The Best September in Stock Market History?

Due to September being historically the worst month for stocks, I decided to pull in my feelers and tend to my own stocks.  Of course, the market being ever unpredictable, it was the best month *ever* for September stocks.  I guess it could have been predicted thanks to Trump and his corporate tax talk, but I decided to tend my own house anyway. 

I bought more MO earlier this month, and Monday, I averaged down Hormel.  The Hormel purchase didn't do much for my dividends, but the stock was fluctuating at the -10% loss level, which is a "Buy me, I'm on sale 10% off!" sign for me.  Hormel has GREAT fundamentals.  It is a very conservative company in many ways, including their dividends, and I have long been wondering why it didn't bounce up while I was waiting to buy it at such a great price.  Reasons I bought it:

1. On sale at 9-10% off from my last HRL purchase.
2. Hovering at its 52 week low (like many consumer staples in this market) .
3. 51 years of increasing dividends.  Why they are 0.68 a share I have no clue.
4. Beta of 0.6
5. P/E of 19.63
6. Increased yield since I last bought it (weak, Midlife!)
7. Almost no debt.
8. Payout ratio of 40%.  This is a big one for me.
9. $640 million cash on hand (plus new acquisitions)
10. Lots of free cash flow 

Since I bought it, it has gone up so it is under the 5% mark after averaging down.  MO has also recovered nicely.

Stocks that worry me:  My other two staples that are also underwater, General Mills (GIS) and Phillip Morris (PM) have some good reasons to be purchased, but one thing is holding me back.  Call me cautious, but payout ratios of 120% and 93% respectively, and GIS's debt (PM has some too) give me pause.  While I expect PM to recover at some point, I already have too much invested in tobacco.  Of my 3 bottom stocks, Old Republic Insurance (ORI) has better fundamentals than these staples.  If anything, I may increase my holdings in ORI for my next purchase in 9 days.  Otherwise, I will be looking outside at staples and possibly oil or tech for my next investment.  I don't know if oil is a good investment now that it bounced back quite a bit - my Chevron stock is already at the +10% above water mark!

Anyways my updated technical data should be up soon after writing this.  Here's to looking toward October and my goal of $1k in annual divs per year!

More MO and my current DRIP strategy

Monday I increased my position in Altria (MO) from NINE to 19.  For a couple of reasons:

1)  I didn't like buying 9 at the time, but I'm glad I did.  I prefer to double digit my purchases since I am paying for trades.
2)  They raised their dividend recently, so it is a good investment due to a higher yield, at least for the short-term.
3)  They are one of the few underwater stocks in my portfolio, so an even better yield.
4)  My staples need to increase in value.  Badly.

On that last point, my staples are below my consumer discretionary - mainly because the latter are doing well and the former are not.  I only have 4 companies in consumer staples, and more than half are tobacco.  I need to diversify!  I also made a rule that if a stock hits below 10%, it is on sale, and I'll buy more of it, so that means Hormel is probably up next.  There are a lot of consumer staples at their 52 week low right now - Smuckers is another on my list - and are good buys in my opinion.  I really don't know why Hormel has been sitting so low for so long, but I think they have made some good investment purchases lately and are set to break out.  General Mills has been relatively flat, but also has potential.  After boosting my position in Hormel, I'll be shopping to up my staple diversification before returning to my other sectors. 

I notice that Altria and Philip Morris are two of the largest holdings in YD's portfolio.  I think that is partly because they are great stocks, and since he DRIPs, their great yields lead to more ownership.

Speaking of DRIPping... I am not a believer in DRIPping everything.  I don't believe you are getting the most for your money by reinvesting your dividend into a stock that may be overpriced or currently having a low yield.  I would rather take the dividends, be a more active investor, and put it into whatever stock du jour is the best offering (technicals, yields, even approaching ex-dividend dates).  This may be because I'm kind of on a time limit.  It is great for the lazy or busy investor, or for people who don't think there are better options on the market  (is that possible all the time?).  However, I will probably DRIP stocks that increase their yield since I bought them (the green ones on my list) ONLY if one dividend payout is enough to buy at least one share of stock.  That has not occurred yet.  This would be beneficial since the money is instantly working for me instead of sitting and waiting for my next purchase.  While it would be impossible to get an ex-dividend date right after receiving the dividend, I would be making the stock buy itself when it is on sale, which is kind of a novel concept when you think about it!

Of course, the hope is that ALL my stocks are red because I strengthened my positions enough so they are all showing a positive market value, but then I'll just reset my control limits, if that ever happens.  The only thing that bothers me about this strategy is that only the volatile or even failing (*COUGH* TECH *COUGH*) stocks will get my attention, and stocks like ABT and MA which have outpriced themselves at about 20% gains, will never increase in holdings.  But I guess them's the breaks.  I need to set myself up short-term - so bring on the oil and tobacco stocks! :)