As I'm writing this blog post, the temperature is 75 degrees Fahrenheit here in Central Wisconsin. This is a major cool off from the highs that reached into the low-90 degrees Fahrenheit range over the last couple of days. And with highs in the low to mid-60 degrees Fahrenheit for the next few days, it will be an especially great time to get outside.
But without further ado, let's dive into a few dividend stocks that are on my watch list for June 2022 since almost half of May is already in the books.
Image Source: Pexels
Dividend Stock #1: Kinder Morgan (KMI)
Kinder Morgan (KMI) owns and/or operates approximately 83,000 miles of pipelines that predominantly transport natural gas, as well as gasoline, crude oil, and carbon dioxide. The company's network is used to transport 40% of U.S. natural gas consumption and exports, which points to an especially bright future (details sourced from slide 3 of Kinder Morgan May 2022 Investor Presentation).
That's because the International Energy Agency anticipates that total global energy demand for natural gas and oil products will steadily increase from 2020 to 2040 (slide 11 of Kinder Morgan May 2022 Investor Presentation). KMI's long-term contracts are mostly for volumes and prices that are contractually fixed or for fixed prices and variable volumes (69% and 25% of contracts, respectively, per slide 5 of Kinder Morgan May 2022 Investor Presentation).
Overall, this is why I believe KMI will generate low-single-digit annual distributable cash flow growth going forward. This will comfortably cover the stock's market-crushing 5.9% dividend yield (as of May 14, 2022).
And at a forward price to DCF ratio of 9 ($42.5 billion market cap from Google Finance divided by $4.7 billion 2022 DCF forecast from slide 8 of Kinder Morgan May 2022 Investor Presentation), KMI looks like a solid buy at $19 a share (as of May 14, 2022) - - even with the 15% year-to-date rally in its share price.
Dividend Stock #2: Medical Properties Trust (MPW)
With a $22 billion-plus real estate portfolio, Medical Properties Trust (MPW) is one of the biggest owners of hospitals in the world. The reasons that initially drew me to purchase MPW are just as strong now as they were in January and February of this year. Interested readers can get a more detailed explanation of why I like MPW in a Motley Fool article published a few months ago.
But at its core, the factors are that MPW is a steadily growing REIT with tons of room for future growth and a well-covered dividend (a whopping 6.4% yield as well at the current $18 share price) at a modest valuation.
Dividend Stock #3: GlaxoSmithKline (GSK)
GlaxoSmithKline is one of the largest pharmaceutical companies in the world. Unsurprisingly, the company has plenty of blockbusters like respiratory drugs Trelegy and Nucala, as well as HIV drugs Tivicay and Triumeq (page 47 of GlaxoSmithKline Q4 2021 earnings press release).
And with dozens of other projects in clinical development in its pipeline, analysts are forecasting 8.2% annual earnings growth over the next five years. The stock also offers investors a market-trouncing 4.6% dividend yield. And the cherry on top is that GSK's forward P/E ratio of 13.4 at the current $43 share price doesn't appear to be too steep for its quality.
Since my master list of stocks that I don't yet own and want to own is now down to barely a dozen, I will mostly be adding to existing positions going forward. Unless the valuations for KMI, MPW, and GSK drastically change, I will likely be adding to my positions in those stocks next month, as well as a few others.
Are any of KMI, MPW, or GSK on your watch list for June 2022?
If not, what stocks are you thinking about buying next month?
Thanks for your readership and feel free to leave a comment below!
I've been slowly adding a bit more MPW and own KMI but don't have intentions on adding more mainly because I work in the O&G sector and have enough exposure to the industry through other investments as well as my income. CMI looks good as well although the mid to low $190s is better. Something about that 3.0% starting yield. I'll also continue to add to my MSFT and BLK positions that keeping dropping lower. Fine by me though because I believe both businesses will be worth much more in the future.ReplyDelete
CMI is looking great right now. And it's less than three basis points away from that magical 3% starting yield. With the way the market has been trading these last several months, we'll probably be above 3% in no time! It's hard to go wrong steadily adding to MSFT and BLK as well. Thanks for the comment.Delete
Thank you for the sharing the watchlist! Kinder Morgan seems exciting to me though I think we need to consider the general market situation as well. With the current ongoing events, there are a lot of uncertainties in the market that may lead to sharp movements.ReplyDelete
Thanks for the comment. Anything is possible in this market with regard to KMI. But it does look like the safe income has been tempting to many investors. And that's pushed the stock up 15% year-to-date, despite the S&P 500 plunging 20% during that time.Delete
GSK has been in my portfolio for many years. Not too exciting in terms of price appreciation but reliable dividends from this pharma name. Not a bad choice for June. REITs still might come in cheaper in the coming months as rates rise and real estate cools off a bit. Thanks for sharing.ReplyDelete
My pleasure and thanks for the comment. GSK is definitely one of those "boring" stocks that pays steady dividends.