The stock market continues to fly high making it difficult to find quality dividend stocks trading at attractive valuations. The usual dividend stalwarts such as KO, ABT, WMT, CL, and CVX are no longer on sale, yet I have money to invest and will continue depositing more funds from my day job. I'm going to buy something, this is a list of what I'm currently looking at.
●Genuine Parts Company: I've had my eye on GPC for a while, but it never quite reached the entry price I had in mind. I came very close to pulling the trigger a few months ago when it went down to around $58. I like Genuine Parts because it would help diversify my portfolio into an industry that I'm currently lacking plus it has proven itself to be a shareholder friendly company over the years. After revisiting GPC, I determined a 3.3% entry yield would be a decent place to start an investment. I'm interested in this stock below $60, it's pretty close right now.
3.24% yield / 52% payout ratio / 56 years of increases / 15.93 P/E
●Kinder Morgan, Inc: KMI is an American success story that wasn't available to the public until last year. It's one of those stocks I feel will be worth more many from years now but is difficult to value due to its business model. If you plug the numbers into a dividend discount calculator you'll see that it's way undervalued because it has a nice current yield and is expected to grow dividends at a rapid pace. It kind of tells you it's almost too good to be true (I had the same sort of feeling when I bought shares of PM last year). This one will be a steal if they can continue raising dividends like they say. The dividend growth is the wild card here; I like KMI's chances seeing that they recently acquired El Paso Pipelines. With that in mind I'm going to target a 4.0% yield which means a price of $35. I plan to put this one in my ROTH and keep regular MLPs in my taxable account. I'd like to make the purchase soon to make sure I get the Q4 dividend, it should go ex later this month.
3.94% yield / 1,078% payout ratio (isn't meaningful) / 2 years of increases / 281.9 P/E
●Norfolk Southern: NSC took a nose dive the past few weeks after it cut its future guidance. This drop has been well documented by internet bloggers and has been a consensus buy across the board. Anytime I get can a 3% yield with NSC I'll consider adding to my position, but at the same time I don't want one stock dominating my portfolio and odds of retirement success (which is why I've leaving INTC off this list). Since I already have a sizable stake with this railroad, I'm going to target a price that will lower my cost basis. My next price point is at the 3.25% yield or $61.50/share since we don't really know when the bleeding will stop.
3.14% yield / 34% payout ratio / 11 years of increases / 10.90 P/E
My plans are constantly changing, but chances are I'll pick up one or two of these names this month. In fact I think I'll put in a limit order for KMI right now just in case.