Tuesday, July 8, 2014

Stock analysis - July

As of July I have $1000 available to buy a new position.
I'm trying to get a diversified portfolio. My current portfolio consists of stocks in these sectors: Telecommunications, Consumer Staples, Healthcare & Consumer Discretionary.

This means my next purchase should be in one of the other sectors. Of course I take into account that I do not want to pay a full price for a stock, so it should be trading close to its 52-low at the moment.

Looking at my watch list, there are just a few safe options to go for: WGL, BMS & AFL.

  • WGL Holdings Inc (WGL)
WGL Holdings Inc. is a public utility holding company serving the Washington, D.C. metropolitan region.
It has been paying dividends for an amazing 162 years. They have been increasing their dividends for 37 consecutive years now. Needless to say, this stock is about as safe as it gets.

Yield: 4.1%
DGR-1y: 4.6%
DGR-5y: 3.4%
P/E: 119

So the yield is pretty good and the DGR is average, but the P/E is very high. Not only compared by the S&P 500 but also compared to all other Dividend Champions in the same sector. I'm not a very experienced invester, so I searched for what this high P/E could mean. Several websites stated that 'Generally a high P/E ratio means that investors are anticipating higher growth in the future.'.

This sounds good, but are there any downsides to this?
  • Bemis company (BMS)
Bemis is a global manufacturer of packaging and pressure sensitive materials with 2013 net sales of $5.0 billion. A large part of their business is related to healthcare. They have been paying dividends for 98 years, while raising dividends for the last 31 years.

Yield: 2.7%
DGR-1y: 4.0%
DGR-5y: 3.4%
P/E: 19.8

Seems like this company has average DGR numbers, as well as an average P/E, but the yield is a bit low. I'm not familiar with this company, even tho it seems like it's a multinational, with operations in almost every continent. Any thoughts?

  • AFLAC Inc. (AFL)
Aflac is a major company in insurances. In the US probably most known for their payroll deduction insurance coverage, but especially in Japan Aflac is huge. According to their own numbers, 1 out of 4 life insurances in Japan in theirs.

Yield: 2.4%
DGR-1y: 6%
DGR-5y: 8.1%
P/E: 9.74

I feel like this stock is value for money. Due to the low Yen, they had a -5% result, compared to last year. This is probably the main reason the stock went down twice this year. The yield and the P/E are low for this company, but the growth rates looks promising.

Please share your thoughts on these stocks.

Thanks for reading.


  1. Hey, I would go with AFL because out of these 3, Aflac's one year target price is higher than the price they are trading now. This is a plus from my point of view.

    1. Thanks for your comment HHWG! That's much appreciated.

      Bless you.

  2. Some good options you have there. A history of dividend increases is always a good quality to have in a stock.

    1. Hi Dear Dividend,

      Thanks for stepping by! You're absolutely right. I hope to add a lot more of those kind of companies in the months ahead.

      Kind regards, DfS

  3. Congrats to you and your country for that win over Brazil for the 3rd place in the World Cup! I really like AFL and I am hoping to free up some capital to buy a few shares. The P/E is very low and a bargain in today's market. Hopefully I can work a few extra hours at work in order to invest a little more.

    1. Hi DM,

      Thanks man! Of course we would have like to win the World Cup, but a 3rd place isn't that bad I guess :)

      It is very admirable that you are still trying to invest the best you can, even tho your income is not that high. You're doing such a good job! And remember, you have one big advantage.. your expenses are low as well! So if your income raises, you still have the ability to stay at your low expense rate as well.. :)

      Thanks for stepping by!

  4. BMS and AFL have been with me since 2007 and I happen to think both stocks are still great companies for the long term. Perhaps AFL is the better bargain these days nut BMS deserves a position in anyone's portfolio. Thanks for sharing.

  5. When I look at the chart for AFL and I see what it did in 08-09 (going from mid $60's to under $20) it scares me. I prefer a stock with far less volatility than that. That's one reason why I own another stock you mentioned WGL. It lets me sleep a little easier, yet with that safety comes some other negatives. One being the slower dividend growth which you typically get with any utility. So it all depends on your preference to a degree.