Dividend Growth Portfolio - Objective: Retire by 50

[Rasec]

Went shopping last night taking the lows from Friday, opened new positions on:

MO
UTX
OHI
DOW
AFL

And bought more shares of:
XOM
CVX
PG
JNJ

I'm still looking around for more opportunities, trying to evaluate some options.

[Rasec]

After a few recent additions to my portfolio, the most recent one being Merck bought at a discount today, here's what my portfolio looks like:





Technology is missing out but I work for a tech company (which doesn't pay dividends) and have equity there that balances out my leverage in the sector, so not too worried about it being at 0. I would like to grow on basic materials and utilities though.

My yield is currently 4.3% (excluding CEFs), YOC is slightly lower.

[rapidacid]

Looking good Rasec.

[Rasec]

Hey everyone, I'm looking for ideas on the sectors where I'm under leveraged:

This is my current situation.



As you can see I'm under penetrated in a few segments: Basic Materials, Financial and Utilities. You'll probably also find it weird I merged Telecoms with Tech but has I noted before I work in the tech industry and I have (non DGI ) equity there, so not too concerned with Tech .

What are your top players in these segments, your battle horses? I'll do my own analysis but I would love to know your opinions. I keep being attracted by companies in the Energy or Consumer/industrial Goods sectors.

Right now, my holdings in these sectors are:

Basic Materials: Dow Chemical
Financial: Aflac
Utilities: Consolidated Edison


I'm not obsessed with perfect leveraging but would love to put some interesting companies in my watch list.

[EricL]

Some other names for ideas.

Materials: Air Products (APD), Airgas (ARG), International Paper (IP), Monsanto (MON), Praxair (PX)
Financials: Blackrock (BLK), T. Rowe Price (TROW), Ameriprise (AMP), Wells Fargo (WFC), Eaton Vance (EV), Paychex (PAYX), Prosperity Bancshares (PB)
Utilities: Dominion Resources (D), SCANA Corp. (SCG), Xcel Energy (XEL), Southern Co. (SO), Vectren Corp (VVC), Wisconsin Energy (WEC), American Electric (AEP)

[Roadmap2Retire]

Financials: There are a lot of very undervalued companies - these should be easy to pick. Canadian banks are trading at very attractive valuations, but the problem for US-based investors is that the Cdn$ has taken a hit, so your dividends when converted to US$ will be a bit depressed due to currency conversion rates. The only US bank that I own is WFC - havent looked at the valuation in a while. Alternatives in financials are asset managers - like BEN, TROW etc which are popular with DGIs these days. Insurance companies should do well if interest rates rise. My top pick here was CB until a few months ago when it was bought out by ACE. I havent looked at ACE yet, but I believe it is a Swiss ADR and I dont want to pay the 35%(?) div withholding taxes on it, so I might avoid it. I am considering Cdn insurance companies instead such as MFC and SLF which have a huge exposure to US and Asian markets, but you will again have teh problems with currency conversion rates working against you.

Basic Materials: DOW is near the top of my list as well. I also like fertilizers and own AGU. Gold (and other mining) stocks are severly beaten down, lot of them down 80-90% from their peaks. I believe if a whole sector is down 80-90% from its peak, it deserves a second look. It might a bit too early to get into gold, but I am never too good to timing, so I might look at which companies have good assets and start initiating. I own IAMGold in this space, which cut dividends a couple of years ago, but the fundamentals are still good - and I continue to hold it. They are still one of the most efficient companies in the sector running pretty lean for a while now. (this is the only company that doesnt pay dividends in my portfolio currently).

Utilities: I think there are better picks than ED. Eric had a good article about his top 10 picks a few months ago. Have a look: http://seekingalpha.com/article/3265285-...and-income
One subsector I recommend looking into are the water utilities - valuations are still a bit stretched, but good to keep them on the watchlist. Top of my list are AWK and WTR.

[Rasec]

By the way, these are my current holdings per sector, I'll try to keep them updated as I add to my portfolio:

Industrial Goods: 3M Company; Emerson Electric; General Electric; United Technologies;
Financial: Aflac;
Consumer Goods: Altria, Coca Cola, Colgate-Palmolive; Procter & Gamble;
Tech / Telecom: AT&T; Verizon
Energy: Chevron, ConocoPhillips; Exxon Mobil; Kinder Morgan;
Utilities: Consolidated Edison Inc.;
Basic Materials: Dow Chemical;
REITs: Health Care Property Inv. (HCP); Omega Healthcare Inc (OHI); Realty Income (O);
Healthcare: Johnson & Johnson; Merck & Company;

---

(10-27-2015, 11:13 AM)EricL Wrote: Some other names for ideas.

