Watch List for September

In the last days I was thinking about what share would I buy in September. I am monitoring a lot of candidates, but I choose four dividend paying companies.

Qualcomm (QCOM) engages in the development, design and provision of digital telecommunications products and services. It operates through the following segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing (QTL), and Qualcomm Strategic Initiatives (QSI). Qualcomm pays out $2.28 dividend per share, and increased the dividend in the last 15 years, with a ten year CAGR 16.50%. The dividend yield of the company with the last closing price is 4.38%.

W. W. Grainger (GWW) is a distributor of maintance, repair and operating (MRO) supplies and other related products and services. The company raised it's quaterly dividend by 4.92% to $1.28 per share. This marked the 46th consecutive annual increase for W. W. Grainger. Over the past decade GWW has been able to boost annual dividends at a rate of 15.80% per year. This was supported by an increase in earnings from $4.94/share in 2007 to $9.87/share in 2016. The company has a sustainable dividend payment, and is fairly valued at 15.40 times forward earnings, while yielding 3.20%.

Kroger Company (KR) operates supermarkets, multi-department stores, jewelry stores, pharmacies, fuel centers and convenience stores in the United States. The company increased it's dividend in the last 12 years, with a ten year CAGR 16.50%. The dividend yield is 2.30% with the Friday's closing price. ($21.74) The payout ratio is really low, it's only 27.60%.

The Walt Disney Co. (DIS) is a diversified international family entertainment and media enterprise. It operates through four business segments: Media Networks, Parks & Resorts, Studio Entertainment and Consumer Products & Interactive Media. The company increased it's dividend in the last 7 years, and the ten year dividend growth rate is 18.80%. The dividend yield is 1.52% with the Friday's closing price. ($102.41) Generally I like companies which have at least 10 years consecutive dividend increases but DIS is an exception. It has powerful brand what doesn't need explanation if you have a child.

Full disclosure: Long KR.

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1. Recent Buy – Kroger

Dividend Increase - Kroger

Kroger (NYSE: KR) announced that its Board approved a dividend increase from 48¢ to 50¢ per year. The next quarterly dividend of 12.5 cents per share will be paid on September 1, 2017, to shareholders of record on the close of business on August 15, 2017.

This means, that my YOC increased from 2.27% to 2.37%.

I think that today's prices offer a great opportunity for the management to repurchase the shares of the company. That's why I'm really satisfied with the announced $1 billion share repurchase program.

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• Recent Buy - Kroger

Disclosure: Long KR.

Recent Buy – Kroger

The Kroger Company (KR) operates supermarkets, multi-department stores, jewelry stores, pharmacies, fuel centers and convenience stores in the United States.

This week was really interesting. On Thuesday Kroger decreased the earnings guidance, on Friday Amazon (AMZN) announced to buy Whole Foods (WFM) for $13.7 billion. What was the reaction? The price of the Kroger shares was falling as a stone. It made me curious, so I looked through the company's financials.

Kroger Co. increased it's revenue from $70.235 billion to $115.337 billion over the period spanning fiscal years 2007 to 2016. That's a compound annual growth rate (CAGR) of 5.67%.

Over the same 10-year period, the company's diluted earnings per share grew from $0.84 to $2.05, which is a CAGR of 10.42%. I think that it's really impressive from such a large company, so take a look at it's dividend.

The company increased it's dividend in the last 11 years, with a ten year CAGR 13.85%. The dividend yield is 2.15% with the Friday's closing price. ($22.29) The payout ratio is really low, it's only 21.60%.

What is the valuation of Kroger Co.?

It has a TTM P/E 10.81, which is greatly below the stock market's P/E ratio. The Debt/Equity ratio is 2.10, which is not so great, but I think it's managable.

I think that the stock market overreacted the Amazon's transaction, and the Kroger Co. proved in the last 10 years that it can improve it's business. The company is buying back it's shares, so the recent decrease of the stock price is not just a good opportunity to buy the shares of this really good company, but it's a good opportunity for the company to buy back it's own shares to improve the shareholder's return.

On Friday I bought a few shares of Kroger Co. at $21.10 which gives me a 2.27% dividend yield.

Full disclosure: Long Kroger.