The stock market continues to edge up, setting new all time highs for what feels like – every other day, at this point.
Therefore, it’s difficult to find undervalued dividend stocks right now, due to the market surging over 24% in 2023 and over 3% so far in 2024. However, you know the Dividend Diplomats never back down from finding undervalued dividend growth stocks!
Let’s dive into THREE dividend stocks on my watch list right now!
dividend stock watch list
Dividend investing happens, whether the stock market is up or down, whether the fed raises interest rates or lowers. Inflation or deflation. Banks are failing or being bailed out. Recession, no recession. It’s all about buying dividend income producing stocks – the best source of passive income source on your journey to financial freedom!
The stock market, specifically the S&P 500, is up over 3% this year and is touching 4,900. Can you believe the S&P 500 is closing in on 5,000? Just amazing.
Earning releases are in full swing, and the market I feel is overly optimistic with things right now, as I know the Consumer spending is still high and strong. Do we see higher rates, for longer? I honestly believe so, and I do not want the Fed / Jerome Powell to have any fast reactons.
Here is the S&P 500 chart below – Up, down, up down and now up:
Interest rates have held steady for 4 months now, and the high yield savings rates “could” be at their peak.
Related: STOP Making Extra Mortgage Payments on Your LOW Rate Mortgage
Given the possibility of inflation cooling, bank current stability, the Fed may top out at the current 5.25-5.50% in their fight against inflation and to hold for a few more months. However, all of the interest rate increases have increased those savings rate. Ally currently has a savings rate of 4.35%, with their money market product at 4.40%. However, there is a Fintech that I HEAVILY use.
I keep MORE savings in my SoFi savings account – as it earns me – now – 4.60% on my savings account.
In addition, I’ve been buying stocks on SoFi’s investing application (hint, if you sign up YOU get free stock! You can automatically buy partial shares as frequent as you want. Absolutely love investing with SoFi and cannot stop recommending their platform.
Related: 3 Financial Freedom Products I am using to finish off 2022
In addition, given the uncertainty, I continue to make weekly investments into Vanguard Exchange Traded Funds (ETFs). The specific ETF my wife and I have been loading up on is Vanguard High Dividend Yield (VYM). We are investing approximately $650-$800 per week into Vanguard (pending the VYM stock price), to stay invested in the market, during the uncertain times. In addition, I am also investing $60 per day into Vanguard S&P 500 ETF (VOO) and $40 into Vanguard’s Dividend Appreciation ETF (VIG)!
Related: Why I’m Investing $500 Weekly with Vanguard ETFs
Related: Dividend Investing Strategy Added – BUYING $50 per day of VOO
Dividend stock watch list
Here is the list of dividend stocks that are on my radar going into the month of February 2024. I typically like to keep it at 2-3 dividend stocks, keeping the focus locked in. Finding dividend stocks isn’t easy, but there are also other factors, such as composition of my portfolio by industry (such as – am I overweight/underweight in an industry), as well as exposure to one stock and the concentration there.
There, the dividend stocks on my list cater to those other facets when building a dividend stock portfolio.
Johnson & Johnson (JNJ)
It was time to bring this iconic dividend king back to the table, especially that the stock price is still below $160. Now.. do we consider them a full-on pharmaceutical stock, competing with the likes of Pfizer (PFE), Eli Lilly (LLY), Bristol (BMY) and AbbVie (ABBV)? What a ride!
Now, they are a TOP 5 Foundation Dividend Stock for YOUR portfolio. Why? Simple. They consistently grow earnings and raise their dividend, every year, and at or around the same rate. Plus, they usually support a nice dividend yield to boot.
Therefore, I want to show the stats and why I do like the stock, even at current prices.
Therefore, lets run JNJ officially through the Dividend Diplomats Stock Screener, which is focused on these 3 metrics.
1). Price to Earnings Ratio: Earnings is approximately $10.67 in earnings per share for 2024. Therefore, JNJ is trading at ~15x forward earnings right now, still low, especially when compared to the 26x the S&P 500 sits at.
2). Payout Ratio: JNJ’s current dividend payout ratio, using that metric is actually at 45%. Perfect, a perfect payout ratio. Room for reinvestment and room for dividend growth.
3). Dividend Growth: See the 10 year chart below. This is JNJ’s little engine just humming along, growing between 5.5%-7.50% every year!
