This year, in an effort to balance my portfolio holdings across all 10 sectors in my watch list, I've changed the way I look for candidates. Rather than search for the best available candidates, I search for the best available candidates by sector. My purchases since January have diversified DivGro to at least 2 holdings per sector, except for Materials, in which I have a single holding. I'll continue to bias purchases with the goal to diversify DivGro, but only if I can identify candidates with good dividend yields and strong dividend growth rates trading at a discount to fair value.
The following stocks are the sector winners for May:
|NEW PennyMac Mortgage Investments Trust (PMT) • rank 1||(*******)||Financials|
|Copa Holdings SA (CPA) • rank 3||(*******)||Industrials|
|Sturm Ruger & Company Inc. (RGR) • rank 6||(*******)||Consumer Discretionary|
|Daktronics Inc. (DAKT) • rank 7||(*******)||Information Technology|
|NEW Alliance Resource Partners LP (ARLP) • rank 9||(*******)||Energy|
|Avista Corp. (AVA) • rank 10||(*******)||Utilities|
|BHP Billiton Ltd. (BHP) • rank 11||(*******)||Materials|
|Owens & Minor Inc. (OMI) • rank 13||(*******)||Health Care|
|BCE Inc. (BCE) • rank 19||(*******)||Telecommunication Services|
|Philip Morris International (PM) • rank 21||(*******)||Consumer Staples|
• PennyMac Mortgage Investment Trust (PMT) | growth 5 yrs | yield 10.07% @ $23.33 | 3-yr CAGR 43.60%
PMT is a real estate investment trust (REIT) operating as a specialty finance company investing primarily in residential mortgage loans and mortgage-related assets. PMT carries more risk than other REITs due to exposure to both interest rate and credit risk. My fair value estimate is $39.40, which translates into a significant discount of 69%.
• Copa Holdings SA (CPA) | growth 5 yrs | yield 2.84% @ $132.27 | 5-yr CAGR 58.57%
Incorporated in 1998, CPA is a Latin American provider of airline passenger and cargo service. The stock trades at a discount of only 21% to my fair value estimate of $160.
• Sturm Ruger & Company Inc. (RGR) | growth 5 yrs | yield 3.55% @ $63.33 | 3-yr CAGR 85.83%
Incorporated in 1969, RGR is engaged in the design, manufacture, and sale of firearms and precision metal investment casings. The stock trades 4% above my fair value estimate of $63.74. With a yield of 3.55% and an impressive dividend growth rate, RGR appears to be an attractive stock for investors seeking both income and growth.
• Daktronics Inc. (DAKT) | growth 9 yrs | yield 2.76% @ $13.68 | 5-yr CAGR 27.23%
DAKT is one of the the world's largest suppliers of electronic scoreboards, computer-programmable displays, and large screen video displays and controls systems. My fair value estimate is $13.20, so DAKT trades at a slight premium. DAKT has a great dividend growth rate.
• Alliance Resource Partners LP (ARLP) | growth 12 yrs | yield 5.25% @ $93.18 | 5-yr CAGR 12.53%
ARLP is a master limited partnership (MLP) engaged in the production and marketing of coal primarily to utilities and industrial users in the United States. It was founded in 1971 and is headquartered in Tulsa, Oklahoma. It trades at about fair value.
• Avista Corp. (AVA) | growth 12 yrs | yield 3.95% @ $32.59 | 5-yr CAGR 12.07%
AVA is a diversified energy company engaged in the generation, transmission and distribution of energy in North America. My fair value estimate for AVA is $33.05, so its trading at about fair value. Sporting a great dividend yield and a decent dividend growth rate, AVA looks quite attractive.
BHP is one of the world's largest diversified natural resources companies. It is involved in mineral exploration, production and processing; oil and gas exploration and development; and steel production and merchandising. BHP trades at a discount of 4% to my fair value estimate is $73.30.
• Owens & Minor Inc. (OMI) | growth 17 yrs | yield 2.98% @ $32.41 | 5-yr CAGR 12.48%
OMI is a Fortune 500 company providing third-party logistics services to manufacturers and suppliers of healthcare and life-science products. It currently trades at a premium of about 12% to my fair value estimate of $30.65. It has the longest history of dividend increases in this month's list.
• BCE Inc. (BCE) | growth 5 yrs | yield 5.12% @ $44.94 | 5-yr CAGR 25.59%
BCE is Canada's largest communications service provider and serves as the holding company
for Bell Canada. The company provides wireless, data communications, telephone, high-speed Internet, direct-to-home satellite television and voice over IP services. My fair value estimate for BCE is $44.10, which means BCE trades at a slight premium.
• Philip Morris International (PM) | growth 6 yrs | yield 4.40% @ $85.80 | 5-yr CAGR 28.40%
PM is a holding company engaged in the manufacture and sale of tobacco products outside the US. It trades at a discount of 4% to my fair value estimate of $89. Since its spin off from Altria Group Inc. (MO) in 2008, PM has returned more than $59 billion to its shareholders through share repurchases and dividends.
I have enough cash for a single non-MLP buy. Once more, BHP is top Materials sector stock. I don't want to buy BHP because I already own the related BBL. The runner-up in the Materials Sector is Syngenta AG (SYT), ranked 14th in my dashboard. I'll take a look at it soon.
Thanks for reading! Any of these candidates of interest to you?