Tag Archives: sjm

October Recap

Wow, what a crazy month! Huge market swings, lots of earnings reports, and major negativity surrounding the markets. Even after all the crazy (often irrational) market movements, the Dow closed October by hitting an all-time high of 17,390. Good thing I’m an investor and not a trader, and can ignore short-term market noise like this past month and instead just focus on continuing to save a large amount of my income and purchase income producing dividend growth stocks.

On a personal note, I am back home after taking a cross country road trip and visiting family and friends for the past three weeks. I had a great time as I was able to see people back home for the first time in several years. Nothing like a little time off once in a while to be able to relax. Now its time to get back to work and get back to some regular blogging updates as well.

Today I’d like to highlight some of the recent news from companies in my portfolio and watchlist.

Kinder Morgan (KMI)

The energy giant announced a 2.3% increase to its quarterly dividend from .43 to .44 per share. With expected 10% dividend growth moving forward as the Kinder Morgan companies consolidate under one umbrella, KMI, I really like the stock as a long-term holding and recently added some more shares to my portfolio.

Visa (V)

The global payment processing company reported strong 4th quarter earnings that has since sent the stock soaring to new highs. Glad I managed to add some more shares in September around $213 a share and didn’t wait. 4th quarter EPS of $2.18 beat estimates by $0.08 while revenue jumped 8.8% year over year. Payment volume grew 11% to a staggering $1.2 Trillion dollars. With China announcing recently that they are opening their market for clearing domestic bank card transactions, Visa looks primed to continued growing revenues, EPS, and dividends at a strong pace going forward.

Realty Income (O)

The monthly dividend paying company announced 3rd quarter Funds from Operations of .64 per share which missed estimates by .01. Revenue beat estimates and showed 16.6% growth from last year. If I wasn’t so heavily weighted in O (accounts for 23% of my projected annual dividend income), I’d probably pick up at some more shares here in the low $40’s.

International Business Machines (IBM)

What a month for IBM. And not in a particularly good way. Revenue growth continues to stagnate as the blue chip technology company reported a 4% decline in revenues for the 3rd quarter and abandoned their previous goal of $20 in EPS for 2015. In all fairness, the EPS was established by a previous CEO. However, EPS growth continues, albeit at a slower than expected pace as the company has begun focusing on improving and growing its business in key segments with an eye towards the future. From CEO Ginni Rometty on her company’s results, “We again performed well in our strategic growth areas cloud, data and analytics, security, social and mobile-where we continue to shift our business. We will accelerate this transformation.”

IBM also provided guidance for 2015 EPS which falls in  a range of $15.97 to $16.30. Applying a P/E of 13 which is where IBM has traded historically, we can come up with a fair value of $207.61 based on the low end of guidance. IBM also added another $5 Billion to their share buyback plan. While the lack of revenue growth is disappointing, I like that the company is aggressively buying back stock, cutting costs, and increasing margins in order to continue growing profits. IBM is a company in transition as they shed old businesses and focus their efforts in faster growing segments like the cloud. While it won’t happen overnight, I think IBM will turn things around and get revenue growing again in the future. Since the dividend is still well covered by earnings, I’m content to just collect the dividend and let it reinvest at low share prices in the meantime.

Aflac (AFL)

The insurer and dividend champion reported so-so numbers for its 3rd quarter report, earning $1.51 in profits missing estimates by 8 cents a share. Revenue beat estimates but still came in slightly lower than last year by 2.5%. Aflac also announced a 5.4% increase in their quarterly dividend to $0.39 a share and increased the size of their buyback plan from $1 billion to $1.2 billion which I like since it shows management is being smart when it comes to buying back stock on cheap valuations. The company also announced it plans to have a $1.3 billion buyback plan for 2015. Currency issues continue to hamper the company but with a low payout ratio, Aflac is set up to weather times like this without risks of dividend cuts or freezes. With the stock hitting 52 week lows, now may be a good time to add to or initiate a position in the company.

Disney (DIS)

Disney is a stock I’ve been looking at recently after reading a write-up by fellow blogger Brian over at Long Term Mindset. Disney recently announced a large slate of new Marvel movies that are expected to be released over the next 4 years.

Check out the list:
The Avengers 3-split into 2 parts in May 2018 and May 2019
Captain America: Serpent Society in May 2016
Doctor Strange in November 2016
Guardians of the Galaxy 2 in May 2015
Thor: Ragnarok in July 2017
Black Panther in November 2017
Captain Marvel in July 2018
Inhumans in November 2018

Pretty impressive, especially since this doesn’t even include the Lucasfilm Star Wars movies (the third trilogy of Episodes 7, 8, and 9 plus spinoff movies) which I am looking forward to as both an investor and Star Wars fan. Although DIS seems to always trade at a premium valuation, I’ve been coming around lately to the idea that this premium is deserved due to their strong growth prospects. I may start dollar cost averaging into a position via Loyal3 soon.


Announced a 2.6% increase to their quarterly dividend to $0.60. While a relatively small increase, I’ll take it as BP’s high starting yield helps make up for it. The stock continues to trade at an attractive valuation compared to their peers and is on my shortlist for portfolio purchases after its recent pullback to the low $40’s. While its easy to get caught up in all the negativity surrounding the company regarding lawsuits over their oil spill, the company is still generating large profits and remains committed to steadily increasing their dividend.

