August 2019 Stock Considerations

After a pretty strong July it looks like panic is setting in as we start August. No worries… as dividend growth investors we can’t focus on the near term as daily, weekly and monthly price fluctuations and sentiment is nearly impossible to gauge. All we can do is look for solid companies with good fundamentals that have the ability to navigate and adapt to current economic situations. With that being said, let’s take a look at my August stock considerations.

First, I am looking at Altria Group, Inc. (MO) once again. What can I say… I still like the stock under $50. The juicy yield well north of 6% is still well covered and the negative sentiment around the stock has not abated which still might give those wishing to go long the stock some time to make up their mind and pick up some shares. I believe MO’s entry into the cannabis and vaping space will, in the long run, pay off as traditional tobacco usage continues to decline.

Next, I am looking to add a potential new name to my portfolio, Leggett & Platt, Incorporated (LEG). This company has been around for well over 100 years manufacturing furniture and other related components. This stock has been growing dividends for almost five decades and though this is definitely not a growth stock it does offer a compelling yield north of 4% with an acceptable payout ratio of 72%. Ever since the stock dropped below $40 it has steadily appeared on my radar. The stock still may be a bit overvalued at current levels with a PEG of 3.06 (ideally I’d like a PEG at 2 or below) but I still might be compelled to nibble in August.

Finally, I am looking towards another potential new position in my portfolio, LyondellBasell Industries N.V. (LYB) a manufacturer of chemicals, polymers, plastics and also crude oil refiner. While this company does not have the dividend raise track record of LEG it does offer dividend investors seeking income a sizable yield north of 5% with a low payout ratio of just 36%. At current prices the stock appears to be more favorably valued than LEG with a PEG of 1.86.

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Disclosure: Long MO

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