The dividend yield is currently at 2.98%. I would like JNJ stock at or below $154 per share.
SHELL (SHEL)
I have been big on oil over the last few months. Shell (SHEL), I believe, is undervalued and also shows that they are okay stepping into the renewable energy sources. Embracing it, in a way.
Therefore, down 4% this year with a yield over 4% and a dividend that is growing at a fast clip, is a stock I want to watch. They did cut the dividend back in the Pandemic, but they’ve been on a mission to juice it up, in a secure manner.
Time to look at the dividend metrics.
1.) P/E Ratio: SHEL analysts are expecting over $7.74 in earnings per share. The P/E ratio is then approximately 8x earnings.
2.) Dividend Payout Ratio: Shell (SHEL) pays $0.662 per share, per quarter. This represents a dividend payout ratio of 34%. Low, with room to grow!
3.) Dividend Growth Rate: The last dividend increase was around 15%. I anticipate 8-12% for the next dividend increase.
Lastly, Shell’s dividend yield. They yield about 4.20%, which is well above the S&P 500. Most oil companies yield higher.
Archer Daniels Midland (ADM)
The stock that shook the week of January 22nd and the investing market with their Accounting Scandal that is currently happening.
The CFO is now on leave, as ADM conducts an internal investigation on the accounting practices at ADM. This was specific to their nutrition segment, which had high margins, but not an overly material part of the overall financial statements. In fact, the impact to earnings per share did not seem significant either.
Therefore, the impact when the news broke was a 24% drop in the share price. Don’t get me wrong, there is a ton of risk here. There is a lot of unknowns with ADM and what direction this could take. There could be more red or this could be one of the greatest opportunities to own a solid company. What is your take?
Alright, time for the dividend metrics, right?
1.) P/E Ratio: ADM stated they still could see $6.90 in earnings. We will discount that to $6 EPS, just for the sake of being conservative. That is a P/E ratio of 8.7 still. Super low.
2.) Dividend Payout Ratio: ADM pays a $0.50 per share, per quarter dividend, or $2.00 annually. This equates to a 33% dividend payout ratio. Makes sense why the company could increase their dividend by 11% no question, even with the accounting scandal.
3.) Dividend Growth Rate: ADM’s 5 year dividend growth rate is over 6%. However, the last dividend increase was over 11%, at 11.11%, heck yah.
Lastly, we’ll take a look at the dividend yield. The yield for ADM is now at 3.46%.
Are you taking the risk and buying shares of ADM? I bought 5 last week!
Other Dividend Stocks to buy
I am also considering, as a quick hitter approach here, my eyes are on a few other stocks. Those stocks are eBay (EBAY) and Main Street Capital (MAIN),
I own each stock and am constantly evaluating the stock market, to see if there are undervalued dividend stocks to buy in this wild market.
Dividend Stock Watch List Conclusion
Dividend investing is real and is happening! Here is a video covering two dividend stocks for the week!
Of course, prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.
As always, I highly encourage you do your own research as this is not financial advice (quick disclaimer!).
Related: 5 Reasons Dividend Income is the Easiest Passive Income Source
As you have noticed, I have trickled many articles on this page. The goal is to educate new dividend investors out there, or to sharpen the terminology for current dividend investors. As always, stick to your investment strategy and dividend stocks will be there. What do you think of these stocks above? Thank you, good luck and happy investing everyone!
-Lanny
Therefore, on the road to financial freedom, acquiring assets that produce cash flow or income is the goal! Like I always say, there is always a diamond in the rough. How do I find an undervalued dividend stock? Time to introduce our beloved Dividend Diplomat Stock Screener!
Time to find the answer to… how did the dividend stocks on my watch list grade on the stock screener?
Dividend Diplomat Stock Screener
If you don’t know already, we keep the stock screener metrics to THREE SIMPLE items. They are:
1). Price to Earnings Ratio – We look for a price to earnings ratio < than the overall Stock Market.
2). Payout Ratio – We aim for a payout ratio between of less than 60%.
3). Dividend Growth – We like to see history of dividend growth in a company.
See the video below, for further details and explanation. If you don’t like to watch videos – see our Dividend Diplomat Stock Screener page!
https://youtu.be/oimCqajeCIk
The stock market continues to edge up, setting new all time highs for what feels like – every other day, at this point.
