Dividend Ten

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Watchlist

Jan Watchlist

Dividend Ten Watchlist

Here are some of the stocks I’m looking at at in Jan, listed in no particular order.

CVS Health Corp (CVS)

First buy in 2017 – Feeling pretty good about building a position for all the reasons stated here. There are some headwinds to be sure, so if the price were to fall appreciably from here, I would most likely to my position.

At the time of this writing, CVS trades at $82.80 and yields 2.42%. It has a forward P/E of 14.

Teva Pharmaceuticals (TEVA)

Another name in the underperforming healthcare sector. TEVA has been the leader in generics for the past decade. I’ve been eyeing this bad boy since November when shares fell 9.5% to land at $39.20 after news of DOJ investigation of price collusion among generic manufacturers. On Friday shares tumbled another 7% on weaker than expected forward guidance and reduced EPS for 2017, leaving shares around $35 and pushing a 4% yield, which seems quite attractive at first (or second) glance.

You could argue that this makes the stock a bargain, and you’re probably right, but this could also be a classic case of trying to catch a falling knife, with few near term catalysts to the price and an opportunity to get a higher yield with a little patience. I am going to be watching out for January 25th when Novartis publishes its’ financial results. This could be important because Novartis has a small generics unit that acts as a bellwether for where the price + profitability of generics are going in the US that could impact TEVA’s share price. The other major issue to look out for is the loss of exclusivity of Copaxone 40mg patent (after 80mg Copaxone came off exclusivity in 2015). Also they have an increasing debt load, but is primarily a function of their Actavis acquisition, and cash flow remains high.

Net is that while in the shorter term there looks to be negative sentiment, declining earnings, and few near term upside catalysts (which is why their P/E is so low), over the long term this is a great firm & should do well with the aging of the population and trend towards cost savings + generics, so looks to be a nice longer term buy. In my view, a little more patience is warranted. As always, however, anything can happen in the near term.

At the time of this writing, TEVA trades at $35.21 and yields 3.86%. It has a forward P/E of just 6.6.

Vanguard REIT Index Fund (VNQ)

This is simple, I currently have zero real estate exposure. Eventually, I’d like to target real estate at 5-10% of my overall portfolio. I’d probably be wanting to build a position more slowly here as REITs tend to underperform in rising interest rate environments, so by diversifying I could make some smaller investments at first. If I were to purchase individual REIT’s I’d be looking at O, DLR, or OHI.

VNQ currently yields 4.82% and sports a low 0.12% expense ratio.

Medtronic (MDT)

This is a new addition to my watchlist. The medtech field offers an intriguing combination of high-margin growth coupled with defensive characteristics with a recession resistant end product. Medtronic is one of the most exciting companies in the medical devices industry. My only desire is getting a better price – I’d be looking for the price to come down a little bit here.

At the time of this writing MDT trades at $74.90 and yields 2.3%. It has a 14.91 forward P/E

Cracker Barrel (CBRL)

I’ve been watching this since November when it was $132 and yielded 3.48%. I didn’t pull the trigger then, opting for Buffalo Wild Wings (BWLD) instead, and today CBRL is trading at $159.06 and the yield has gone down to 2.89%.

Still kicking myself a bit for not getting in then, but the shares still remain somewhat undervalued, in my view. They remain shareholder friendly, and have a differentiated dining concept.

Altria (MO)

I’ve been wanting to get in forever it seems, but the price just doesn’t seem to want to go down to sub 60. I can continue to wait, or consider writing puts to collect income while doing so.

Altria currently trades at $67.71 and yields 3.58%. It has a 20.27 forward P/E.

Well that’s it! What say you – any of these on your watchlist? What’s on yours?

I’ve updated the watchlist page with more detailed metrics on these opportunities.

Thanks for stopping by.

 

 

14 Comments

  1. 10,

    Do you have any idea how the TEVA dividends are taxed in the US? Isn’t the company based in Israel? Thanks in advance!

    MDP
    My Dividend Pipeline recently posted…Recent Buy — PGMy Profile

    • Greg Gee

      Hi MDP –

      Yes, it’s actually Israeli so is an ADR.

      I actually owned TEVA quite briefly a while ago for about a month. I just checked my records and the tax withheld from the dividend was 15%.

      Definitely an important consideration to keep in mind.

      Cheers

  2. Fab

    Hi Dividend10,

    is VNQ really having a yield of 6.12%?
    I see you probably got the value from google finance. Wondering how they get that amount… adding up the 4 dividends of 2016, makes less than 5%.
    Also on vanguard site, they seem to indicate around 4%…

    • Greg Gee

      Hey Fab,

      It does seem like there’s a bunch of conflicting information depending on which source you asked. I revised it down to Morningstar’s 4.82% for now.

      Thanks for pointing that out.

      10

  3. Cracker Barrel and CVS seem to be on a lot of DGI lists this month for potential buys. It’s for good reason too. Both appear to be quite undervalued at this time. May just grab one or both of them myself :). Thanks for sharing your potentials.

    • Greg Gee

      Hey DR,

      Yes, it appears so. I like both. I’ll be interested in seeing what you do as well!

      Cheers

  4. Dan

    Great list Greg. I’m thinking of adding Vanguard’s REIT myself. Great reminder! I think DIS and WFC are still two good options as well.

    Passive Income Dude
    Dan recently posted…Income/Expenses: December 2016My Profile

    • Greg Gee

      Hey Dan, Very cool- will look forward to seeing yours play out. DIS is a great company. I actually had sold out of WFC myself before the scandal. If I get back into financials I’d probably do it in a fund for diversification as I have no confidence in any particular name.

  5. I own quite a lot of the vanguard REIT index – thing it’s a great way to get exposure to the REIT market as individual companies in that area are a bit too risky for me. I do think the index has some exposure to areas I’d like to avoid(Mall/Retail REITs) but what can ya do.

    I like CVS and MDT as well.

    • Greg Gee

      Cool, yeah. Seems like the VNQ is a hit. I’ll probably get rolling – just trying to decide which account it belongs in. CVS and MDT look great – glad you like them too. Cheers.

  6. VNQ looks great. Thanks for sharing. I’m currently invested in Realty Income and Ventas in my Roth but might be looking to add some more real estate exposure soon. I don’t own any ETFs or mutual funds currently but this might be a low cost way to get some diversification.

    Scott
    Scott – Two Investing recently posted…2016 Year-End Performance & Goal ReviewMy Profile

    • Greg Gee

      Hey Scott – Thanks, I agree. I also like Realty as well. Thanks for commenting!

  7. Great list. I have also been watching Vanguards REIT funds ever since I sold out of $HCP and decided that all my exposure to REITs would come through an ETF or Mutual Fund. Personally i like the Vanguard REIT Index Fund Admiral Shares (VGSLX) but both are great options with the .12% basis points!
    Predictable Snowball recently posted…Dividend income from you, to the world – December ’16My Profile

    • Greg Gee

      Yep, I just checked that out. They look to be rather identical. The same expense ratio and same top 10 holdings for each 1 Simon Property Group Inc.
      2 Public Storage
      3 Prologis Inc.
      4 Equinix Inc.
      5 AvalonBay Communities Inc.
      6 Welltower Inc.
      7 Equity Residential
      8 Ventas Inc.
      9 Boston Properties Inc.
      10 Vornado Realty Trust

      Seems like it’s basically the same thing, from what I can see.

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