September 2018 Stock Considerations

A little late with this post as I like to highlight my potential stock buys in the beginning of the month but sometimes it can be tough deciding where to deploy fresh capital when many stocks are trading at premium prices. Of course, we all know that no matter how high the market rises there will always be a gem in the rough lurking somewhere. With that being said let’s take a look at some of my September stock considerations.

I’ll potentially be looking to add to a couple of my health REITs that have been showing some signs of life when compared to their performance in early 2018. These buys will allow me to average down my cost basis while continuing to enjoy some generous yield. It’s been a while since I added to any of my current REIT holdings and HCP, Inc. (HCP) is starting to look OK to me once again. Seeing HCP well below a $30 price could finally compel me to trigger a buy. Also, in the health REIT space I am looking to add to my Sabra Health Care REIT, Inc. (SBRA). The stock has climbed a lot from its lows of 2018 as this skilled nursing REIT play still demonstrates a difficult business environment. Of course, that generous yield, which highlights some of the risk involved with the stock, can justify the risk/reward scenario.

Finally, I’ll continue to look at some of the utilities for a potential buy in September. Last month I added to my Dominion Energy, Inc. (D) as the stock continues to look attractive to me sporting a juicy yield of 4.6% with a moderately high payout ratio of 81.1%. It also has a very respectable ten year dividend growth rate of 7.6%. I am also considering adding a new holding to my portfolio, PPL Corporation (PPL). As with D, PPL is another juicy yielding (5.3%) utility with U.K. exposure that offers a sustainable dividend with a payout ratio of 70.0%. While not a stellar dividend grower over time the high current yield makes up for that deficiency. While utilities are rarely exciting investments, they can offer stability and predictability to any dividend income portfolio.

Disclosure: Long HCP, SBRA, D.

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