Materials: Air Products (APD), Airgas (ARG), International Paper (IP), Monsanto (MON), Praxair (PX)
Financials: Blackrock (BLK), T. Rowe Price (TROW), Ameriprise (AMP), Wells Fargo (WFC), Eaton Vance (EV), Paychex (PAYX), Prosperity Bancshares (PB)
Utilities: Dominion Resources (D), SCANA Corp. (SCG), Xcel Energy (XEL), Southern Co. (SO), Vectren Corp (VVC), Wisconsin Energy (WEC), American Electric (AEP)

(10-27-2015, 11:20 AM)Roadmap2Retire Wrote: Financials: There are a lot of very undervalued companies - these should be easy to pick. Canadian banks are trading at very attractive valuations, but the problem for US-based investors is that the Cdn$ has taken a hit, so your dividends when converted to US$ will be a bit depressed due to currency conversion rates. The only US bank that I own is WFC - havent looked at the valuation in a while. Alternatives in financials are asset managers - like BEN, TROW etc which are popular with DGIs these days. Insurance companies should do well if interest rates rise. My top pick here was CB until a few months ago when it was bought out by ACE. I havent looked at ACE yet, but I believe it is a Swiss ADR and I dont want to pay the 35%(?) div withholding taxes on it, so I might avoid it. I am considering Cdn insurance companies instead such as MFC and SLF which have a huge exposure to US and Asian markets, but you will again have teh problems with currency conversion rates working against you.

Basic Materials: DOW is near the top of my list as well. I also like fertilizers and own AGU. Gold (and other mining) stocks are severly beaten down, lot of them down 80-90% from their peaks. I believe if a whole sector is down 80-90% from its peak, it deserves a second look. It might a bit too early to get into gold, but I am never too good to timing, so I might look at which companies have good assets and start initiating. I own IAMGold in this space, which cut dividends a couple of years ago, but the fundamentals are still good - and I continue to hold it. They are still one of the most efficient companies in the sector running pretty lean for a while now. (this is the only company that doesnt pay dividends in my portfolio currently).

Utilities: I think there are better picks than ED. Eric had a good article about his top 10 picks a few months ago. Have a look: http://seekingalpha.com/article/3265285-...and-income
One subsector I recommend looking into are the water utilities - valuations are still a bit stretched, but good to keep them on the watchlist. Top of my list are AWK and WTR.

Thanks for the tips lads!

Any interesting dividend paying ETFs in the Utilities front? I feel it's the most complicated sector for me to understand and follow.

[Dividendsrule]

I would wait for a Fed rate hike and then get like, WEC, maybe AVA...SO...Something like that. I'd keep it spare with utes, their dividend growth is often slow due to regulation.

[Roadmap2Retire]

(10-27-2015, 11:56 AM)Rasec Wrote: Thanks for the tips lads!

Any interesting dividend paying ETFs in the Utilities front? I feel it's the most complicated sector for me to understand and follow.

XLU is the largest ETF, I think. I used to own a Canadian utilities sector ETF, but sold it as I was ready to go with individual stocks instead.

http://etfdb.com/etfdb-category/utilities-equities/

[crimsonghost747]

(10-27-2015, 11:20 AM)Roadmap2Retire Wrote: One subsector I recommend looking into are the water utilities - valuations are still a bit stretched, but good to keep them on the watchlist. Top of my list are AWK and WTR.

I am a big fan of water utilities. A lot of people see utilities as almost always electricity related but as we all know that has it's own risks due to us finding better and more efficient means of generating/transporting that electricity. So there is always a risk of new inventions that make the current stuff obsolete faster than expected. That and the current mindset of making everything more and more energy efficient.

With water there are fewer risks. Everyone wants and needs water... that will never change. Nor will the method of transportation... there simply are no smart alternatives, or the need to change away from using pipes. As an added bonus, pretty much always there is just one pipesystem that serves a certain area and that means that companies have a small scale monopoly in these areas.

Both AWK and WTR are really solid picks. In fact WTR is one of my largest holdings. So definitely take a look and put them on your watchlist, however they are both very highly valued at the moment so I wouldn't necessarily jump in right now.

[Roadmap2Retire]

(10-30-2015, 11:05 PM)crimsonghost747 Wrote:

(10-27-2015, 11:20 AM)Roadmap2Retire Wrote: One subsector I recommend looking into are the water utilities - valuations are still a bit stretched, but good to keep them on the watchlist. Top of my list are AWK and WTR.

I am a big fan of water utilities. A lot of people see utilities as almost always electricity related but as we all know that has it's own risks due to us finding better and more efficient means of generating/transporting that electricity. So there is always a risk of new inventions that make the current stuff obsolete faster than expected. That and the current mindset of making everything more and more energy efficient.

With water there are fewer risks. Everyone wants and needs water... that will never change. Nor will the method of transportation... there simply are no smart alternatives, or the need to change away from using pipes. As an added bonus, pretty much always there is just one pipesystem that serves a certain area and that means that companies have a small scale monopoly in these areas.

Both AWK and WTR are really solid picks. In fact WTR is one of my largest holdings. So definitely take a look and put them on your watchlist, however they are both very highly valued at the moment so I wouldn't necessarily jump in right now.

One thing to look out for in water utilities is the capex aspect. When I was browsing through the IR sections of AWK, I came across some metrics and projections which was talking about the age of the pipes and the need to replace them. As I understand, a big part of the infrastructure is very old upgrades will be needed in the coming years. Not a deal breaker, but just something to keep an eye out for...

[Rasec]

Since I joined this party in August, I've been able to build something that is starting to look very interesting:



Overall performance since purchase (KMI being a scar in a not so ugly performance):



I've sent a lot of soldiers to war and I'm happy they've been able to come back with more!