Friday, September 9, 2016

What I'm doing on this recent pull back

The Fed is tripping people up again. Fear of a rate hike sent stocks spiraling downwards today. I opened my monitor in the morning and couldn't help but grin. Before any down turn, each investor should have a shopping list already of top companies they want to some day own or add to.

Market dips are opportunities. While most are scrambling in fear and the news is spouting SELL SELL SELL, this is a great time to be rational and buy high quality assets at a discount. I look forward to sales since it helps boost how much actual dividend income I can add every week.

I had my shopping list in my head already and I'll share some of my favorite companies that I hope to add in the coming days. Stocks are likely going to continue falling. Those that play with margin will be getting margin calls and will be forced to sell, continuing the downward spiral. Since I am terrible at timing bottoms, I just add bit by bit when stocks pull back from their all time highs.

I currently have a bit over $12,000 in US Dollars and am looking forward to adding as stocks continue to fall.


The plots below show the price graph and the RSI. The RSI is the relative strength indicator. It shows how oversold a stock is. If the RSI is in the low 20's I usually consider the stock oversold.


Abbott - Healthcare (they sell stuff like baby food, medical devices, diagnostics, and generic pharma)

Colgate Palmolive - Staples (toothpaste, dish soap, etc... boring stuff that rakes in $$$)

Clorox - Staples (cleaning stuff, Brita, Hidden Valley ranch, Glad bags, and other regular stuff....)

General Mills - Staples (cereal yogurt and foods.... Cheerios, Cocoa Puffs, Lucky Charms, Pillsbury, Yoplait, etc...)

Kimberly Clark - Staples (toilet paper and other personal care products that are unexciting but generate extremely stable growing cash flows)

Altria - Staples (sells addictive cigarettes and alcohol..)

Pepsi - Staples (junk food and sugary soda)

JM Smucker - Staples (jam, coffee, and now pet food...)

AT&T - Telco (cell phone and internet monopoly)

Aqua America - Utilities (water bill)

Most of them are Consumer Staples. Yes I am a fan of that sector and most of the big dips recently have been largest in that sector. This list is mainly higher yielding companies (2.5 - 4.5% yield). When markets take a dive, I like searching for higher yield due to cheaper prices. When the markets tank, high quality companies eventually start popping up with over 3% yield. I refer to these as accidental high yielders and these can be dividend aristocrats such as Johnson and Johnson, 3M, and Kimberly Clark. It is always good to acquire more of these stalwarts on a sale since they are usually only sold at a premium.

When markets are at a high, I tend to purchase lower yielding stocks with higher dividend growth to offset the lower starting yield.

6 comments:

  1. Great idea...and some great names listed there! As Buffet says, be greedy when others are fearful. :)

    Thanks for sharing. We are adding Aqua America to our watch list thanks to your post.

    Have a great weekend my friend. AFFJ

    ReplyDelete
  2. Young Dividend,

    Thanks for sharing these stocks. Wish I had your $12,000 available to invest right now! Hopefully the market stays down until the end of month. :) Looking forward to seeing what you decide on.

    ReplyDelete
  3. I'm with you. No one ever knows a top or bottom so all you can really do is continue to invest when opportunities arise. Will the market head lower? Rebound? Who knows? As long as you can pick up some quality names at better prices, value and yield you should be fine long term. Nice list of stocks to consider by the way.

    ReplyDelete
  4. Those look like some great stocks to own! Friday's pullback is a nice start, but not enough to really make me excited. Let's see what happens!

    ReplyDelete
  5. Replies
    1. Tomorrow morning the buys will be going in.
      I listed what I bought in a post on the homepage.

      Delete