Watchlist update: June

In the middle of every month I will update my current stocks watchlist, and post a top 3. Below are my reasons for looking at these stocks, for current valuations and a list of 25 stocks please visit my ‘Watchlist’ page.

I will explain my top 3 watchlist stocks briefly based on sentiment, P/E ratio and ‘% off 52 week high’:

 

To see the picks I made last month click here.

 

  • General Dynamics is a company which is active in many segments, they have increased their dividend every year for the past 25+ years. The segments in which they’re active include; Aerospace, Combat Systems, Marine Systems and Information Systems and Technology. They design and built Gulfstream jets,  armored vehicles and nuclear submarines, destroyers and cargo ships for the US navy. They also design information and communication techniques and systems for governments and businesses. The companies biggest client is the US navy with approximately 71% of the revenue coming from them. The leftovers are filled in by international governments and businesses. As they work on sensitive projects, most of what is in their pipeline is kept a secret. Although these two less than optimal facts, I believe GD is a great dividend growth option. They have proven to focus on building their dividend payout up. Also with America spending a huge amount of money on national defense GD is set up to do well for many more years. At a price of $195,80 they yield 1,90%, with a 5 year DGR of 10,54%, a P/E of 19,26 and a payout ratio of 36,6% this seems a nice opportunity to buy into a solid company at a fair price.
1 year chart of General Dynamics.

 

  • AT&T makes it to the list for the third time, three months straight makes it a hattrick. Last week Judge Leon approved the merger of AT&T and Time Warner, after almost 1,5 year of waiting. AT&T’s stock fell around 6% creating a nice opportunity, I believe this drop in their stock price happened to the additional debt they take on for acquiring Time Warner. I have read different reports about their debt, ranging from 185 all the way to 250 billion dollars. This is a huge amount, but then again, Time Warner is a company which is totally worth it. After a few years of merging the the combined company should become a huge cash machine. Currently at a price of $33,15 they yield 6,03%, with a 5 year DGR of 2,15%, a P/E of 19,73 and a payout ratio of between 58 and 119% due to the tax reforms.
1 year chart of AT&T.

 

  • Illinois Tool Works is a company that produces engineered fasteners and components, equipment and consumable systems, and specialty products. The company has a market capitalization of $50 billion, and generates annual revenue of more than $13 billion. They have increased their dividend for 43 years straight, it seems like a spectacularly boring company which keeps generating dividends for it’s investors. Currently at a price of $148,65 they yield 2,10%, with a 5 year DGR of 14,85%, a P/E of 20,82 and a payout ratio of 43,6% they seem to be trading at fair value. This might be an average price, certainly not undervalued. But for premium companies you usually have to pay premium prices.
1 year chart of Illinois Tool Works.

 

I hope you enjoyed my watchlist and I’m curious to what stocks you will be adding this month!

Happy investing!

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12 Comments

  1. Willem

    Hi Dutch

    Great names you consider
    I am looking for Buying T and GD as well ..when ITW drops a little bit down with a P/E < 20 They will also come on my list.
    Go ahead with your posts.
    Regards
    Willem

    • DutchIndependence

      Thanks for the compliment and your comment. Ideally I’d purchase ITW under 20 P/E aswell!

      DI

  2. I’m liking AT&T here. I know they added a lot of debt with this last purchase but I’m hoping the new revenue stream will more than make up for that. I’ll be watching to see how they can reduce their debt over the next few years. I don’t mind collecting a 6%+ dividend to wait.

    • DutchIndependence

      My thoughts exactly, the combined company should be huge! Waiting for this moment while receiving 6% dividend is quite obvious to me!

      DI

  3. Looks like T is on everyone’s list lately. Lots of people taking advantage of the volatility caused by the acquisition. Myself included just picked up a few more shares. Great position to build up when the price is right. Good luck deciding what to buy next.

    • DutchIndependence

      Great decision to pick up some more shares, it does wonders for your forward annual income. Thank you for your comment!

      DI

  4. AT&T is always high on my list when it is in the low $30/share range, no doubt about it. ITW and GD are great companies that I always have my eyes on. However, I would like to see their price drop a little more and their yields to increase before I seriously consider them for additions. But all three are great companies!

    Bert

    • DutchIndependence

      T seems to very popular in the community, and rightfully so! I would love for GD/ITW to drop further, but I consider this price as a decent long term entry point already, but I can imagine why one would wait a bit more.

      DI

      • Willem

        Ha Dutch

        Ik heb niet voor ITW of GD gekozen zoals ik in de 1e post schreef maar
        heb 10 shares of DOVER gekocht.

        kan ik met je in contact komen via email?
        Gr Willem

        • DutchIndependence

          Also a very nice buy, I send you an e-mail!

          DI

  5. Seems like everyone is nibbling or wanting to nibble on T these days. I guess there is a lot to like about this stock. ITW is one of my favorite long term holds. Been with me for about ten years and it has been a solid performer. Not the cheapest stock in the bunch but it’s said that you have to pay for quality sometimes. You mentioned it 🙂 ITW is like a mutual fund of smaller companies.

    • DutchIndependence

      Exactly, there is so many listed holdings if you search for ITW on wiki, it’s exactly like a mutual fund/ETF! Thank you for your comment!

      DI

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