March 2018 Stock Considerations

A few days into the month of March it is time, once again, to outline my potential stock picks for the month. After many, many months of a market that was on a never ending melt up run, we have been suddenly reacquainted with the notion of volatility. By any measure, the stock market has been an exciting place to be in February as we witnessed wild moves in many of the averages as well as individual stocks. Of course, volatility isn’t something that should be feared. It’s a normal part of being invested in the stock market and if nothing else, it provides us opportunities to jump aboard certain stocks at much better prices, values and yields… a dream for long term dividend growth investors. With that being said, let’s take a look at the stocks that I’m considering for the month of March.

First up, I’m looking at the utility sector and possibly adding to The Southern Company (SO). It’s no surprise that the utilities have been hammered as of late because of rising interest rate fears. Another name in the space I’m looking at is Dominion Energy, Inc. (D). Both are sporting juicy yields and are trading near their 52 week low which simply highlights how much the sector is out of favor.

Another out of favor sector is the REITs. In fact, my last several purchases have been in the space as I added to my Ventas, Inc. (VTR)LTC Properties, Inc. (LTC) and Welltower Inc. (WELL) the last couple of months. As with utilities, rising interest rates coupled with D.C. policy uncertainty has created a perfect storm dragging down every name in the space. With my entire IRA swimming in a sea of red I must consider adding more and take this opportunity to average down a bit on some of my REIT positions.

Finally, I’m looking at some out of favor consumer staples. Names that I know are not too popular among many in the DGI community but stocks that I’m nevertheless still considering for a March buy. Those names include General Mills, Inc. (GIS) and Hormel Foods Corporation (HRL). While traditionally, these stocks have been dividend growth darlings, they have stumbled as of late sporting much lower growth rates. Still, their dividends are well covered and both are sporting higher historical yields. To me, I see both stocks facing near term headwinds as many of their products are seemingly out of touch with today’s consumer taste but I feel that is slowly changing as both GIS and HRL are moving towards fresh and organic products.

Disclosure: Long SO, D, VTR, LTC, WELL, GIS, HRL.

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