Tuesday, October 25, 2022
Tuesday, October 18, 2022
As I'm writing this blog post, it's snowing here in Central Wisconsin. But since the temperature is 38 degrees Fahrenheit, the snow is luckily melting before it hits the ground. Hooray to no snow cover!
With that aside, it's already mid-October. That means it's probably a good idea to look ahead to the stocks that I will consider buying in November. Here are the three that are looking most favorable for my investment goals at this time.
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Dividend Stock #1: Realty Income (O)
The first stock on my watch list is none other than Realty Income (O). For readers seeking a more in-depth explanation of why I like O so much, I would refer them to my Motley Fool article from earlier this month on the stock (as well as Procter & Gamble and Magellan Midstream Partners).
Basically, O has immense scale and it only acquires the best properties. The company also has plenty of room for future growth and pays a well-covered 5.3% dividend yield. Yet it is trading at a forward price-to-AFFO-per-share ratio just over 14 at the current $56 share price (as of October 14, 2022). This should provide a compelling combination of income and low-double-digit annual total return potential over the long haul.
Dividend Stock #2: Medical Properties Trust (MPW)
Medical Properties Trust (MPW) is the other REIT that's on my watch list for the month. Readers looking for a more complete rationale on why I like MPW should check out my recent Motley Fool article on MPW (and W.P. Carey).
There are concerns about the financial condition of MPW's largest tenant, Steward Health Care System, which comprises 27.8% of the company's total annualized base rent (page 32 of 51 of MPW's recent 10-Q). But I am confident that the tenant will recover in the quarters ahead. And even if the tenant doesn't, this risk appears to be more than priced in at the current $11 share price. That's because MPW is trading at a valuation of less than eight times its trailing-twelve-month AFFO per share.
Dividend Stock #3: Microsoft (MSFT)
The final stock rounding out my watch list for November is Microsoft (MSFT). With its Office suite of products, Azure cloud computing service, professional networking website and app LinkedIn, and video gaming brand Xbox, MSFT has something of use for everyone: Businesses, individuals, and governments.
Given its diversified and recurring streams of revenue, it shouldn't be surprising that analysts are anticipating 14.9% annual adjusted diluted EPS growth over the next five years from MSFT. Along with its low dividend payout ratio, this should fuel plenty of dividend growth moving forward.
And shares of the stock can be scooped up at a forward price-to-earnings (P/E) ratio of just 22.6 at the current $228 share price. That's not an excessive valuation to pay for arguably one of the top five to top 10 businesses on the planet.
Are any of O, MPW, and/or MSFT on your watch list for November?
If not, what stocks are you considering buying next month?
Thanks for reading. I look forward to your comments below!