There are a lot of great dividend companies out there. Unfortunately, everyone else knows how good they are and their stock prices usually carry a quality premium. So what does a income investor to do? Pay the premium and dollar-cost average your way in? Not hardly, there is a better way!
Fortunately, the market does not always behave in a rational manner. On any given day emotion or today's news drives the market up or down. As patient, long-term investors, we can use this to our advantage.
Preparing For The Hunt
You would never get up one morning and decide to go on an African Safari, neither should you attempt to purchase dividend stocks unprepared. Here are a few items you should do before pulling the trigger on that dividend stock:
An American Safari
Does it work? Yes it does. I keep a watch list of stocks along with their target prices and patiently wait for the right time to buy. Here are three dividend stocks that I have been stalking for some time now:
BANG: Kimberly-Clark Corporation (KMB)
KMB is a global consumer products company produces tissue, personal care and health care. Its brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, Scott and Kimberly-Clark. This is one I have been waiting for the right time to pull the trigger. Last week I did when it dipped below my Buy Below Price of $52.87.
BANG: Clorox Co (CLX)
The Clorox Company is a manufacturer and marketer of consumer products. The Company markets brand names, including Clorox bleach, Armor All, STP, Fresh Step/Scoop Away, Kingsford, Hidden Valley, KC Masterpiece, Brita , Glad, etc. I have stalked CLX for some time now and last week I was able to finally able to pounce when it dipped below my Buy Below Price of $52.69.
Click: Chevron Corporation (CVX)
Chevron Corporation (formerly ChevronTexaco) is a global integrated oil company that has interests in exploration, production, refining and marketing, and petrochemicals. This is the one that has eluded me so far. Not that it hasn't dipped below my Buy Below Price of $72.91, but it has done it when I was unarmed (no cash in my brokerage account) or when I wasn't paying attention. It looks like I may have to tag this one with a limit order.
Conclusion
All stocks eventually go on sale. Exercising a little patience and letting our greatest wealth building asset work for us will enhance our long-term returns.
Related Articles:
American Safari: Stalking Three Great Dividend Stocks
Posted by D4L | Tuesday, December 16, 2008 | commentary | 6 comments »________________________________________________________________
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Solid Stocks, I particularly like KMB, solid management team.
Very well said - preparing, positioning, and going for the kill is important. Yes, stocks eventually go on sale.
You waaaaaaskily wabbit!
That's now the third dividend investor recently I've heard acknowledge Clorox as a good investment. I may have to look into that one with more effort shortly.
Brad,
Remember, always do your own homework.. A lot of dividend investors were bullish on ACAS, and then turned bearish when it suspended dividends..
Great hunting analogy. Rule #4 is excellent. I'm trying to be patient and only buy stocks selling at a bargain within 5% of 52-week lows.
Thanks for all the great thoughts and comments!
Best Wishes,
D4L