Stock watchlist for December 2016

A photo by JOHN TOWNER. unsplash.com/photos/bZXQ6zUmqkw

As the end of the year is slowly passing by, we have planned to make another 2 buys before we reached the end of 2016. Normally we only have a longer list of companies we are interested in, and just keep on looking for new possibilities at the same time. Just recently we added Allergan to our watchlist. Because our list is constantly growing, a lot of the companies on there we don’t follow too closely. And the longer it gets the more flexible we get with picking a stock buy. So for now we choose to zoom in on a few for the coming weeks to be able to focus on a few instead of many.

We look at our watchlist as a fluent and constantly evolving ‘thing’ that we use as a kind reminder of companies that might be interesting to buy.

This means a lot of companies stay on the list for months or even years, some are bought after being on there 1 week or some we pull of the list because we’re no longer interested.

But as this list is growing over time we realized sometimes it’s better to get a few of the companies on closer view, so deciding which one to buy will be easier.

The market is acting strangely the last few weeks. There are a lot of things going on in both the US and Europe, which can cause some uncertainty. In some sectors it has provided some interesting opportunities, like the consumer defensives or tech companies. We picked up some shares of Unilever for a very fair price. In others it was more to closing the gap on finding value, like healthcare.

Although timing the market is not something we pursue, we still like to find solid companies for a decent value.

For the coming month we planned to make 2 more buys for around €2000 each. By doing this we will also reach our goal of having €35.000 of invested capital!

There are a few stocks that we consider as possible buys. One was a favorite a few weeks/months back in the community: Starbucks ($SBUX). We already aiming on this one for a longer time, and still really like the products, the companies vision and it’s solid growth. The amazing dividend growth of 25% recently really shows that there is much to like. The price however also increased steadily which makes us a bit more wary at the same time. Still, considering the long term growth potential it’s a good value for your money.

Another consideration are AB Inbev ($ABI) and Heineken ($HEIA). Both are world famous breweries with well known products and international coverage. We checked in on both a year back, but lost focus because of their higher valuation at the time. Now the both dropped in price and might be offering a buying opportunity.

Ab Inbev is in the middle of a merger with SABMiller and has to deal with lots weakness in Brazil, a potential dividend cut and a high acquisition related debt. Not much to like would you think. That’s why we want to compare them to Heineken, which has to deal with currency headwinds and lagging returns in emerging markets. Both are enduring some difficulties but are very powerful companies. As EU stocks they also have a-typical (semi-annual) dividend payments which might be less attractive for some. Heineken had some major dividend hikes and had a growth of 18% over their 2o15 dividends.

One that is on our watchlist a little longer as well is Nike ($NKE). One of the biggest seller of athletic footwear and apparel, which only had a few moments the last 10 years where the price was trading for a good value. One of them is now. They depreciated 22% over the last 12 months and has a shy dividend yield of 1.4%. However they also increased their dividend recently with 14% which makes up for the lower yield.

Besides the companies listed above, we also like to average down on 1 companies on which we already own some shares: Unilever ($UNA). Their pay out ratio of 76% is a bit high. It’s expected that their dividends won’t grow as fast as others. But with a current dividend yield of 3,5%, that might not be so bad. This stock provides as a solid fundamental stock for every DGI portfolio.

They still provide a solid quality for low value. We love the company because of it’s broad range of products, international activity and innovative character. We recently initiated a position in this company, and with current valuations wouldn’t mind to add some more.

Of course there are numerous companies out there trading at a nice value and providing a nice dividend. There are just too much to all pay attention too. That doesn’t mean that a lot of good value can be found at other places than we mentioned in this article.

A lot of strong and ‘older’ dividend companies in the consumer goods sector has come down in price recently. Many are suffering from big challenges like: growing local competition, currency swings, lagging emerging markets and rising commodity prices.
Some say they even lost their shine a bit. Sounds like some interesting opportunities may rise up for us dividend growth investors. If this trend continues into 2017, it will be one heck of a year to invest in 🙂

What do you say? Any stocks you still want to buy before 2016 comes to an end? Or looking at the same companies as we mentioned? Maybe owning them already? Found some nice gems in the consumer goods sector? Feel free to share your thoughts with us and other readers 🙂 

 

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8 thoughts on “Stock watchlist for December 2016

  1. I’ve been waiting a while for Nike too! Although it doesn’t pay a dividend, I think Under Armour is very interesting. It’s certainly got crushed.

    Costco is also on my watch list. It has been for a while and I’ve been waiting patiently. I’ve also been waiting for a better entry point to get more of Service Corporation International (SCI), but it’s really resilient.

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    • Similar minds… 😉 I like Under Armour too, but also tend more towards Nike as it ‘feels’ a bit more established (and the dividends of course.) The others you mention we didn’t really checked out, never even heard of SCI. Will definitely check them out later on, thanks!

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  2. I’m currently looking really hard at CHD. There has been some pull back and I’m thinking now might be a good time.

    I also really like DIS. I’m thinking at some point I should just pull the trigger and own it. It’s not as good of a price as it was earlier this year. I still have concerns about ESPN. But overall it’s just such a solidly run company.

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    • Oh yeah, I’ve read about CHD. I don’t follow the company but sounded pretty nice.
      ESPN is not much of a worry to me as long as the other divisions of DIS brings in some good money (and growing). And you never know, there might come another pullback here too 🙂

      Liked by 1 person

  3. Divnomics –

    Love all the names. Great list there and keep your eyes on UL – would like that lower, that’s for sure! Big dividend players/growth rates on them, as well, NIKE had that nice one, “Just do it” right?

    -Lanny

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  4. Great companies you put on your watchlist for December.
    I
    With valuations that came down, AB Inv and Heineken are particularly interesting defensive stocks in my view. AB Inv is so huge with plenty of strong brands now. But the debt load is massive and growth rate is not that high. It seems to me that Heineken could have more room for future eps and dividend growth.

    Cheers

    Like

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