Wednesday, July 10, 2013

Three Potential Buys for July

The stock market is once again near all time highs making it difficult to find under valued stocks.  As always, I plan to make a purchase this month.  In order to build a passive income stream, I must buy income producing assets.  It's pretty simple.  Holding cash is not a bad idea right now, but I cannot predict the future.  Averaging in over time is a strategy that makes sense to me and has worked well for me in the past.  I'm looking to increase my position in a super high quality name this month.

Procter & Gamble:
Wow it has been two years since I've bought PG shares!  PG is a dividend king (50+ years of increases) and one of my favorite companies in the world.  The reason why I have shied away from buying PG has more to do with allocations than anything else.  My portfolio is reaching the point where I can start increasing my core positions again.  I'm pretty excited about that!  With a 3.0% yield, PG is looking attractive as a long term position.  It is well above my cost basis right now, oh well, that's what happens to strong stocks.  I'd be very interested in picking up shares around $77-78 if we happen to see a decent dip.

Chevron:
CVX is another dividend champion and favorite of mine.  I am actually underweight CVX at the moment and would have no problem scooping up a few shares.  I plan on selling some of my other energy positions in the near future which would leave me a lot of room to pick up CVX and XOM.  Last month I thought XOM had an edge in valuation, this month CVX is looking a little more attractive to me.  It is currently yielding about 3.3% and would make a nice contribution towards growing my passive income stream.  I'd be interested in adding shares around $117-119.

Southern Company:
SO is a small position that needs a boost in share count within my portfolio.  This is my favorite utility and one of my favorite dividend growth stocks to boot.  I think SO has a bright future, I definitely want to be a part of it.  I would classify Southern as fairly valued at the moment.  Not under valued.  That's okay because this is surely the highest quality utility around.  Yeah the dividend growth is a bit low, it's true.  On the other hand the yield is pretty nice and the increases can be counted on.  I'm looking to add a few shares around $42-43 if possible.

I'm going to buy something this month, it's just a matter of when.  The three companies listed above are my top choices at this point in time.  I am also considering KO, XOM, and GIS.

14 comments:

  1. CI, I agree with you, that it is hard to predict the future - will the stocks drop or will they continue in this crazy run? You never know. However I will stick to my cash building plan during run ups and investing that cash during drops.

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    1. Yes I am waiting for a decent drop too! If not, I'll just plop down some cash the last week of the month to increase my passive income stream. I'm hoping to see at least a little bit of progress every month. That's what keeps me motivated!

      Thanks for the comment and visiting my little part of the internet!

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  2. I need to add more dividend stocks to my portfolio but havent done the research needed to add any new positions. I like the idea of PG or CVX not sure on SO though as I dont know much about them. The markets are up and down but I need a nice dip before I scoop anything up right now. I also need to find my price points hopefully you get the drop you are waiting for. Nothing like passive income.

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    1. I also hope for a dip in the next week or two. I don't think PG is especially cheap right now. It appears to be trading a little bit over fair value. I don't mind paying a small premium for Procter & Gamble though.

      The market had another big day. Hmm..

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  3. CI,

    I picked up some CVX and PG in the last few months. My portfolio's also finally building up to where I feel I can add to some core positions again. Well except for MCD although I think I got in on that at some great prices. It's still 9% of my portfolio but it's coming down with every purchase I make. I'd need about a 15% drop before I'd want to add to my position anyways so I'm in no hurry. Hopefully we can get a choppier market because that leads to some great opportunities. Although I hope it continues to rise since I'll be allocating less capital to my FI portfolio since my wife and I are probably going to buy a house later this year.

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    1. Awesome! I'm happy for you guys!

      I found out earlier today that I am entitled to a nice sum of money (from my recent move) that I wasn't expecting. I probably won't see the payment for a month or so however, and there may be extra paper work. Oh boy... I'll go through the headache for enough cash to buy a new position any day of the week.

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  4. I own all but PG. I don't think you can go wrong with these. I missed PG's big drop last year and haven't added due to the huge price increase and my already large allocation to the sector. I would be looking to add more SO since my utility exposure is still low.

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    1. There are a few that have eluded me as well. At some point I need to get my hands on GPC, KMB, and MDT for instance. We'll see they are all pretty pricey at the moment.

      It's tough to build a portfolio with perfect proportions. I'll worry more about that when I'm done accumulating assets.

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  5. You may want to add to position that will balance out your dividend income stream so you are receiving about equal income each month instead of one quarter with a big lump and 8 months of low inflow.

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    1. Thanks for the tip! That may be something I look at when I'm closer to retiring. Right now I simply track my progress quarter to quarter which smoothes over the monthly fluctuations. July income will be lower than June for example. However, I expect to bring in more Q3 compared to Q2. At the end of the day that is what I am attempting to accomplish.

      Now if I had to live off the income I may want it to closer to equal.

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  6. Great picks -- love them all. Don't think you can ever really go wrong with these gems over the long haul.

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    1. Thanks buddy. Hope your real estate ventures are proceeding as planned. I know there is a lot of money to be made there.

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  7. All look like solid picks overall, I'd love to have any of those in my portfolio. GIS's ex-div date has just passed though and PG's is on the 17th so you better hurry if you want in before that.

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    1. Well PG is out of the picture again since it jumped up to $81.50. I'll be on the lookout in the future however. Yeah I don't have anything in mind for a buy at the moment, everything is looking pretty pricey...

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