As the new year rolls out, I decided that it would be a fun experiment to run and collect top investment picks for 2016. I reached out to the community of bloggers that I regularly interact with and asked them to participate in this collection.
The rules were simple: Pick one investment (either a stock or a fund or a commodity or any other form of investment), and present a short & quick investment reason behind the pick. Most bloggers I reached out to were happy to comply and shared their pick. I intend to present the data here in this post and track the investments over the course of 2016 on a regular basis (on a quarterly basis perhaps?).
Top Investment Picks for 2016
Before I present the picks, I would like to remind the readers that these are simply picks based on current outlook and each investor should perform due diligence before investing in any of the companies mentioned. Also, the investors I reached out to are long term investors, so I discourage readers to trade in and out of these investments based on the data presented here simply because it is their top pick at the moment.
Without further ado, here are the top picks from the blogging community for 2016.
A Frugal Family’s Journey: Wells Fargo & Co (WFC)
“With interest rates on the rise again, we like banks prospects for growth as profits should increasingly get easier as rates continue their long awaited climb”
Angry Retail Banker: Kinder Morgan Inc (KMI)
“This is a stock that’s been beaten down, and you know what they say to do when there’s blood on the streets (you buy stocks, not call the police because we’re not talking about actual blood. It’s an expression). Kinder Morgan has solid assets in terms of its pipeline network, is a bet on natural gas (which I think will one day replace oil as our primary fuel source), and is only indirectly connected to oil prices. Richard Kinder is a major shareholder and, as such, is committed to paying and raising that dividend. And the 75% dividend cut, meanwhile, shows me that they take the health of the business seriously and will make the neccessary short term sacrifices to ensure a safe dividend for years to come (rather than an oversized one today). It’s near it’s 52 week low. This may be a once in a lifetime chance to pick up a solid, high quality business at a ridiculously great value while it’s facing short term issues.”
Div4Son: Archer Daniels Midland (ADM)
“Great dividend history with dividend growth. The yield within the sweet spot and the price is currently pretty discounted. Not for everyone, but it should do well if you buy and hold.”
DivGro: 3M Co (MMM)
“With the bull market getting long in the teeth, I’m looking for extreme safety. Therefore, my pick is MMM, a Dividend Champion with 57 consecutive years of dividend increases. Yield is 2.62% and 5-year DGR is 10.9%. Dividend growth is accelerating and MMM can afford it — the payout ratio is only 53%. According to Morningstar, the company has a 4-star rating and trades about 6% below fair value ($160.00). On the other hand, S&P Capital IQ has a 3-star Hold recommendation, a fair value estimate of $126.80, and an A+ Quality Rating. If safe and boring is not your cup of tea and you’re looking for growth, SBUX and NKE seem to be great choices.”
Dividend Chimp: PureFunds ISE Cyber Security ETF (HACK)
“I’m super conservative and I stick with stocks with long track records of dividend increases for my investments, but for fun, if we are speculating for big gains, I would go with the area of cybersecurity taking off in 2016. HACK cybersecurity ETF provides diversification in the cybersecurity industry. More and more companies are attacked each year and this ETF has reached a 1 billion market cap in under one year showing that investors are very interested in the cybersecurity space.”
Dividend Diatribes: Starbucks Corp (SBUX)
“Howard Schultz is the man! SBUX keeps growing the dividend too. They have recently added beer, wine, and delivery services. I do not think this company is going away anytime soon. I believe it will do extremely well again in 2016!”
Dividend Digger: Inter Pipeline Ltd (IPL.TO)
“Very well priced for any dividend growth investor looking for value. Despite low oil prices, interpipeline still generates steady revenue through bulk liquid storage as they are one of the biggest independant tank storage business in Europe.”
Dividend Growth Investor: Schwab Strategic Trust (SCHD)
“If I had to select just one investment, I would have to pick an ETF or Mutual fund. I am big on diversification, which explains why. This ETF is a diversified portfolio consisting of 100 quality dividend payers such as ExxonMobil, Procter & Gamble, Johnson & Johnson etc.. Many of these equities have a track record of consistent dividend growth. This ETF yields 3%, is commission free at Charles Schwab and has a low expense ratio of 0.07%.”
Dividend Hawk: Emerson Electric Co (EMR)
“Hard to pick one, but I chose Emerson Electric. Short-term headwinds like stronger US dollar, growth slow-down in emerging markets and low oil prices have driven down EMR’s stock price. In my opinion there is much to like about Emerson Electric stock, 59 years of consecutive dividend increases, shareholder friendly management, in recent years EMR’s management has been restructuring significantly and also plans a spinoff of its Network Power operations in 2016. I expect double-digit total returns of a year.”
Dividend Lord: Gilead Sciences Inc (GILD)
“Picking only one stock seemed overwhelming at first, but soon it became clear which I should choose. Firstly it should be from my actual portfolio. Is there any clearly undervalued stocks? Well, from my point of view at least, there is one. Gilead Sciences has shown excellent earnings for the short time I have been a shareowner. Yet the stock hasn’t really taken off. Resulting in forward P/E below 9. Company has very low payout ratio too, so they have a possibility to increase dividend significantly if they choose. Also this fits well my personal 2016 strategy, where investing in healthcare is one of top priorities.”
Dividend Wisp: Algonquin Power & Utilities Corp (AQN.TO)
“Year over year the growth of this company has been amazing. Consistent stream of new, long-term fixed contract renewable energy projects with a ~5% dividend yield. Divs paid out in USD gives additional benefits for CAD trading accounts. Wish I had bought more when i started out and it was at $7.50!”