Therefore, it’s difficult to find undervalued dividend stocks right now, due to the market surging over 24% in 2023 and over 3% so far in 2024. However, you know the Dividend Diplomats never back down from finding undervalued dividend growth stocks!
Let’s dive into THREE dividend stocks on my watch list right now!
dividend stock watch list
Dividend investing happens, whether the stock market is up or down, whether the fed raises interest rates or lowers. Inflation or deflation. Banks are failing or being bailed out. Recession, no recession. It’s all about buying dividend income producing stocks – the best source of passive income source on your journey to financial freedom!
The stock market, specifically the S&P 500, is up over 3% this year and is touching 4,900. Can you believe the S&P 500 is closing in on 5,000? Just amazing.
Earning releases are in full swing, and the market I feel is overly optimistic with things right now, as I know the Consumer spending is still high and strong. Do we see higher rates, for longer? I honestly believe so, and I do not want the Fed / Jerome Powell to have any fast reactons.
Here is the S&P 500 chart below – Up, down, up down and now up:
Interest rates have held steady for 4 months now, and the high yield savings rates “could” be at their peak.
Related: STOP Making Extra Mortgage Payments on Your LOW Rate Mortgage
Given the possibility of inflation cooling, bank current stability, the Fed may top out at the current 5.25-5.50% in their fight against inflation and to hold for a few more months. However, all of the interest rate increases have increased those savings rate. Ally currently has a savings rate of 4.35%, with their money market product at 4.40%. However, there is a Fintech that I HEAVILY use.
I keep MORE savings in my SoFi savings account – as it earns me – now – 4.60% on my savings account.
In addition, I’ve been buying stocks on SoFi’s investing application (hint, if you sign up YOU get free stock! You can automatically buy partial shares as frequent as you want. Absolutely love investing with SoFi and cannot stop recommending their platform.
Related: 3 Financial Freedom Products I am using to finish off 2022
In addition, given the uncertainty, I continue to make weekly investments into Vanguard Exchange Traded Funds (ETFs). The specific ETF my wife and I have been loading up on is Vanguard High Dividend Yield (VYM). We are investing approximately $650-$800 per week into Vanguard (pending the VYM stock price), to stay invested in the market, during the uncertain times. In addition, I am also investing $60 per day into Vanguard S&P 500 ETF (VOO) and $40 into Vanguard’s Dividend Appreciation ETF (VIG)!
Related: Why I’m Investing $500 Weekly with Vanguard ETFs
Related: Dividend Investing Strategy Added – BUYING $50 per day of VOO
Dividend stock watch list
Here is the list of dividend stocks that are on my radar going into the month of February 2024. I typically like to keep it at 2-3 dividend stocks, keeping the focus locked in. Finding dividend stocks isn’t easy, but there are also other factors, such as composition of my portfolio by industry (such as – am I overweight/underweight in an industry), as well as exposure to one stock and the concentration there.
There, the dividend stocks on my list cater to those other facets when building a dividend stock portfolio.
Johnson & Johnson (JNJ)
It was time to bring this iconic dividend king back to the table, especially that the stock price is still below $160. Now.. do we consider them a full-on pharmaceutical stock, competing with the likes of Pfizer (PFE), Eli Lilly (LLY), Bristol (BMY) and AbbVie (ABBV)? What a ride!
Now, they are a TOP 5 Foundation Dividend Stock for YOUR portfolio. Why? Simple. They consistently grow earnings and raise their dividend, every year, and at or around the same rate. Plus, they usually support a nice dividend yield to boot.
Therefore, I want to show the stats and why I do like the stock, even at current prices.
Therefore, lets run JNJ officially through the Dividend Diplomats Stock Screener, which is focused on these 3 metrics.
1). Price to Earnings Ratio: Earnings is approximately $10.67 in earnings per share for 2024. Therefore, JNJ is trading at ~15x forward earnings right now, still low, especially when compared to the 26x the S&P 500 sits at.
2). Payout Ratio: JNJ’s current dividend payout ratio, using that metric is actually at 45%. Perfect, a perfect payout ratio. Room for reinvestment and room for dividend growth.
3). Dividend Growth: See the 10 year chart below. This is JNJ’s little engine just humming along, growing between 5.5%-7.50% every year!
The dividend yield is currently at 2.98%. I would like JNJ stock at or below $154 per share.
