Stock Alert: 30 November 2017

Archer Daniels (ADM) | YLC  1 | C/M -5% | C5H 25% | DY 3.2% | RY +50% | OSI 5.1

Schlumberger (SLB) | YLC  6 | C/M -23% | C5H 47% | DY 3.2% | RY +100% | OSI 16.7


YLC – LOWEST MONTHLY CLOSE IN “X” NUMBER OF YEARS

C/M – CLOSE TO 5 YEAR AVERAGE MONTHLY CLOSE (% ON SALE)

C5H – CLOSE TO 5 YEAR HIGH MONTHLY CLOSE (% CORRECTION)

DY – DIVIDEND YIELD

RY – % RELATIVE TO 5 YEAR MEDIAN DIVIDEND YIELD

OSI – ON SALE INDICATOR:  THE GREATER THE VALUE THE MORE ON SALE

Stock Alert: 31 October 2017

Walgreens Boots (WBA) | YLC  2 | C/M -7% | C5H 31% | DY 2.4% | RY +30% | OSI 7.9

Kimberly-Clark (KMB) | YLC  2 | C/M -1% | C5H 18% | DY 3.4% | RY +20% | OSI 5.3

Realty Income (O) |  YLC  1 | C/M +7% | C5H 25% | DY 4.7% | RY -10% | OSI 4.0

HCP Inc (HCP) | YLC  7 | C/M -27% | C5H 47% | DY 5.7% | RY +50% | OSI 18.4

Qualcomm (QCOM) | YLC  1 | C/M -20% | C5H 37% | DY 4.5% | RY +70% | OSI 10.9

Kraft Heinz (KHC) | YLC  1 | C/M +11% | C5H 16% | DY 3.2% | RY 0% | OSI 2.6

AT&T (T) | YLC  1 | C/M -8% | C5H +22% | DY 5.8% | RY +10% | OSI 5.4


YLC – LOWEST MONTHLY CLOSE IN “X” NUMBER OF YEARS

C/M – CLOSE TO 5 YEAR AVERAGE MONTHLY CLOSE (% ON SALE)

C5H – CLOSE TO 5 YEAR HIGH MONTHLY CLOSE (% CORRECTION)

DY – DIVIDEND YIELD

RY – % RELATIVE TO 5 YEAR MEDIAN DIVIDEND YIELD

OSI – ON SALE INDICATOR:  THE GREATER THE VALUE THE MORE ON SALE

Stock Alert : 09/29/17

My approach to dividend stock investing is based on monthly closing prices.  Because of that, stock alerts will typically be posted on the last trading day of the month.


Core holdings Realty Income (O) and Southern Company (SO) are both in range for dividend reinvesting with dividend yields of 4.5% and 4.7% respectively.


General Mills (GIS)    Tier: 1   Sector: Consumer Staples    Industry: Packaged Foods

Closed at $51.76 with a dividend yield of 3.8% which is 20% above the median yield for the past 10 years.  This was the lowest monthly close in the last 2 years and was 5% below the 5 year moving average.  The close was a 28% correction from the highest monthly close in the last 5 years and significantly larger than the median of 3%.

Starting in 2004, General Mills has raised its dividend 13 years in a row.  Dividend growth for the latest 7 year period is 11%.  The smallest growth rate for the last 5 periods is 10%.  In addition, dividend growth for the past 3 years has exceeded stock price growth for those 3 years.  If dividend growth were to maintain the low growth rate of 10%, the effective dividend yield of this investment in 7 years would be 7.4%.  Current dividend is $1.93 and reported earnings per share is $2.79 for a dividend payout ratio of 69%, which is in the upper end of the range but acceptable.

Before August 2017, General Mills had not been below the 60 month moving average since May 2009.  The previous date before that was August 2000.  So, General Mills moving below the moving average is a significant event.  Since January 2000, the lowest General Mills has moved below the moving average is 8%.

General Mills has been under downward pressure since March 2017.  Recently the company reported $0.71 quarterly earnings that missed estimates by .05¢.  To Wall Street, a quarterly miss is a mortal sin.  For long term dividend stock investors, their “miss” is our opportunity.

So, due to its “on sale” status by being below the moving average; having a dividend yield of 3.8% that is 20% above the median; a substantial correction from the 5 year high close; and recent dividend growth exceeding price growth, the September close for General Mills represents an attractive investment point for long-term investors looking to reinvest dividends.

ACTION:  Buy – reinvest dividends


Intl Business Machines (IBM)   Tier: 1   Sector: Technology  Industry: Computer Services

Closed at $145.08 with a dividend yield of 4.1% which is 110% above the median yield for the past 10 years.  The close was 15% below the 5 year moving average and greater than the median of 11% below.  The close was a 32% correction from the highest monthly close in the last 5 years and greater than the median of 21%.

Starting in 1996, IBM has raised its dividend for 21 years in a row.  Dividend growth for the latest 7 year period is 14%.  The smallest growth rate for the last 5 periods is 14%.  If dividend growth were to maintain a growth rate of 10%, the effective dividend yield of this investment in 7 years would be 8.0%.  Current dividend is $6.00 and reported earnings per share is $12.03 for a dividend payout ratio of 50%.

IBM has spent considerable time below the moving average since October 2014 with 5 year low monthly closes in October, November, December of 2015 and January 2016 when the close was $124.79, or 30% below the moving average.  Revenues have consistently disappointed Wall Street, but IBM continues to make profits and pay dividends.

So, due to its “on sale” status by being below the moving average and median; having a dividend yield of 4.1% that is 110% above the median; and a substantial correction from the 5 year high close that is greater than the median, the September close for IBM represents an attractive investment point for long-term investors looking to reinvest dividends.

