DivGro Pulse: November 2016

Quality Stocks

Sometimes it is appropriate to add shares to an existing position even if the stock is trading at fair value or at a small premium to fair value. Alternatively, one could sell puts on stocks trading at a premium, and so set your preferred entry price while collecting options premiums.

Here are the top ten ranked stocks for November:

General Dynamics Corporation (GD)	• premium  12%	• ★★★★★★☆
Nike Inc (NKE)	• premium    6%	• ★★★★★★☆
Cisco Systems, Inc (CSCO)	• discount   14%	• ★★★★★★☆
3M Company (MMM)	• premium  15%	• ★★★★★★☆
T. Rowe Price Group, Inc (TROW)	• discount     1%	• ★★★★★★☆
Chubb Limited (CB)	• premium  15%	• ★★★★★★☆
International Business Machines Corporation (IBM)	• premium    2%	• ★★★★★★☆
Valero Energy Corporation (VLO)	• discount   14%	• ★★★★★★☆
Qualcomm Inc (QCOM)	• discount     7%	• ★★★★★★☆
Target Corporation (TGT)	• discount     7%	• ★★★★★★☆

All these stocks have 6-star ratings.

The premiums on General Dynamics Corporation (NYSE:GD), 3M Co (NYSE:MMM) and Chubb Ltd (NYSE:CB) are too high for my taste. I’m unlikely to find suitable put options (at or near fair value) unless I choose expiration dates far into the future.

As for Nike Inc (NYSE:NKE) and International Business Machines Corp. (NYSE:IBM), I’m more likely to find suitable put options trades. And IBM is trading at about fair value, so I could even consider doing a straight covered call trade.

Of the discounted stocks, I have less than 1% of available capital allocated to Target Corporation (NYSE:TGT), while T. Rowe Price Group Inc (NASDAQ:TROW) (1.41%) and Valero Energy Corporation (NYSE:VLO) (1.36%) both have allocations below DivGro’s average of 1.65%.

GD remains my top performing stock with an annualized total return of 45%. NKE currently yields 1.25% but its dividend growth rate is impressive.

T. Rowe Price Group Inc (NASDAQ:TROW), Target Corporation (NYSE:TGT), International Business Machines Corp. (NYSE:IBM), and QUALCOMM, Inc. (NASDAQ:QCOM) made my list of 10 Dividend Growth Stocks for November 2016 (2).

Recent Performance

One way to assess a stock’s recent performance is to plot the current price relative to the 52-week trading range: