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+--- Thread: Next DGI purchase: what to do? (/showthread.php?tid=1167)
Next DGI purchase: what to do? - DividendDream - 04-27-2015
This is cross-post from my blog but I am searching for some advice. I just deposited €1000,- to my brokerage account. Together with the accumulated dividends of the last months (€500) I am able to open up another position in my dividend growth portfolio. Given the fact that the US dollar and the Euro are looking at parity maybe somewhere in the next few months, I was pondering to purchase a Euro-based dividend company. However the 'Euro Dividend All Stars' (maintained by No More Waffles) provided me with less options than I originally anticipated!
I used the following criteria in my search:
- P/E-ratio < 20;
- 3-, 5- and 10 DGR > 6%;
- Yield > 1.5%;
This set of criteria yielded me with 6 investment options. All of those are hovering near their 52wk highs. I only recognized BASF (materials) and BMW (auto industry). However I am not keen on getting into the auto industry. So maybe BASF? Unfortunately they only pay their dividends once per year
So what about US dividend stocks? There seems to be some consensus that certain stocks are good buys in the current market environment. I've seen a few 'recent buy' posts about JNJ, T and TROW. However, Praxair (PX) is looking nice at $122 as well (P/E-ratio at 21x though). Blackrock's (BLK) stock price has run up slightly since the beginning of the year, so perhaps TROW is a slightly better option right now? Realty Income (O) decreased almost 10% in the last 3 months and is a monthly dividend payer. Definitely O would be a nice quality addition to my portfolio!
Does someone out there have some good advice for me? Or maybe some other suggestions? I am looking forward to hearing from you
RE: Next DGI purchase: what to do? - ChadR - 04-27-2015
I personally own T, JNJ, and O of the ones that you listed. I'm partial to JNJ over O. Though O is at a very attractive price currently.
RE: Next DGI purchase: what to do? - earthtodan - 04-27-2015
I would take a good look at Sanofi (SAN in France or SNY in the US). I first started looking at them because of their strong presence in the diabetes market and ended up buying a large position. The DGR is a little weak but the yield is over 3% and the stock is a good value. They have a lot of depreciation of intangibles from past acquisitions that counts against the bottom line, but in fact their operating earnings are higher; i.e. the P/E and payout ratios are lower than they appear on a cash flow basis.
RE: Next DGI purchase: what to do? - EricL - 04-27-2015
I don't think you could wrong with any of the companies you listed.
I own T and O and would call T a better value at current prices. I don't like buying O unless its yield is over 5%.
I think TROW, BLK and also AMP are all good choices for financials. All have great track records of earnings and dividend growth and are trading at reasonable valuations.
JNJ looks like its at fair value, and is one that is generally a buy when trading with greater than 3% yield. I also think ABBV is a good buy here at over 3% yield.
I don't know if you own any oil, but CVX, OXY, XOM, KMI are all trading at decent yields right now.
RE: Next DGI purchase: what to do? - Dividend Watcher - 04-27-2015
DD, I don't envy you. I looked at Waffle's list and there's a paucity of choices. Now you're forced to deal with currency issues along with valuations. I often wonder how/why the European companies evolved to only paying once or twice a year and often base it on a percentage of earnings whatever they may be. Maybe the better question is how did the North American companies end up paying quarterly for the most part and more seemed to be focussed on a consistently increasing dividend and let the payout ratio fluctuate. Alas, that's a philosophical question for another day.
Those listed by the others are good choices. I don't have much to add at this point.
RE: Next DGI purchase: what to do? - Kerim - 04-28-2015
(04-27-2015, 11:24 PM)Dividend Watcher Wrote: I often wonder how/why the European companies evolved to only paying once or twice a year and often base it on a percentage of earnings whatever they may be. Maybe the better question is how did the North American companies end up paying quarterly for the most part and more seemed to be focussed on a consistently increasing dividend and let the payout ratio fluctuate. Alas, that's a philosophical question for another day.
Why not today?!
I sometimes think that the European model, if that's what we can call it, makes a lot more sense from a corporate perspective. I imagine it would free the company to focus more on the long term health and growth of the company. Paying a fixed amount, as opposed to a percentage, can put a lot of pressure on a company as earnings inevitably fluctuate. Of course this "American" approach has distinct advantages for us dividend growth investors -- it makes our ride much more smooth and predictable.
RE: Next DGI purchase: what to do? - Dividend Watcher - 04-28-2015
Kerim, you took the bait. I'm starting a new thread so the topic doesn't "get lost in the sauce". Maybe the visibility will spark further debate.
Let's continue this line of thought here rather than clutter up DD's thread.
RE: Next DGI purchase: what to do? - DividendDream - 04-28-2015
Thanks all for your replies so far. I am not done debating which option is best for me, but considering the diversity of your replies I guess I can't go wrong with either one of 'em.
RE: Next DGI purchase: what to do? - crimsonghost747 - 04-28-2015
First of all, if you believe that they USD and EUR will reach parity then you want to be looking at US stocks right now. Currently you can get 1.10 USD for 1 euro so they are cheaper for us now than they are if that parity occurs.
Out of the companies that you mentioned I really like JNJ at current valuations and I will probably be picking up a small amount later on during the week. Already have some T and it did jump up nicely after the earnings report but I still don't think it's a bad buy at these prices. Also picked up some more (yet again) RTN last week, also worth looking into at these prices.
Overall, if the selection in Europe is only 6 companies with your criteria then maybe it's time to check into North America. (CAD has gone down too due to the oil issues and the exchange rate seems a lot more attractive than it does for the USD) Use the same criteria and see what you can find.