ACTION:  Buy – reinvest dividends


Exxon Mobil (XOM)   Tier: 1   Sector: Energy  Industry: Integrated Oil & Gas

Closed at $81.98 with a dividend yield of 3.8% which is 40% above the median yield for the past 10 years.  The close was 7% below the 5 year moving average.  The close was a 20% correction from the highest monthly close in the last 5 years and greater than the median of 12%.

Starting in 1989, Exxon Mobil has raised its dividend 28 years in a row.  Dividend growth for the latest 7 year period is 8%.  The smallest growth rate for the last 5 periods is 7%.  In addition, dividend growth for the past 3 years has exceeded stock price growth for those 3 years.  If dividend growth were to maintain the low growth rate of 7%, the effective dividend yield of this investment in 7 years would be 6.1%.  Current dividend is $3.08 and reported earnings per share is $2.76 for a dividend payout ratio of 112%.   A payout ratio above 100% is certainly not ideal, but for the most recent quarter reported Exxon Mobil had over 4 billion dollars in total cash on hand and free cash flow of over 12 billion dollars.  Exxon Mobil would appear to be able support its dividend going forward.

Exxon Mobil moved below the moving average in Mar 2015 and has stayed below for the large majority of months since.  June, July, August and September of 2015 closes were all 3 year low monthly closes with the September close of $74.35 being 15% below the moving average and the low point of the current price phase that has been linked to lower oil prices.  More recently, May, July and August closes were 1 year low monthly closes with the August close of $76.33 nearing that of September 2015 but holding above.

So, due to its “on sale” status by being below the moving average; having a dividend yield of 3.8% that is 40% above the median; a substantial correction from the 5 year high close; and recent dividend growth exceeding price growth, the September close for Exxon Mobil represents an attractive investment point for long-term investors looking to reinvest dividends.

ACTION:  Buy – reinvest dividends


Other stocks

Cereal producer Kellogg (K), a Tier 2 company, closed at a 2 year low monthly close; at 7% below the moving average; at a 25% correction from the 5 year high monthly close; and with a dividend yield of 3.5% that is 20% above the median.  The 3 year dividend growth is now exceeding the 3 year price growth.  Kellogg is in range for dividend reinvesting consideration for those looking to add exposure to the consumer sector or packaged foods industry group.

Retail grocer giant Kroger (KR), a less stable Tier 4 company due its retail nature, closed at a 3 year low monthly close; at 27% below the moving average which is significantly greater than 10% median; at a 52% correction from the 5 year high monthly close which is very significant; and with a dividend yield of 2.5% that is 50% above the median.  The 3 year dividend growth is now exceeding the 3 year price growth.  Kroger’s recent downturn appears to be in direct response to the news of Amazon (AMZN) purchasing Whole Foods and the looming prospect of intense competition it will surely face from this merger.  While not a strong candidate for dividend reinvesting, Kroger at this level represents an attractive entry for those looking to hold Kroger for possible long term price appreciation and dividend collection.  As always, companies in the retail sector carry a larger degree of risk due to the less stable nature of their industry.  Think Harvest Foods, K-Mart, Circuit City, Radio Shack, etc.

Toy maker Mattel (MAT), a Tier 4 company due its cyclical nature, closed at an 8 year low monthly close, which is an extremely significant close; at 52% below the moving average, also extremely significant.; at a 67% correction from the 5 year high monthly close, again extremely significant.  Having reduced its quarterly dividend in August from 0.38¢ to 0.15¢, Mattel now has a 3.9% dividend yield.  Dividend reductions, as opposed to omissions, very often offer strategic entry points for those willing to have a very long term outlook and the patience to withstand probable price volatility.  Mattel experienced a very similar situation in 1999 – 2000.  An investor that bought shares at that point would have seen the price double in 7 years, collecting dividends all along the way.   While obviously not a reinvesting candidate, Mattel might offer an opportunity for those investors searching for an extremely “oversold” situation in which to take a chance for long term price gains.

Alert explanations

Stock Alert: 08/31/2017

My approach to dividend stock investing is based on monthly closing prices.  Because of that, stock alerts will typically be posted on the last trading day of the month.


General Mills (GIS)    Tier: 1   Sector: Consumer Staples    Industry: Packaged Foods

Closed at $53.26 with a dividend yield of 3.7% which is 20% above the median yield for the past 10 years.  This was the lowest monthly close in the last 2 years and was 2% below the 5 year moving average.  The close was a 26% correction from the highest monthly close in the last 5 years.

Since 2004, General Mills has raised its dividend every year.  Dividend growth for the latest 7 year period is 11%.  The smallest growth rate for the last 5 periods is 10%.  In addition, dividend growth for the past 3 years has exceeded stock price growth for those 3 years.  If dividend growth were to maintain the low growth rate of 10%, the effective dividend yield of this investment in 7 years would be 7.2%.  Current dividend is $1.93 and reported earnings per share is $2.79 for a dividend payout ratio of 69%, which is in the upper end of the range but acceptable.

General Mills has not been below the 60 month moving average since May 2009.  The previous date before that was August 2000.  So, General Mills moving below the moving average is a significant event.  Since January 2000, the lowest General Mills has moved below the moving average is 8%.

General Mills has been under downward pressure since March 2017.  Recently the company reported $0.71 quarterly earnings that missed estimates by .05¢.  To Wall Street, a quarterly miss is a mortal sin.  For long term dividend stock investors, their “sin” is our opportunity.

So, due to its “on sale” status by being below the moving average; having a dividend yield of 3.7% that is 20% above the median; a substantial correction from the 5 year high close; and recent dividend growth exceeding price growth, the August close for General Mills represents an attractive investment point for long-term investors and those looking to reinvest dividends.

ACTION:  Buy for dividend reinvesting

Alert explanations