Thursday, July 24, 2014

Dividend Growth Portfolio, June 2014 Update

Soooo... we're now past the half way point in 2014. It's felt like a really long 6 months. A lot has happened since New Years 2014.

The year started with tiny Latvia officially adopting the Euro, and becoming the 18th member of the Eurozone. We then had the Winter Olympics in Sochi, Russia, which was filled with typical Olympic controversies (judged competition scandals, ballooning costs of hosting). This was immediately followed by civil unrest in Ukraine, and the annexation of Crimea by a belligerent Vladimir Putin. Kind of made you wonder if they were just waiting for the Olympics to finish... And to think... its still only February...

Just as the world was trying to figure out Ukraine, MH370 went missing with 239 onboard, a Korean ferry capsized and killed 290, and 276 women and children were kidnapped and held hostage in Nigeria. We then had a fantastic World Cup, one of the highest scoring ever, which made it incredibly fun to watch. The climax was when Germany embarrassed the hosts 7-1 on home turf. Lucky for Brazil, Argentina did not win on their soil. Now that would have been really embarrassing.

Now, as July is wrapping up, we have Israel and Gaza going at it again, and yet another Malaysia Airlines hull loss. Honestly, I feel really bad for these guys. TWO hull losses in 4 months? I've never heard anything like it...

It is only July and I feel like we've had enough world events to last me half a decade. Fortunately not a lot has happened to my portfolio in this time. Just some minor tinkering here and there. Personally I believe the stock market overall continues to be at or near full valuation. This does not mean there are no good investments out there. It simply means you have to be more selective, and work harder to find the attractive investments.

If all else fails, blue chips are still within their full valuation band. Recall that one of Warren Buffett's most famous quotes is that it is better to buy great companies at fair prices than fair companies at great prices. You could certainly do a lot worse than buying KO at 22x or JNJ at 20x. These are the types of businesses that will provide above average returns even if you are unable to buy them at bargain prices.

That being said, someone who invests in individual stocks is always attempting to find undervalued companies to buy. Especially so if they are a dividend growth investor, because it allows you to pick up a larger income stream for a cheaper price. So here are 5 stocks which I believe are attractively valued, and could be your next potential investment.

  • Procter & Gamble
  • Baxter International
  • Rogers Communications
  • Enbridge
  • McDonalds

As always, please do your due diligence and independent research before making any investment decision. Past performance is no guarantee of future returns.

Now that we've gotten the chit chat out of the way, let's take a look at the Dividend Growth Portfolio's Q2 update.