August 2018 Dividend Stock Watch List

We are getting to the mid-point of summer and it’s time to warm up my dividend stock watch list article.Time for me to put the pencil to paper, analyze dividend stocks that may or may not be undervalued and ripe for my portfolio. I am looking forward to deploy capital that I managed to save over the last 4+ weeks, in order to add dividend income to my forward looking projection and reduce the time needed to being financial independent! Are you ready to grab that ice-cold… drink and check out my dividend stock watch list for August? Keep on reading then!

Dividend Stock Watch List

I am completely revamping my dividend stock watch list from where it was last month. My last month dividend stocks in SBUX, DAL and CSCO seem to be of flavor, and their prices have been increasing quite a bit, however, I was able to grab SBUX when the price came to where I liked it.Therefore, you will see three stocks below that I’ve never had on my watch list. You’ll see three stocks below that really look nice from a Dividend Diplomat Stock Screener standpoint. Lastly, the three dividend paying companies below are in industries that don’t have a spot, yet, in my portfolio.

Illinois Tool Works (ITW) – How could I have a watch list without a dividend aristocrat?  ITW has increased dividends for over 50 years.  They are a very old company, to say the least.  They have a plethora of companies underneath their umbrella, but they are a fastener, component and consumer equipment company.  Their three year growth rate to their dividend is 17%, followed by a 5 year growth rate of 15.52%.  Therefore, not too much variation for their metrics in the recent term.  September will be the month that they increase their dividend, so we’ll see if they keep the double digit pump going.  Their earnings expectations, on average, are $7.61 and they currently trade at $140.21.  They are down, year-to-date, by 15%, in terms of their stock price.  Their dividends per year are $3.12.  Therefore, using our metrics, their price to earnings ratio stands at 18.41, slightly on the higher end of what we like to see, but still better than most of what’s out there.  Their dividend yield is 2.23%, which is definitely on the lower end, about on par with what the S&P 500 yields, and is slightly higher than a risk-free rate, at this time.  However, that’s where their powerful dividend growth comes in, and given how things have gone so far this year for companies, I would expect the powerful increase to come in September.  Further, their payout ratio is at 41%, so right in the “sweet” spot of the 40-60% range, not keeping too much and not giving too much.  This doesn’t get easier to explain why they are on my watch list, as you can see from the reasons and metrics above.  Further, this is something I don’t have in my portfolio.

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Disclaimer: I do not recommend any decision to the reader or any user, please consult your own research. Thank you.

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