Tuesday, March 26, 2024

April 2024 Dividend Stock Watch List

As I'm writing this blog post, it's March 18th. The temperatures have cooled off considerably in the last week, with the high set to reach just 37 degrees Fahrenheit today. That's a far cry from the temperatures ranging in the 50s to 60s just a few days ago.

I haven't yet purchased any of the stocks on my March 2024 Dividend Stock Watch List, but plan to in the coming days. With the month more than half over, I will now be looking ahead to April 2024. Here are three of the stocks on my watch list for next month.


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Dividend Stock #1: PepsiCo (PEP)

The first stock on my watch list for April 2024 is PepsiCo (PEP). Since my investment thesis is unchanged from my Seeking Alpha article last September, interested readers can check out that article.

In a nutshell, PEP's 3.1% dividend yield is sustainable. Thanks to healthy profitability and industry leadership, the company possesses an A-rated balance sheet. Shares also appear to be slightly undervalued at the current $171 share price (as of March 18, 2024). That's why I'm looking to up my weighting from 0.9% to between 1.5% and 2%.

Dividend Stock #2: Starbucks (SBUX)

The next stock on my watch list for next month is Starbucks (SBUX).

The holding currently comprises 0.8% of my portfolio, which I wouldn't mind ultimately doubling. Starbucks looks to have plenty of room to grow yet: The company is targeting 55,000 stores in the long-term, which is well above its mark of nearly 39,000 as of Dec. 31, 2023.

Couple that with margin expansion and this could support double-digit non-GAAP EPS growth annually for the foreseeable future. Free cash flow also covered the dividend nearly three times over in its fiscal first quarter per the Q1 2024 Press Release that I linked above, which suggests the payout can keep growing at a strong rate. Along with a 2.5% dividend yield and what I believe to be moderate undervaluation from the current $91 share price (as of March 18, 2024), this is why I'm interested in doubling my position.

Dividend Stock #3: UnitedHealth Group (UNH)

The third stock on my watch list for April 2024 is UnitedHealth Group (UNH). Since my previous Seeking Alpha article last month, my investment thesis remains unchanged.

UNH is a dividend growth machine with more than enough free cash flow to support further dividend growth. That makes an otherwise pedestrian 1.5% dividend yield quite attractive to me. It's how I anticipate the dividend will again double in the next five years. Shares also could be somewhat discounted at the current $487 share price (as of March 18, 2024). This is why I wouldn't mind increasing my weighting of UNH from the current 1.3% to around 2%.

Concluding Thoughts:

So, that's the trifecta of dividend growth stocks I'm seriously considering adding to next month. In my opinion, these are each respectively three of the best businesses in the world. I'm pleased to own all three of them and even more pleased that I will likely be owning more of them in the coming weeks.

Discussion:

Are any of PEP, SBUX, or UNH on your watch list for next month?

If not, what stocks are you paying attention to for April 2024?

Thanks for reading and please feel free to comment below!

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