Tuesday, March 16, 2021

April 2021 Dividend Stock Watch List

With Mizuho Securities expecting about 10% of the $380 billion in third round stimulus payments to be allocated to stocks and Bitcoin, it's safe to say that there will be quite a bit of money from individual investors pouring into the market over the next few weeks.

Depending upon when I receive my $1,400 stimulus direct deposit, I plan on either paying off what remains of my Robinhood margin or purchasing additional dividend stocks. If I receive my stimulus payment prior to the beginning of April, I will deleverage the last bit of Robinhood margin. 

On the other hand, if I receive my stimulus payment early April or later, I intend to purchase dividend stocks. Regardless of when I receive my stimulus payment, I am forecasting that I will be deploying over $3,000 in capital in April, with the vast majority of that capital going into dividend stocks.

Below are 3 dividend stocks that I am considering initiating positions in come April.

100 US Dollar Banknotes

                                                              Image Source: Pexels

Dividend Stock #1: American Tower (AMT)

The first stock on my watch list is the tower REIT, American Tower (AMT), which put up a very strong 2020, delivering nearly 8% AFFO growth during the year. 

Since AMT operates in a rapidly growing industry and is the leader of that industry, it's expecting yet another year of high-single digit AFFO growth in 2021, 8.5% at the midpoint.

Based on AMT's $4.53 in dividends/share paid out in 2020 and AMT's $8.49 in AFFO/share generated during that time, AMT maintained a comfortable AFFO payout ratio of 53.4% during the year.

AMT's FCF payout ratio of 67.7% further suggests that its dividend remains well covered heading into 2021 (as per data sourced from page F-9 of AMT's recent 10-K).

Based on AMT's ~$4.1 billion in forecasted AFFO at its midpoint for 2021 and the current market cap of $97.1 billion (as of March 15, 2021), AMT is trading at just under 24 times this year's AFFO forecast.

Taking AMT's strong fundamentals, safe (and fast growing) dividend, and its reasonable valuation (relative to its growth potential) into consideration, I believe that AMT is worth a look at its current share price of $218 and change.

Dividend Stock #2: BlackRock (BLK)

The second stock on my watch list is asset manager, BlackRock (BLK).

As I outlined in my recent Seeking Alpha article on BLK, the stock's dividend is quite safe (with a 42.9% adjusted diluted EPS payout ratio in 2020 and a 63.7% FCF payout ratio during that time), BLK's outlook for 2021 includes high-single digit adjusted diluted EPS growth, BLK maintained an interest coverage ratio in excess of 30 in 2020, and the stock is trading at about 19 times this year's earnings.

Taking all of that into account, I am quite bullish on BLK around $720/share.

Dividend Stock #3: T. Rowe Price Group (TROW)

Rounding out my watch list, is yet another asset manager, T. Rowe Price Group (TROW).

As I discussed in my recent Seeking Alpha article on TROW, the stock's dividend is rather safe (with a 37.6% adjusted diluted EPS payout ratio and a 37.4% FCF payout ratio in 2020), TROW is set to produce yet another year of high-teen percent growth in adjusted diluted EPS, the stock boasts no long-term debt and a strong cash position, and trades at less than 15 times this year's earnings.

The preceding points have led me to strongly consider opening a position in TROW, especially at the current share price of $173 and change.

Concluding Thoughts:

When considering that I'm anticipating over $3k in capital deployment in the month of April (which also just happens to be my birth month as I was born on the 15th, coinciding with Tax Day), I am really stoked to repay some of my remaining Robinhood margin in March and go on a dividend stock shopping spree in April!

In light of the capital deployment that I have planned for April, I am anticipating that my net annual forward dividends will surge from around $1,530 heading into April to about $1,675 at the end of April.

Discussion:

Are AMT, BLK, or TROW on your watch list heading into April? If not, what names are on your watch list?

Thanks for reading and I welcome your comments in the comment section below!

4 comments:

  1. Those are some quality stocks you are watching, Kody. I own BLK and TROW. They are both top 10 holdings for me. They've provided good price appreciation and terrific dividend growth. I used to own CCI, which is in the same industry as AMT, but sold out about a year ago as I was paring down my REIT holdings. I used the CCI sale proceeds to buy during the market downturn at the beginning of the pandemic.
    Since you were born on Tax Day, are you planning to celebrate on May 17th this year? :-) 'Til next time... best of luck.

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    1. ED,

      Thanks for stopping by and congrats on holding BLK and TROW as top positions in your portfolio. I saw the news that the federal and Wisconsin tax filing deadlines were extended to May 17. I think I'll stick to April 15 :)

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  2. All 3 are solid companies. I'm kicking myself on missing out on BLK for as long as I did but have slowly started adding to that position. AMT is another one that I haven't owned but I'm quite interested in. Happy shopping!

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    1. PIP,

      Thanks for sharing and congrats on building that BLK position out!

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