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Stocks which sparked my attention for addition #2

The list of stocks which sparked my attention for addition narrowed from a week ago down to two stocks. All other stocks reversed and continued marching higher or just stayed flat. They may however continue falling later as the market turns into correction. That is however something we do not know at this point.

So what are the stocks which continued lower today?

PPL Corporation
Realty Income

Both stocks are great dividend payers and I own them both. I own PPL in my ROTH IRA account and Realty Income in my TD account. The problem I see here is that these stocks are still expensive in my opinion. It is because these days the interest rates are very low and everybody is buying dividend paying stocks these days. So which one to buy?

Looking at my TD portfolio, I am quite heavily allocated in Real estate industry and have no utilities. Should I PPL to my portfolio?

PPL increased dividend for 13 consecutive years and paid dividends since 1946. Current dividend yield is 4.70%, its 5yr dividend growth is 3.01% and payout ration at 56%. It recently increased the dividend by 2%. The dividend increase however looks mediocre to me and discourages me from purchasing this stock.

On the other hand Realty Income increased the dividend quite a lot after the merge with ACRT. But that would increase my Real estate exposure.

OK, now is time for a flip-flop

When browsing my watch list a long-term member of my dividend payers list popped up. It was Kinder Morgan Energy. It pays even better dividend (5.80% yield), 5yr dividend growth at 7.51% (a lot better than PPL) and it increased dividends for 16 consecutive years. The stock is also pressed down these days. Recently it broke down through 50 day MA on a quite heavy volume and with a large bearish candle. The stock is in oversold territory and money is somewhat flowing out of the company.

However, Morningstar values the company at $92 a share of the fair value, so the stock trades with a significant discount.

KMP is one of the largest publicly traded MLPs and it is one of three Kinder Morgan (what to call it, companies?) stocks. KMP, KMR and KMI. KMP is owned by a KMI (Kinder Morgan Inc.) and you as an investor have three possible ways to invest in this behemoth.

Buy timing method to get in

I will use the same strategy to buy KMP by entering a conditional order with my broker. The order will slightly exceed the current closing price. If the stock moves up and reaches the activation price, the order will be executed and I will buy 11 shares of KMP. If the stock moves down, I will trace the activation price down as well as long as the stock is purchased. The purchase of this stock will bring me $54.78 annual dividend (if it gets executed at current price level and I will buy 11 shares only.

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2 responses to “Stocks which sparked my attention for addition #2”

  1. Martin says:

    I totally understand you Marvin. I had the same problem with Realty Income. Today it seems to be too high. When the stock fell in mid November last year I was freaking out instead of buying. Never do that again with dividend paying stock. But I must learn it first.

    Well, these days Realty income is falling down, it may present the opportunity. Morningstar is valuing the stock at 43 a share, if we get there or even lower it may be a nice addition.

  2. I really hate the fact that I missed out on Realty Income, that stock is a dividend machine. Lately I have been contemplating buying it at a premium but I just can’t bring myself to pull the trigger.

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