Mid Week Money: Correction Edition

Unfortunately its been quite some time since I’ve done one of these, and they are rapidly turning into mid or end of month rather than mid week. There has been quite a lot of good content which I’ll share. The topic of a correction seems to be on many peoples mind, and while we are short of that, there is gradually emerging value in large cap stocks.


In early February, I posed the question of whether we were in a new bubble. At that time, the DOW was trading at 14,000 and it was up almost 7% since the beginning of the year when it was trading at 13,100.

Fast forward a few months, and the DOW has continued its March past 15,000. While we may not be in a bubble, the market has run very hard very fast, and at some point fear will kick in and profit taking commence.

In fact, late last week it was evident that there was selective profit taking occuring. I see a few pockets of value starting to open up in some large cap dividend stocks, notably Coca Cola and McDonalds.

I couldn’t help myself with Coca Cola and took a small position. I’ll be hoping to add to that on additional dips in the stock. McDonalds is starting to show some weakness, and I’ll be looking forward to add to my position if I can obtain some additional stock in the mid $80’s.

Here’s hoping that some great stocks keep getting punted downwards so that opportunities to pick them up at more reduced prices come along!.

In the meantime, here are some great links I have come across in the last few weeks.

Dividend Growth Investor writes about dividend investors placing too much reliance on consumer staples for dividends. I’ve reviewed my dividends holdings and noticed I’m a little light on consumer staples stocks, and I’d like to bulk up dividends from this area. I’m very concentrated in financial services, technology and resources to a lesser extent, and I’d like to add more to consumer staples at the right price.

Dividend Mantra talks about the joy of doing nothing….. well specifically not having to rush out to make a buy, but having the patience to wait for something in the strike zone. As an investor, one of the most difficult things to do is to wait for something to come along that is a fat pitch, a strong company with a high margin of safety that you can add to the portfolio. You need to have the patience to look past all those wide curve balls to have a swing at something like this.

Dividend Growth Stock Investing  had a great article on 20 dividend stocks that you shouldn’t be buying right now. I’m hoping he’ll cut me some slack for my  recent purchase of Coca Cola, which was one of the ones on the list!. Nevertheless, its a great watchlist of things you should put on the radar in the event of a market correction and includes names like Clorox, Colgate Palmolive & Caterpillar.

My Money Design talks about using dividend yield to evaluate a stock. I personally look at current yield in comparison with a stocks historic yield to get a sense of relative overvaluation or undervaluation. This is a fairly quick, easy way to gauge valuation for stocks with a long history of dividend payment in my view.

Passive Income Pursuit had a great analysis on Cisco stock. I’m a big fan of Cisco, particularly now that they have a dividend and are rapidly increasing it. I think they will be well positioned to keep growing the dividend for years to come.

Dividend Ladder had an interesting post on the Dividend Stock Holdings of Hedge Fund Managers. I never realized the hedge fund guys held quite so many dividend stocks, but they actually do, though i’d argue some of these are more growth oriented names than classic dividend growth stocks, but this was interesting reading.

Whiz Silver had a great checklist to help one define what they of investor they are. I wonder if its possible to have multiple investor types!. I guess I’m fortunate that my dividend side generally wins out when it comes time to allocating new capital.

MyFI Journey had an interesting post on whether home buying was right for him. This can be a tough one, with many tradeoffs in my view, including the desire to have a permanent roof over your head and making permanent modifications and changes to a property.

Brick By Brick investing had a great post about how to invest profitably in bear markets. Some interesting ways to keep go about keeping your sanity and making some money.

First Million is the Hardest writes about how to invest without a lot of money. Its a great article, because it gives some good ways to get started early, which is very important for a number of reasons, most significantly the power of compounding in my view.

Hello Suckers had an interesting post about dividend stocks to consider adding to the portfolio. I was pleased to see Coca Cola mentioned here, given I only added it a day or so ago!

Write your own reality mentioned his trade out of BP into Kinder Morgan given an inability to DRIP BP.  Automatic dividend reinvestment can be a great way to grow dividend income fast. Its what I did when I first started and can make a material difference to dividend income over time.

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