yield is 233% above 5 year median of 1.5%
  • CVS Health has maintained its quarterly dividend at 0.50¢ since January 2018
  • 7 year dividend growth:  +19%
  • 7 year price growth:  +3%
  • 7 year div growth > 7 year price growth is an on sale factor
  • One month removed from its lowest monthly close in 6 years of $53.93
  • RSI (14):  33.6  (< 0 considered on sale)
  • C/M:  -35% to the 60 month moving average of $83.17  (≤ -30% oversold)
  • C/M value of -35% is less than the 5 year median of -10%
  • 52% correction from 5 year high monthly close of $112.47 (July 2015) [≥ 50% oversold]
  • 52% correction is greater than the 5 year median of 42%
  • Bristol-Myerss has underperformed the SPDR S&P 500 ETF (SPY) by 33% over the last year (≤ -30% oversold)
  • 35% below the 60 month high-low monthly close midpoint price of $83.20 (≥ 30% oversold)

CVS Health is working through its recent merger with the Aetna Insurance, which has put downward pressure on the stock.  CVS Health has a reported free cash flow per share value of $9.52 versus a forward dividend of $2.00 creating a free cash payout ratio well above 100%, which solidly supports its dividend going forward.

CVS Health is at a very attractive entry point for those looking to collect and reinvest dividends over the long term.

 

Kraft Heinz (KHC)

  • Branded packaged foods
  • Close:  $33.24
  • Dividend yield:  4.8%
  • Dividend yield is 50% above 5 year median of 3.2%
  • Recently reduced the quarterly dividend from 0.625¢ to 0.40¢
  • 5 year dividend growth:  +2%
  • 5 year price growth:  -4%
  • 7 year div growth > 7 year price growth is an on sale factor
  • RSI (14):  19.0  (< 30 oversold)
  • C/M:  -53% to the 60 month moving average of $71.15  (≤ -30% oversold)
  • C/M value of -30% is less than the 5 year median of -24%
  • 64% correction from 5 year high monthly close of $92.20 (May 2017) [≥ 50% oversold]
  • 65% correction is greater than the 5 year median of 40%
  • Kraft Heinz has underperformed the SPDR S&P 500 ETF (SPY) by 48% over the last year (≤ -30% oversold)
  • 47% below the 60 month high-low monthly close midpoint price of $62.54 (≥ 30% oversold)

Here’s an article from The Motley Fool discussing Kraft Heinz.

https://www.yahoo.com/finance/news/kraft-heinz-value-stock-falling-144500363.html

Kraft Heinz has stabilized around $32 over the past 2 months and is still oversold via multiple technical signals, which is not surprising considering its recent 15 billion dollar accounting write down and 35% dividend reduction.  Kraft Heinz has a reported total cash per share value of $3.72 which is significantly higher than its forward dividend of $1.60.  While it obviously didn’t stop the dividend reduction, it should give investors some sense of dividend security going forward.  Kraft Heinz is going to continue to sell its products, making billions of dollars as it does.  Dividend reductions and bad news from legacy-type companies often provide superior investment entry points for those with a long-term view.

For those less risk averse investors, Kraft Heinz is at a potentially good long-term entry point.

 

Monthly Stock Report: 29 March 2019

Exxon Mobil (XOM) has moved up from its 8 year low monthly close of $68.19 in December 2018 but is still 4% below the 60 month moving average, has corrected 21% from the highest monthly close in the last 5 years of $102.41, has increased its dividend for 36 calendar years in a row, and has a dividend yield of 4.1% which is 40% greater than the 5 year median of 2.9%.

 

Both CVS Health (CVS) and Walgreens Boots Alliance (WBA) have been on the decline recently.  Both are facing “pressure” from Amazon’s possible move into prescription drug delivery.  CVS Health is also still working its way through the merger with Aetna and has held its quarterly dividend at 0.50¢ going back to January 2017 as it does.

CVS Health is 35% below the 5 year moving average, has corrected 52% from its highest monthly close in the last 5 years of $112.47, and closed at the lowest monthly close in 6 years.  CVS Health has a dividend yield of 3.7% which is 155% greater than the 5 year median of 1.5%.

Walgreens Boots Alliance is 15% below the 5 year moving average, has corrected 35% from the highest monthly close in the last 5 years of $96.63, and has increased its dividend for 43 calendar years in a row,.  Walgreens Boots Alliance has a less attractive dividend yield of 2.8% which is 45% greater than the 5 year median of 1.9%.

 

Packaged food companies have rebounded a bit lately with Kraft Heinz (KHC) stabilizing around $32 after its steep decline in February.  Warren Buffett still steadfastly supports the company so for those with patience Kraft Heinz might be an attractive investment for the long-term.  Kraft Heinz is 54% below the 5 year moving average, has corrected 65% from the highest monthly close in the last 5 years of $92.20, and still has a strong dividend yield of 4.9% following cutting its quarterly dividend from 0.625¢ to 0.40¢.

General Mills (GIS) has rebounded significantly from its December 2018 low but is still 5% below the 5 year moving average, has corrected 28% from the highest monthly close in the last 5 years of $71.89, has increased its dividend for 15 calendar years in a row, and has a dividend yield of 3.8% which is 21% greater than its 5 year median of 3.1%.

Kellogg (K) is 16% below the 5 year moving average, has corrected 31% from the highest monthly close in the last 5 years of $82.71, has increased its dividend for 14 calendar years in a row, and has a dividend yield of 3.9% which is 29% greater than the 5 year median of 3.0%.

 

Bristol-Myers Squibb (BMY), which is in the process of attempting to merge with Celgene (CELG), is 19% below the 5 year moving average, has corrected 36% from the highest monthly close in the last 5 years of $74.81, closed at the lowest monthly close in the last 5 years, has increased its dividend for 12 calendar years in a row, and has a dividend yield of 3.4% which is 13% greater than the 5 year median of 3.0%.

 

QUALCOMM (QCOM), a world leader in mobile phone chip production, is 7% below the 5 year moving average, has corrected 29% from the highest monthly close in the last 5 years of $80.45, has increased its dividend for 16 calendar years in a row, and has a dividend yield of 4.35% which is 22% greater than the 5 year median of 3.6%.  As a technology company and with many court disputes ongoing with Apple, QUALCOMM is a little outside my normal area of recommendation but its 4.355 dividend yield and history of steady dividend increase makes it an attractive alternative selection at this price.

 

AT&T (T) received final approval for its merger with Time Warner and has moved up a bit as a result.  AT&T is 13% below the 5 year moving average, has corrected 28% from the highest monthly close in the last 5 years of $43.29, has increased its dividend for 34 calendar years in a row, and has a dividend yield of 6.5% which is 19% greater than the 5 year median of 5.5%.  AT&T has a large debt load due to its merger with Time Warner but it also has a steady, well established cash flow stream to support its dividend going forward.