Safe Picks For 2019

With the market going sideways for the past few months, both US and Canadian markets are on their way to close 2018 in negative territories. There are lots of fluctuations as many investors realize they don’t have the stomach to ride such markets.

Each year, I make the publication of a book titled “Best Dividend Stocks”. This requires several weeks or hard work reading and researching financial statements. The purpose of this book is not to make you sell your portfolio and make you switch to this one.

The purpose of this book is to create a portfolio-like list of stocks in various sectors to provide both stock value appreciation and dividend growth perspectives. Additional research and analysis are required before making any trades. I’m neither your broker nor your financial advisor.

I’ve started this “tradition” in 2012 and pick American Stocks (20) and Canadian Stocks (10) that, combined together, I believed will beat the market. Each company has been analyzed and handpicked per the DSR investing model.

What you are about to read is an excerpt of this book. Each stock has been considered according to stock market lessons learned from 2018. I’ve included 4 US “safe” picks for 2019. DSR members received the full 30 picks. Even better, they received them in December, not late in January ;-)

BLACKROCK (BLK)

BlackRock (BLK)

 

Business Model & Recent Comments

BlackRock is not only the world’s largest asset manager by assets under management (AUM), but it is also a dominant leader in one of the fastest growing investment products: ETFs. As low-cost fees and passive investing solutions tend to grow stronger, more money is being transferred toward BLK. BlackRock offers investment products in all asset classes enabling it to generate fees regardless of whether investors are bullish or bearish.

BLK didn’t impress the market with its recent modest revenue growth. Shares were once close to $600/share earlier this year, but now have crossed below the $400 level for the first time since the spring of 2017. Weak AUM is still on the table. Q3 net outflows $3.11B vs net inflows of $20B in Q2 and inflows of $96.1B a year ago. You can see investors are nervous about the market as equity had outflows of $17.3B, fixed income had inflows of $22.9B, multi-asset had inflows of $3.23B, and alternatives had inflows of $1.74B. This is definitely a time to add some BLK to your portfolio.

Investment Thesis

BlackRock is a winner and a keeper for decades to come. BLK net inflows of assets under management continue to increase quarter after quarter. In other words; there is always new money coming in. The company is a leader in a growing investment field (ETFs), and has a strong relationship with several institutional clients. Institutional investors are more inclined to stay with their providers for several years than switching from one company to another in the short term.

Potential Risks

The main problem is BLK has been on an incredible run on the stock market. No matter how much you love it, BLK will be among the biggest losers if a market correction occurs. It could also be a victim of its own success. The market is going into cheaper and more efficient investing products. BLK’s actively managed products could suffer much while its less-profitable products (ETFs) will grab market share.

Dividend Growth Perspective

The company has shown an impressive dividend growth rate for the past 7 years. Over the past 5 years, BLK maintained a 10%+ annualized dividend growth rate. Even better, the current payout and cash payout ratios are well under control. We expect a high single-digit dividend growth rate going forward even if the payout ratio permits low teens growth rates.

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Disclaimer: I’m long AAPL, BLK, DIS, and DWDP in my Dividend Stocks Rock portfolios

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