Watchlist update: March

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’:

 

  • Altria is the biggest cigarette company in the USA, it spun off from Philip Morris in 2008. It’s famous brands are L&M, Marlboro and Chesterfield to just name a few. Altria has around a 10% stake in Anheuser-Busch InBev SA/NV which is the biggest beer producer in the world. Cigarette companies have had to deal with a declining rate of smokers ever since midway last century yet they still are among the most profitable companies around. Altria has seen some weakness in their stockprice lately, I can only think about this as a stockholder friendly company trying to give investors more time to buy shares at a nice discount. It has provided returns in excess of 20% since 1970 until 2016. Just this year they raised the dividend with 6,1%, it was an extra increase as they normally increase their dividend around August, I just love surprises!
    At a current share price of $63,82 and a yield of 4,39% this makes Altria a strong buy for me.
1 year chart of Altria.

 

  • Procter & Gamble is a company with a huge selection of well known, every day brands in their portfolio, 23 of their brands have a revenue of 1 billion or more. Brands like Ariel, Always, Pampers, Braun, Head&Shoulders, Gillette, Oral-B and Pringles and many, many more. It’s a very defensive company with a history of 64 consecutive dividend increases. They have seen some recent weakness in their stockprice and this creates a great opportunity for long term investors. At a price of $79,00 they yield a very solid 3,49% at a comfortable payout ratio of 60,79% based on next years earnings. Because of the recent dip they approached a P/E ratio of about 20, this is very solid for such a premium company in these times.
1 year chart of Procter & Gamble.

 

  • Walt Disney which is also called ‘The house of the Mouse’ is famous for things like Mickey Mouse, Disneyland theme parks and their great movies. It’s a behemoth of a company which also includes things like ESPN, ABC and Marvel. They recently agreed on a deal with 21st Century Fox to buy their movie department and television channels for roughly $52,4 billion. Disney is also working on creating it’s own streaming channel to try and take market share from companies like Netflix. Their biggest issue right now are the ever declining viewers and subscriptions on their ESPN channel, but in my humble opinion the growth of their other brands is more than enough to offset this loss. They have paid dividends for around 60 years, these years were not full of consecutive and consistent increases. However since 2011 they really started hiking the dividend aggressively, they raised the dividend 50% that year alone and more recently we have been seeing increases of 10% a year. Their most recent increases was late last year and it was 7,7%, a little less than before but still a solid increase never the less. With a stockprice of $103,90, a yield of 1,62% which is believed to grow a lot in the coming years, a payout ratio of just 22,90% and a P/E ratio of just 17.34 this seems like a great time to buy into maybe the biggest and best media company out there.
1 year chart of Walt Disney.

 

This months picks were a little tough, we have seen quite a major dip in the market this past month, and companies like Exxon Mobil, UPS and Kimberley-Clark are all looking great. I decided to pick MO, PG and DIS anyway for my personal preferations, but I’m sure there are a lot more great options out there and I’m curious to hear your picks!

 

Happy investing!

Disclosure: I’m long MO.

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6 Comments

  1. Hi DI,

    It’s a nice watchlist that you created there. I‘m not such a huge fan of P&G at current price levels, but Altria and Disney definitely look interesting to me. However, if I had to choose one of the tobacco companies, I would currently prefer British American Tobacco or Japan Tobacco.

    – David

    • DutchIndependence

      Thanks for the nice compliment! How come you are not interested in PG yet, and at what price would you be interested? I’m curious about your thoughts!

      DI

  2. I like your second and third pick. Due to personal preferences I don’t invest in Altria, no matter the fundamentals 🙂

    I already own DIS and am looking to expand, shame its semi-annualy in stead of quarterly dividend but at the moment they seem like a nice buy. PG is also on my list (just as Unilever) to open up a position in.

    • DutchIndependence

      Unilever and PG are in my opinion maybe the safest kinds of companies out there. I can understand why you would not invest in MO, I myself have not so much trouble with it as long as they make me money haha.

      DI

  3. I like both PG and MO at their current levels. That is a powerful watch list. And of course, how could I forget about DIS 🙂

    Take care!

    Bert

    • DutchIndependence

      There is a lot of solid names at great prices these days, it’s hard to narrow it down! But I felt (like you) that these choices are great. Good luck picking your next investments!

      DI

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