J. M. Smucker (SJM)

Announced a 5 million share increase to their buyback program, bringing their total authorized buyback plan to 10 million shares which will retire about 10% of the company’s outstanding stock if fully executed. How cool is that? Another stock on my short list (I feel like I’ve said that a lot today, so many great stocks, so little capital! 😉 ), I’d prefer to buy it near the 17 P/E mark but may initiate a position sometime during the last quarter of this year or early 2015 if shares continue to trade around 19 times earnings.


Disclosure: I am long KMI, V, O, IBM, AFL, and BP and may initiate positions in DIS and SJM in the coming weeks/months.

How about your portfolio and watchlists? Any important news or events this month?

Mulling Over Investment Options

After not investing any new capital in May for a variety of reasons, I’ve now built up a decent little stash of cash ready to be deployed into quality dividend growth stocks that will provide me with a reliable source of passive income going forward.

So what to buy? Looking over my watch list, I struggled to come up with any ideas for a while. Seems like the majority of them are overvalued. Can we please just have a market correction already? 😉

But I figured I’d find some candidates eventually and after going through my list again and looking at other blogs and investing sites, this is what I came up with.

J. M. Smucker Company (SJM)-This dividend contender with 16 years of dividend growth was founded in 1897 and operates in the consumer staples sector. Although a name like Smucker makes you think of grape jelly, the J.M. Smucker Company’s largest business segment is in the brew at home coffee industry which was bolstered by their acquisition of the Folger’s brand in 2008. Smucker is the market leader in the brew at home coffee industry here in the United States and also holds the number one brand in the $2 billion a year peanut butter industry, Jif. Coffee makes up 48% of sales, which is way ahead of their number two product, peanut butter, at 13%. The company’s namesake fruit spreads only account for 6% of all product sales as of 2013, but are the market leader in that category.

Although not undervalued by any means, I think the stock is trading at fair/possibly slightly overvalued price right now with a current P/E of 19.5 and a forward P/E of 16.8. Looking back over the last ten years, SJM has traded between a P/E of 11.45 and 23.95.

Dr. Pepper Snapple Group (DPS)Thanks to Brian over at Dividend Mongrel for giving me this idea. DPS is a manufacturer and distributor of non-alcoholic beverages that are sold in the United States, Canada, and Mexico. The company’s brands include its flagship Dr. Pepper and Snapple drinks, Sunkist soda, 7UP, A&W, Canada Dry, Crush soda, Hawiian Punch, Mott’s, Schweppes, and my personal favorite as a kid, Yoohoo. Unlike its main competitors, Coca-Cola and Pepsi, both of which are trading at P/E’s of 19+, Dr. Pepper’s P/E comes in at 17.5 with a forward P/E of 15.2, both of which are less than the S&P 500’s current and forward P/E ratios of 18.3 and 17 respectively. Although they have only been growing their dividend for 5 years, the stock does sport dividend growth rates of 10.4% for the past year, and 22.8% average for the last three years while still keeping the payout ratio at 47%. While their current P/E of 17.5 is above their 5 year average of 14.9 since being spun off from Cadbury in 2008, I think we have to take in to account that the P/E stood at a low of 13.01 at year end 2009 due to the recession and bear market which skews the average.

Exxon Mobil (XOM)-I remember reading on The Conservative Income Investor a while back something to the effect of, when in doubt buy Exxon stock. 😉 In all seriousness though, the global oil giant and dividend champion is currently trading at a P/E of 13.9 with a forward P/E of 13.2. What most attracts me to a potential buy of Exxon right now though is the PEG ratio is currently at .9. The PEG, which was popularized by Peter Lynch compares the P/E ratio of a company to its growth rate. A PEG of 1 which is considered fair value by most investors indicates a stock is selling at a P/E equal to its growth rate. Exxon appears slightly undervalued here going by that metric. While not the flashiest of stock picks, Exxon has been and should continue to make for a great long-term dividend growth investment.

Deere & Company (DE)-Another stock that looks undervalued based on the PEG ratio. Although earnings are expected to decrease in the coming few years, I like the long-term growth story of this company which is summed up nicely at their investor page. After keeping their dividend static for five quarters, Deere recently announced a 17.6% increase, bringing the quarterly payout up to $0.60 from $0.51. Sweet. 🙂 Even after the recent run-up in price the stock continues to trade at an attractive valuation with a P/E of just 9.9.

And for some stocks I already own that I would consider adding to at current levels.

Target (TGT)-The dividend champion with 47 years of dividend growth continues to trade at a depressed share price due to the fallout from their data breach and difficult roll-out in Canada. After a very impressive 20.9% increase to their dividend announced last week, shares now trade at with a froward yield of 3.66%.

Visa (V)-Even though shares have run up a bit since my first purchase in April, the company is still trading at an attractive valuation, in my opinion, for those seeking to open a long-term position.

Disclosure: I am long TGT, V, and may initiate a long position in SJM, DPS, XOM, and DE in the coming weeks. Please my portfolio page for a full list of my holdings.

What do you think of these stocks? Are there any others you are looking to buy right now?