SHELL (SHEL)
I have been big on oil over the last few months. Shell (SHEL), I believe, is undervalued and also shows that they are okay stepping into the renewable energy sources. Embracing it, in a way.
Therefore, down 4% this year with a yield over 4% and a dividend that is growing at a fast clip, is a stock I want to watch. They did cut the dividend back in the Pandemic, but they’ve been on a mission to juice it up, in a secure manner.
Time to look at the dividend metrics.
1.) P/E Ratio: SHEL analysts are expecting over $7.74 in earnings per share. The P/E ratio is then approximately 8x earnings.
2.) Dividend Payout Ratio: Shell (SHEL) pays $0.662 per share, per quarter. This represents a dividend payout ratio of 34%. Low, with room to grow!
3.) Dividend Growth Rate: The last dividend increase was around 15%. I anticipate 8-12% for the next dividend increase.
Lastly, Shell’s dividend yield. They yield about 4.20%, which is well above the S&P 500. Most oil companies yield higher.
Archer Daniels Midland (ADM)
The stock that shook the week of January 22nd and the investing market with their Accounting Scandal that is currently happening.
The CFO is now on leave, as ADM conducts an internal investigation on the accounting practices at ADM. This was specific to their nutrition segment, which had high margins, but not an overly material part of the overall financial statements. In fact, the impact to earnings per share did not seem significant either.
Therefore, the impact when the news broke was a 24% drop in the share price. Don’t get me wrong, there is a ton of risk here. There is a lot of unknowns with ADM and what direction this could take. There could be more red or this could be one of the greatest opportunities to own a solid company. What is your take?
Alright, time for the dividend metrics, right?
1.) P/E Ratio: ADM stated they still could see $6.90 in earnings. We will discount that to $6 EPS, just for the sake of being conservative. That is a P/E ratio of 8.7 still. Super low.
2.) Dividend Payout Ratio: ADM pays a $0.50 per share, per quarter dividend, or $2.00 annually. This equates to a 33% dividend payout ratio. Makes sense why the company could increase their dividend by 11% no question, even with the accounting scandal.
3.) Dividend Growth Rate: ADM’s 5 year dividend growth rate is over 6%. However, the last dividend increase was over 11%, at 11.11%, heck yah.
Lastly, we’ll take a look at the dividend yield. The yield for ADM is now at 3.46%.
Are you taking the risk and buying shares of ADM? I bought 5 last week!
Other Dividend Stocks to buy
I am also considering, as a quick hitter approach here, my eyes are on a few other stocks. Those stocks are eBay (EBAY) and Main Street Capital (MAIN),
I own each stock and am constantly evaluating the stock market, to see if there are undervalued dividend stocks to buy in this wild market.
Dividend Stock Watch List Conclusion
Dividend investing is real and is happening! Here is a video covering two dividend stocks for the week!
Of course, prior to making any purchase, I definitely will make sure to run them through the Dividend Diplomat Stock Screener once more.
As always, I highly encourage you do your own research as this is not financial advice (quick disclaimer!).
Related: 5 Reasons Dividend Income is the Easiest Passive Income Source
As you have noticed, I have trickled many articles on this page. The goal is to educate new dividend investors out there, or to sharpen the terminology for current dividend investors. As always, stick to your investment strategy and dividend stocks will be there. What do you think of these stocks above? Thank you, good luck and happy investing everyone!
-Lanny
Therefore, on the road to financial freedom, acquiring assets that produce cash flow or income is the goal! Like I always say, there is always a diamond in the rough. How do I find an undervalued dividend stock? Time to introduce our beloved Dividend Diplomat Stock Screener!
Time to find the answer to… how did the dividend stocks on my watch list grade on the stock screener?
Dividend Diplomat Stock Screener
If you don’t know already, we keep the stock screener metrics to THREE SIMPLE items. They are:
1). Price to Earnings Ratio – We look for a price to earnings ratio < than the overall Stock Market. 2). Payout Ratio – We aim for a payout ratio between of less than 60%. 3). Dividend Growth – We like to see history of dividend growth in a company.
See the video below, for further details and explanation. If you don’t like to watch videos – see our Dividend Diplomat Stock Screener page!
https://youtu.be/oimCqajeCIk
Originally Posted on dividenddiplomats.com