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Dividend investing is strong and return! There’s great value in the stock market to boost your dividend-paying stock portfolio. Many dividend-paying stocks are available for purchase right now, as the stock the market is down more than 850 points in the S&P 500 heading into July 2022.
Additionally, dividend increases have been plentiful. Dividend investors can say that 2022 has been another fantastic year for dividend investors, despite inflation, a rising interest rate environment with the big quit happening.
So, as I do monthly, here is the July 2022 Dividend Stock Watchlist!
Dividend Stock Watch List
Another watchlist of dividend stocks! The stock market is more volatile than ever since the 2020 pandemic. What does this mean? New undervalued dividend stocks are emerging! It’s about buying stocks that produce dividend income – the best source of passive income on your path to financial freedom!
The stock market, especially the S&P 500, is still below 4,000! All-time highs of 4,800, breaking below 4,000 and holding above 3,900. We were in bearish territory recently, but came back from a decline of more than 20%. What an unstable period we are in! The graph is below:
Interest rates are still low on your savings, including high-yield savings, accounts, and money market accounts and funds. However, rates are rising now that the Fed has raised the fed funds rate by 75 basis points. Ally where I hold a significant amount of money earns 1.00%, but I use two accounts to increase my APY, one is SoFi (SOFI), which offers a checking and savings account at 1.25%as well as Yotta.
I keep After savings in my Yotta savings account which has consistently earned over 1.50% APY and earned over 2% in May 2022 and well over 2% in June 2022. The account is FDIC insured, of course.
What else happened? I’ve been investing more and more in Fundrise lately – I finally topped over $10,000 invested there. Moreover, I have been magnet the SoFi app and financial platform.
As a dividend stock investor, it is increasingly difficult to find an undervalued dividend stock.
Additionally, given the uncertainty, I continue to make smaller weekly investments in Vanguard’s exchange-traded funds (ETFs). The specific ETF my wife and I loaded onto is Vanguard High Dividend Yield (VYM). We invest about $400-$500 a week in Vanguard (pending VYM stock price), to stay invested in the market, during times of uncertainty. Plus, I also invest $50 a day in Vanguard S&P 500 ETF (VOO)!
Therefore, on the path to financial freedom, the goal is to acquire assets that produce cash or income! As I always say, there is always a diamond in the rough. How to find an undervalued dividend stock? It’s time to introduce our beloved Dividend Diplomat stock screener!
Diplomat Dividend Stock Screener
If you don’t already know, we keep stock screener metrics for three singles elements. They are:
- Price/earnings ratio – We are looking for a lower price/earnings ratio than the overall stock market.
- Payout ratio – We are aiming for a payout ratio below 60%.
- Dividend Growth – We like to see the history of dividend growth in a company.
Time to find the answer to… how did the dividend-paying stocks on my watchlist rank in the stock screener?
Dividend Stock Watch List
Here is the list of dividend stocks that are on my radar heading into July 2022. I generally like to keep it at 2-3 dividend stocks, keeping the focus on me. Finding dividend stocks isn’t easy, but there are also other factors such as the composition of my portfolio by industry (like – am I overweight/underweight in an industry), as well as exposure in a title and its concentration.
There, the dividend stocks on my list cater to these other facets when building a dividend stock portfolio. This is a rather defensive, consumer-heavy, dividend-equity watchlist!
Kroger (KR)
Kroger is an Ohio-based supermarket. They now have over 2,500 stores, operating in over 35 states across the country. Warren Buffett was also a shareholder in this company, although he recently sold part of his position lately.
Kroger released its first quarter earnings report and sales rose $3 billion. First quarter net income increased by more than $500 million. Kroger absolutely crushed it. Their stock also took notice. While the S&P 500 is down nearly 20%, Kroger stock is actually up this year, which isn’t the case with too many stocks.
First, however, we to have to Run Kroger through the Dividend Diplomats Stock Screener, which focuses on these 3 metrics.
- Price-to-earnings ratio: Analysts of Kroger shares are expecting earnings per share of around $3.91. Therefore, at a stock price of $48.45, taking that off the $3.91, you’re actually at a low price-earnings ratio of 12.39x. That’s less than the S&P 500, which trades nearly 20 times its earnings.
- Distribution rate: Beauty and security in the dividend! We like to see a dividend payout ratio below 60%. Kroger, which recently announced a massive dividend increase, has a safe dividend payout ratio of 26.60%, while paying $0.26 per share, quarterly or $1.04 per year. Silver! Plenty of room to grow the business and the dividend in the years to come.
- Dividend growth: Kroger has been increasing its dividend for over 15 years, good on his way to becoming a dividend aristocrat. In fact they just increased their dividend by 24%! Wow. In addition, the dividend growth rate over 5 years is on average 11.92%. Well above the rate of inflation (which is at a 40 year high) and is a great combination with their dividend yield.
The dividend yield is 2.15%, well above the S&P 500 and is a better yield on average than the majority of high quality stocks.
LyondellBasell (LYB)
There is no doubt that LyondellBasell will remain on the dividend stock watch list! They recently announced a 5.3% increase in the dividend and a special dividend of $5.20 this June!
I have watched them for the past few years and even bought this stock for the past few years. So much so that I’ve even racked up over 100 total shares of this now…dividend growth monster! Why are they back on the stock watchlist? The stock has fallen almost $30 since my last article (meaning last month!!!). Therefore, we definitely need to review the dividend statistics, of course.
Let’s review the Dividend Diplomats Stock Analyzer for them, and I’ll bring the statistics from my previous article on why LYB is a dividend growth stock last month, to save time.
1.) P/E ratio: Analysts are expecting $16.78 in earnings for this big chemical company. Based on LYB’s stock price of $89.24, the P/E ratio is so low at only 5.32. Value trap? Just… Wow. The S&P 500 P/E ratio is currently 20 times earnings. It’s insane. Even though earnings were half of expectations, still a low P/E ratio below 11.
2.) Dividend Payout Ratio: They didn’t land in the “perfect” payout ratio, BUT they are actually better – because it’s below 40%, instead of higher. LYB has an extremely safe dividend payout ratio of 28.37%. Think of it like this – LYB keeps 70% of its profits to develop, invest and research new products and pays almost 30% of its profits to shareholders. If earnings were cut in half, the dividend would still be… sure!
3.) Dividend growth rate: LYB remains consistent. Although they just announced a massive special dividend, the dividend growth rate has averaged just under 6-7% over the past 5 years. Solid overall.
Finally, we will look at the dividend yield. As an investor, you want to know how much you are now earning from owning these dividend-paying stocks! The yield of LYB is 5.33%. That’s higher than the S&P 500 by about 350+ basis points. Not too bad. It’s also higher than all CDs and your high-yield savings accounts!
Conclusion of the watchlist of dividend stocks
Dividend investing is real and happens!
Of course, before making a purchase, I will definitely make sure to get them through the Diplomat Dividend Stock Screener one more time.
Talk about great everyday dividend growth stocks. My order, right now, would be to add LYB below $90 and if Kroger drops below $45, I’m here to buy a stock or two! Let’s keep building assets!
As always, stick to your investment strategy and the dividend stocks will be there. What do you think of these actions above? Thank you, good luck and good investment to all!
Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.
