Editors' pick: Originally published Sept. 23.
Brian Bollinger does a good job culling out 10 safe dividend stocks that have an average yield of 3% and have delivered high dividend growth for years.
Bollinger's list covers what to buy. Now let's spend a few extra minutes to find out when to buy. Charts, indicators and experience can help with that.
Here's a technical look at Bollinger's top 10 consumer-staples dividend stocks for safe income growth.
In this chart of Nestle (NSRGY) , above, we can see that prices have been correcting their July/August rally. The slope of the 50-day simple moving average line has peaked. The on-balance-volume, or OBV, line has turned lower from a July high, signaling some more aggressive selling by longs.
We also notice a bearish divergence with momentum in July and August. Prices made higher highs, but the momentum indicator made a lower high. The pace of the rally slowed into the August peak.
Nestle could retest the $78 or even the $77 area in the near term. This might prove to be a better location to probe the long side.
In this daily chart of Anheuser-Busch InBev(BUD) - Get Report , above, we can see a long, choppy sideways pattern. Prices have crisscrossed the 50-day and 200-day moving averages numerous times. The OBV line has declined through much of this neutral trend, and momentum has weakened.
BUD has tried to break out over $132 a number of times to not avail. If prices broke out on the upside, we would have to join the buyers. Otherwise, patient buyers should have their orders in around $124.
In this chart of Coca-Cola(KO) - Get Report , above, we have a company we may like, but we have a stock we are in no rush to buy. Coca-Cola has broken down below its declining 50-day and 200-day moving averages. The 50-day average has also declined below the 200-day for a bearish death cross. The OBV line has been weakening from June to July and tells us that sellers of Coca-Cola are more aggressive now with heavier volume of shares traded on days when the stock has closed lower.
The moving average convergence/divergence, or MACD, oscillator is bearish, with its position below the zero or neutral line. A cover-shorts signal from the MACD might give Coca-Cola a short-term lift.
This one-year daily chart of Kraft Heinz(KHC) - Get Report , above, is interesting. We know the products forever but the trading history of KHC is pretty limited. This chart shows a pretty good rally this year but the advance has slowed and investors seem to be more aggressive sellers despite the advance when we look at the OBV line. Prices have dipped below the rising 50-day average a few times recently and the momentum study shows lower peaks since May. Patient buyers of KHC should wait for a decline into the $84-$82 area to take advantage of a price dip should it develop.
This daily chart of Diageo (DEO) - Get Report , above, is not an easy read, with big swings in both directions. Prices are currently in a positive position above the 50-day and 200-day moving averages.
The volume data and the OBV line are puzzling. Volume was heavy in June and July as prices rallied about 15%, but buyers retreated the past two months. Prices are near their highs despite a lack of aggressive buying. A dip toward $114 may be all we get.
Altria has spent a number of weeks below the declining 50-day moving average line. The 200-day average line has been tested and even broken, but prices have recently rallied back above it. The OBV line has been drifting lower from its July peak, so we know that selling has become more intense. The trend-following MACD oscillator is below the zero line, so buy signals are more likely to signal covering shorts than going long.
Another small leg lower on the charts could take Altria to $60.
This daily chart of Kimberly-Clark(KMB) - Get Report , above, looks to be a double top formation, in my opinion. (When it comes to subjective chart patterns, everyone can have an opinion.) Notice the two-rally failure in April and July? Prices have broken down below both the declining 50-day average and the still rising 200-day line. A bearish dead cross can be seen this month. The OBV line has weakened since July, telling us that volume has picked up on the downside and that longs want to get out.
Short term, it looks like Kimberly-Clark is having a minor short-covering bounce and the downtrend could resume soon. The double top measures down to around $114, and that is where I would look to be a buyer.
Philip Morris International
Prices of Philip Morris International (PM) - Get Report have been locked in a sideways trading range since April, as you can see in the chart above. If the OBV line looked more constructive, I would recommend buying PM at the market or on a breakout over $104, but I think we could see another test of the downside.
Let's see if we can buy PM at $98 or better.
In this chart of Colgate-Palmolive (CL) - Get Report , above, we can see that prices broke below the 50-day average and are now rallying back to the underside of the average and resistance in the $74-to-$75 area. If prices fail and turn lower again, we could get to buy CL in the $70-to-$69 area in the near term.
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