With earnings season well underway, stocks are making their volatile moves again.
Given my investment strategy, I am much less concerned about day to day gyrations of the stock market. However - I am always looking for new companies to add to my portfolio.
I therefore regularly compose watch lists with stocks to research further, and with the potential to become this or next month’s new divided growth stock purchases.
There are currently two candidates on my August watch list:
Starbucks Corp. (SBUX) and Legg Mason Inc. (LM).
As can be seen in the graph above, Starbucks stocks took quite a hit recently, albeit recovering somewhat after.
I currently own 75 shares of SBUX in my portfolio and with a current price of around ~$50 I am considering adding to my position and making it a nice even 100 stocks.
SBUX provides a decent yield of 2.81%, and is a Dividend Challenger with 9 years of growing dividend pay-outs.
It’s current P/E ratio is ~17 - quite favorably compared to the 5 year average.
Most appealing however is the recent acceleration in dividend growth, with this year coming in at a great 44%.
Now of course there are reasons Starbucks took this recent hit with investors.
However, I still believe SBUX - given it’s moat, innovation, China store roll out and digital transformation - is a sound long term dividend growth investment.
The second stock on my watch list is Legg Mason.
Like SBUX, this asset manager is hovering around 52 week lows (chart above).
It’s dividend features look appealing though. LM boasts 8 years of growing dividends, with an attractive current yield of 4.01%.
It’s current P/E ratio is around 11, close to half (!) of the 5 year average. The dividend growth rate is attractive as well - with a 5 year average growth of 21%.
Both SBUX as well as LM are close to 52 week lows, have attractive P/E ratios and dividend features.
After additional research, I might add them to it my portfolio next month.
What do you think about these two companies? What is your watch list for this month? Leave a comment/reply to share your thoughts!
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I scooped up SBUX 2-3 weeks ago. Had a small pop after that 🙂
Nice! Today’s SBUX’s results were pretty decent. Will probably add soon!
Nice little watchlist that you have there. I haven’t had a deeper look into Legg Mason. But SBUX definitely looks fairly priced at current prices. Thought about adding it to my portfolio myself. However, the starting yield of just under 3% is a little bit too low for my personal taste, even though dividend growth looks really good to me as well.
Jung in Rente,
I have kept adding SBUX on dips. Yield might be relatively low, but the dividend growth rate has been pretty great lately. Management recently upped their commitment with regards to buybacks and dividend hikes: https://www.fool.com/investing/2018/06/30/starbucks-doubles-down-on-dividends-again.aspx
Thanks for commenting!