Target Corporation (TGT) is a dividend champion with a 46 year streak of increasing dividends. Hard to argue with a track record like that, Target is high quality. I have a fair value of $71 on shares of this business, and would be interested in picking up additional shares at $64 or below. Purchasing under $64 ensures I have a 10% margin of safety as calculating fair values can never be an exact science. The best I can do is estimate using available facts. Regardless, I am underweight retail stocks and would rather own both WMT and TGT. Although I see Walmart as the stronger company, I don't feel the need to only choose one!
Wal-Mart Stores (WMT) is another dividend champion I want to buy. It has an ongoing dividend growth streak of 39 consecutive years and also dominates the retail space. WMT is one of the highest quality companies I can think of. I have a fair value of $83.50 on Walmart, and would be interested in grabbing additional shares at $75 or below to ensure a margin of safety. I recently visited a Neighborhood Walmart store in my area and was pleasantly surprised with what I found. WMT plans to expand internationally and I think the Neighborhood Walmarts will also be a hit.
Leggett & Platt, Inc. (LEG) has a dividend growth streak of 42 years. My calculations tell me this stock is worth $32, therefore I am interested in adding LEG to my portfolio at $29 or below. I currently do not own any LEG, but became interested in this particular company a few months back when I purchased a new bed. Guess what they produce? Metal bed frames that raise your bed off the floor (among other products). Boring companies that produce boring products like bed frames are right up my alley! I love it! LEG is projected to grow EPS fairly rapidly and currently sports a 4% yield. However the payout ratio is a tad high and I only anticipate dividend growth of 3-4% for the time being.
Chevron Corporation (CVX) is yet another dividend champion, this time with a 26 year streak. I calculate a fair value of $127.50 which compels me to consider a purchase at $114.50 or cheaper. CVX is one of my core holdings, and I'm ashamed to say I haven't bought any shares in well over 2 years. I've had many opportunities to add CVX shares at discounted prices, yet I failed to take action. Should I continue to disappoint myself, or should I just buy some dang shares? I'm willing to break the 10% margin of safety in order to increase a core holding. It's currently trading at $118... close enough?
Abbott Laboratories (ABT) used to be a dividend champion with a 40 year streak. That streak ended when it spun off the new pharmaceutical company Abbvie earlier this year. Last month ABT rewarded patient investors with a massive 57% dividend boost. That boost telegraphed the new ABT's intentions regarding dividend growth. For the first time in almost two years I am interested in buying more shares of this health care company! It is difficult to calculate a fair value on Abbott because the new business cannot really be compared to historical data. Since I am unable to calculate a fair value on my own, I will have to defer to Morningstar with its $40 fair value calculation. I am interested in grabbing ABT shares at the 2.5% yield threshold which equates to a $35.25 share price. I believe Abbott has positioned itself for an easier path to sustained growth now that concerns over Humira patent expiration are a thing of the past.
As it stands right now all these stocks are trading at prices a little bit higher than I want to pay. That's not too surprising since the stock market is near all time levels. All 5 candidates are within striking range of my target purchase price so I plan to be on the lookout. With a little help from Mr. Market I'll have a better menu from which to place an order, in fact I'm going to place a limit order on CVX right now.