Monday, April 27, 2015

Next purchase: what to do?

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 :)


  1. It is indeed difficult for us Europeans with the low USD to EUR rates to invest in US companies. Like you I'm not interested in European companies as they don't have dividends as a high priority and most pay only once or twice a year.

    I currently like DLR, HCP and EMR as possible additions to my dividend growth portfolio as they seem reasonable valued.

    1. Hi Robert, thanks for chipping in. Yeah, it's difficult I guess. Thanks for giving me your shortlist. I'll discard HCP for now because I am already invested in OHI and looking to purchase O when rates rise. DLR is a REIT as well right, for datacenters? EMR might be a good candidate. Their annual report looks decent.

  2. Im finding it hard to deploy cash at this time too...there arent any screaming opportunities out there...staying in cash doesnt seem like a bad idea right now either.

    Looking forward to see what you invest in.

    1. Hi R2R, thanks for putting that thought into my head. I had not even considered it (no joke). I am not sure I will choose this option but it's a valid point nonetheless.

  3. Hey Robin,

    It's a bit of a quiet time at the moment - there aren't many undervalued stocks in my watchlist. I guess the less glamorous answer is to wait. Keep saving and accumulating liquidity, and then buy when there is a great deal out there. At the end of the day, dividend investing is a long game, and there's no rush.



    1. Hi DividendLegion, thanks as well for your input. Like I said above, I had not even considered it!

  4. It is hard to advice as everybody has different metrics and preferences on selecting stocks to invest in. For example I try to find investments which are out of favor and undervalued. And which stocks paying nice yield, have a great dividend history, dividend increases and yet are heavily sold these days? My answer would be energy stocks. Although we are seeing a slow recovery already, you still can find energy or oil involved stocks which satisfy DGI strategy and are depressed. For example COP, XOM, MOS, OXY, EC, NUE, CVX, TIS, BP, QIWI (financial), and some others. Oil and energy stocks will not be out of favor forever and I think now is a good time to accumulate or even invest in them no matter how scary they may look. You will also hear people (doomsayers) telling you that it is a bad idea, that these stock will have bad results, will fall further down, it will take years before they recover... but hey, we are not investing for the next quarter, but next what? 10 years? 20 years? With this portfolio investing horizon I do not care if my investment into COP today will stay depressed for the next 2 years, 5 years, 10 years, as long as they keep paying me 5% dividend, right?