My Top Dividend Stock To Buy In October
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I’m not going to sugarcoat things for you—because we’re friends, and I wouldn’t do that—but things are tough right now.
We dividend investors are always on the hunt for deals and discounts, but lately, it seems like good buying opportunities are pretty few and far between. The market just keeps climbing higher and higher, which doesn’t leave us with too many decent options.
With that said, all you need is one good find, and I’ve managed to dig up a few despite generally high valuations. One of those is Robert Half Inc. (RHI), which is my top dividend stock to buy in October. (You can check out some of my other top picks here.)
In case you’ve never heard of Robert Half, this company is a staffing agency that connects employers with skilled employees, primarily in white-collar industries like law, finance, accounting, marketing, and technology. So whether your business needs a bookkeeper, a graphic designer, a software developer, or even a CFO, Robert Half can help fill that role—whether it’s a temporary role or something more permanent.
Now, about the share price: on the surface, it might not look like a screaming deal because it has rebounded about 8% in the last month (not unlike many stocks out there). However, the stock is still down over 18% year-to-date and about 6.5% over the past 12 months.
Here’s where things get interesting for us dividend investors—the dip in share price has pushed the dividend yield about 35% above the company’s five-year average. This means that by buying at current prices, you’ll be able to lock in a significantly higher cash flow return than usual.
In addition to the above-average yield, Robert Half has consistently grown its dividend by around 10% on average over the past decade, making it a solid choice for dividend growth investors.
So, what’s behind this stock’s decline?
Well, it’s largely due to weaker demand for staffing services. When businesses are feeling uncertain about the economy, hiring tends to slow down, and that directly impacts staffing companies like Robert Half.
In my opinion, though, this short-term dip doesn’t take away from the company’s long-term financial strength. Robert Half has been a solid grower over the years, particularly in the free cash flow department. (By the way, the negative free cash flow in the TTM isn’t correct — that’s an error on Snapstock’s end that we’re working to fix.)
One of the things that stands out most to me about this company’s financials is its strong balance sheet. Robert Half has negative net debt, which means it has more cash and liquid assets than total debt.
In other words, the company is in no danger of going belly up anytime soon. Plus, the dividend is well-covered with a free cash flow payout ratio of only 31%, leaving plenty of room for future dividend increases.
At the end of the day, during a time when good deals are playing hard to get, Robert Half is still looking pretty attractive. This is a discounted stock with a strong history of dividend growth and rock-solid financials—definitely one worth considering, or at least keeping on your radar.
Now with that said, I want to hear from you: Which discounted stocks do you have your eye on for this upcoming month? Write to me here and let me know.
And if you want to learn about some other great buying opportunities right now, I've got a few more for you here.
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IN MY PORTFOLIO 📈
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3 Deeply DISCOUNTED Dividend Stocks To Buy In October 2024
In this video, we’re talking about 3 stocks that look like particularly great pickups for your portfolio here in October.
CAREFULLY CURATED 🔍
📺 Dealing With Decline - Like humans, all companies go through life cycles. Young, growing companies look very different from mature, potentially declining ones. In this video, Professor Aswath Damodaran highlights three companies—Intel, Walgreens, and Starbucks—that have fallen from market grace and explores where they are in their life cycle.
🎧 Finding Your Circle - Identifying your Circle of Competence should be step #1 for all investors, and this episode of the Investing for Beginners podcast is an excellent guide on how to do it.
📚 Retail Giants in 2024 - This white paper details the foot traffic trends of retail giants Walmart, Costco, and Target in 2024 and explores the key factors driving their success.
SINCE YOU ASKED 💬
"Is it better to invest a lot of money into just a few stocks/ETFs or is it better to invest less money into multiple stocks/ETFs?"
- Robert | Email
I don't personally think there's one definitive method that's better than another. When it comes to diversification, it's really a matter of personal preference.
I know investors who own over 100 stocks and do well, while others take a "less is more" approach. There's no magic number—it all depends on how many companies you can actively manage and stay in the loop on. This number will vary from person to person, and you'll naturally find your diversification sweet spot over time.
The number of holdings you should own also depends on the size of your portfolio and where you are in your investing journey. For example, if you have a larger portfolio and are using your dividend income to pay the bills, it might make sense to have a larger number of holdings. To me, that just seems like a sensible, defensive way to protect your wealth and income.
With all of that said, this advice really only applies to individual stocks. When it comes to ETFs, I think having just two or three is enough to cover your bases.
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