The stock market has been showing signs of weakness this quarter. Little did I know that the stock market will go down so quickly after I wrote my article titled " are you ready for the next bear market" back in early August of this year.
For those of us who are in the accumulation stage, this is welcome news, since it means that future dividend income is available at lower cost today. To paraphrase Warren Buffett, whether it comes to socks or stocks, everyone loves a good sale.
For whatever reason, the environment today feels a lot like we are going to see lower prices in the foreseeable future, as long as the S&P 500 stays below 2000 points. After all, the stock market only started going down one or two months ago (though many cyclical companies had been drifting lower before that). It is interesting to note that through July of this year, most of the gains on the S&P 500 came from just six stocks. So we might actually see further weakness in major stock indices from here.
We have all been trained to buy on weakness over the past 6 years. If this doesn’t work for this correction, and it actually does turn into an actual bear market, I wonder how many will abandon stocks altogether
That being said, I do not believe that timing the market is possible, which is why you should take the above paragraph with huge a grain of salt (or take it as mostly wishful thinking on my part). As I mentioned before, time in the market trumps timing the market. Furthermore, as someone who is still in a position to save money every month and invest in equities for the future, I have an incentive to cheer for lower prices. After all, if I buy shares of Johnson & Johnson for $100/share, I only get a 3% yield. However, if I manage to buy those shares at $75/share, my starting yield will be 4% - a nice 33% more income to live off. And I am totally fine if I temporarily look foolish in the case where I buy low, and the stock price keeps sliding lower. I am in this game for the long-run, which is why I believe that month to month comparisons to benchmarks are just useless speculation.
If I am right about the severity of the current sell-off, then I may be able to get shares of companies like Brown-Forman (BF-B), or McCormick (MKC) at much lower prices than today.
But enough of my rambling. I will share with you the list of companies I am considering in October. While I cannot put as much money as I want to, I still manage to scrape a few dollars here and there to consider investing in the types of companies listed below. This is based on what I am seeing today, and also based on my portfolio weights.
3M Company (MMM) operates as a diversified technology company worldwide. This dividend king has managed to increase dividends for 57 consecutive years. The ten year dividend growth rate is 9%/year. The stock is selling at 17.90 times forward earnings and yields 2.90%. Check my analysis of 3M.
Omega Healthcare Investors, Inc. (OHI) invests in healthcare facilities, primarily in long-term healthcare facilities. This dividend achiever has managed to increase dividends for 13 years in a row. The ten year dividend growth rate is 10.90%/year. The stock is selling at times funds from operations (FFO) and yields 6.20%. Check my analysis of Omega Healthcare Investors.
ACE Limited (ACE), through its subsidiaries, provides a range of property and casualty insurance and reinsurance products worldwide. This dividend achiever has managed to increase dividends for 23 years in a row. The ten year dividend growth rate is %/year. The stock is selling at 11.10 times earnings and yields 2.60%. Check my analysis of ACE Limited .
Exxon Mobil Corporation (XOM) explores for and produces crude oil and natural gas in the United States, Canada/South America, Europe, Africa, Asia, and Australia/Oceania. This dividend champion has managed to increase dividends for 33 consecutive years. The ten year dividend growth rate is 9.80%/year. The stock is selling at 18.50 times forward earnings and yields 4%. Check my analysis of Exxon Mobil.
Genuine Parts Company (GPC) distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Canada, Mexico, Australia, New Zealand, Puerto Rico, the Dominican Republic, and the Caribbean region. This dividend king has managed to increase dividends for 59 consecutive years. The ten year dividend growth rate is %/year. The stock is selling at 18 times forward earnings and yields 2.90%. Check my analysis of Genuine Parts Company.
Diageo plc (DEO) produces, markets, and sells alcoholic beverages worldwide. This dividend achiever has managed to increase dividends for 17 years in a row. The ten year dividend growth rate is 6.70%/year. The stock is selling at 19.30 times earnings and yields 3.20%. Check my analysis of Diageo.
Ameriprise Financial, Inc. (AMP), through its subsidiaries, provides various financial products and services to individual and institutional clients in the United States and internationally. The company has managed to increase dividends every single year over the past decade. The stock is selling at 11.50 times earnings and yields 2.50%. Check my analysis of Ameriprise Financial.
Overall, the declines in stock prices are providing more opportunities for me to look at. This is why I can actually afford to be a little more selective than last year.
What companies are you considering this month?
Full Disclosure: Long all stocks mentioned above
- Are you ready for the next bear market?
- Dividend Companies I purchased in August
- The Biggest Investing Sin Exposed
- Dividend Growth Stocks I Purchased in July
- Time in the market is more important than timing the market
“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections...
Investors who are looking for quality stocks that regularly raise dividends have several lists available as a starting point in their ...
My investing goals are very simple – to cover my expenses from dividend income generated from my portfolio. In order to translate goals in...
Every dollar that you have in your possession can be traced back to you exchanging your labor for money. The labor you provided was essentia...
I have highlighted below several frequently asked questions about dividend investing. This is not an all inclusive list, but more of a runn...
Motif Investing is an established brokerage which lets investors create their own portfolios, and purchase them for a set commission. Each...
There are many misconceptions about dividend investing. I have tried itemizing several of them, outlining them, and providing a brief comm...
There are four key attributes that need to be considered, in order to be successful at dividend investing. These ingredients include focusin...
There are two schools of thought when it comes to dividend reinvestment. One of the options is to automatically reinvest dividends , wherea...
I have been writing about dividend growth investing since January 2008. I often get asked questions by readers. Many of those questions in...