Category Archives: Dividend Growth Stocks

Which Popular Dividend Growth Stocks Are ‘Always’ Undervalued? [Apple Inc.] – Seeking Alpha

Which Popular Dividend Growth Stocks Are ‘Always’ Undervalued? [Apple Inc.] – Seeking Alpha: This article is a companion to “Which Popular Dividend Growth Stocks Are Always Overvalued?”

Coming from the opposite direction from that article, here I use F.A.S.T. Graphs to identify which stocks from the 59 most commonly held dividend growth stocks persistently have traded at valuations that are lower than what F.A.S.T. Graphs presents as “earnings justified” valuation.

On the graphs in this article:

The orange line represents “fair value” as determined by F.A.S.T. Graphs, which apply Ben Graham’s valuation formulas to each stock’s earnings record.

Which Popular Dividend Growth Stocks Are ‘Always’ Overvalued? [PepsiCo, Inc., The Clorox Co, Paychex, Inc.] – Seeking Alpha

Which Popular Dividend Growth Stocks Are ‘Always’ Overvalued? [PepsiCo, Inc., The Clorox Co, Paychex, Inc.] – Seeking Alpha: I have noticed a couple of themes emerging in dividend articles over the past year. One theme revolves around valuation, with some suggesting that dividend stocks were in a bubble or significantly overvalued. Another theme has centered on “high quality” companies, and whether investors need sometimes to “pay up” for quality.

Putting the two themes together very recently, there has been discussion about Coca-Cola (KO) being a high quality company that never seems not to be overvalued. In the course of those discussions, it became clear that many feel that KO “always” trades at a premium valuation, so if you want to own it, you might as well accept that you’ll need to pay up for it.

Considering High-DGR Dividend Growth Stocks – Seeking Alpha

Considering High-DGR Dividend Growth Stocks – Seeking Alpha: There is a cohort of dividend growth stocks that have always fallen below my minimum threshold of 2.7% yield, but which have high dividend growth rates that make them attractive to some investors. These stocks come up often in comments and portfolio holdings as among the favorite dividend growth stocks.

These high dividend growth rate (DGR) issues seem particularly attractive to younger investors, who often feel that with several decades of compounding ahead of them, high DGRs are more important than high yields. They feel that they have plenty of time to develop excellent dividend streams. Examples of names that typically come up are IBM (IBM), Wal-Mart (WMT), and Exxon-Mobil (XOM).

Beware The Valuations On The Best Consumer Discretionary Dividend Growth Stocks – Seeking Alpha

Beware The Valuations On The Best Consumer Discretionary Dividend Growth Stocks – Seeking Alpha: The Consumer Discretionary sector consists of businesses that sell nonessential, and therefore, discretionary goods and services. Companies in this sector include retailers, media companies, consumer services companies, consumer durables and apparel companies, automobiles and components companies. Since so much of what this sector offers is discretionary items, companies in the sector tend to do best when the economy is strongest. Unfortunately, as we will soon see, so do the prices of their stocks tend to perform best when the market is performing best.

Many Of My Dividend Growth Stocks Have Become Overvalued, What Do I Do Now? – Seeking Alpha

Many Of My Dividend Growth Stocks Have Become Overvalued, What Do I Do Now? – Seeking Alpha: To me, there’s almost nothing better than finding a great company that I truly want to own at a fair valuation, or better yet, undervalued. In the long run, it has been my experience that this usually leads to outsized future returns, especially if you buy stocks when they are undervalued at the time. But there is quite often a side effect that can prove very disconcerting. Once an undervalued stock starts moving to the upside, momentum will often carry it above what prudent fair valuation would dictate.

Dividend Growth Stocks Are Success Outliers – Seeking Alpha

Dividend Growth Stocks Are Success Outliers – Seeking Alpha: In his bestseller Outliers: The Story of Success, Malcolm Gladwell explained the idea that success in many fields comes from factors that may be unusual in the population at large, but that are quite common among the outliers themselves. From the book’s flap copy:

The lives of outliers – those people whose achievements fall outside normal experience -follow a peculiar and unexpected logic.

The definition of outlier is quoted at the very beginning of the book. An outlier is:

The Fourth Scenario For When Should I Transition From Capital Gain Investing To Dividend Growth Investing? – Seeking Alpha

The Fourth Scenario For When Should I Transition From Capital Gain Investing To Dividend Growth Investing? – Seeking Alpha: Introduction

An author, whom I consider a friend, Robert Allan Schwartz, recently penned an article describing his views on when young investors should transition from growth to dividend growth investing. In this article found here, he created a series of three scenarios and created a set of parameters from which to run them on. Although I felt that his parameters were reasonable, and his scenarios plausible, I also felt that they grossly underestimated the true power of what I would call a pure growth strategy. Frankly, I felt he inadvertently shortchanged the powerful performance capabilities that true growth stocks are capable of achieving.

Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? – Seeking Alpha

Can Dividend Growth Investing Be Reconciled With Modern Portfolio Theory? – Seeking Alpha: For the past couple of years, an active discussion or debate has been going on between proponents of dividend growth investing [DGI] and proponents of modern portfolio theory [MPT]. I have been in the middle of some of those debates. I often wonder whether the two strategies for portfolio construction can be reconciled. I will state my preference up front: My primary investing strategy is a DGI strategy. I recognize that many readers will see this as biasing this article. I am sure that any mistakes, stereotypes, or misconceptions can be rectified in the comments section.

Yield On Cost’s Role In A Selling Decision – Seeking Alpha

Yield On Cost’s Role In A Selling Decision – Seeking Alpha: I recently received an email question, as follows:

On the list of stocks that have been dropped [from the annual ‘Top 40 Dividend Growth Stocks,’ some of them have been dropped for having a yield that is too low. So let’s say I already own [a stock], and two years later the current yield drops below 3%, but my yield on cost is still above 3%. I’m guessing you would drop [that stock] from the top 40 list, but would you sell it as well? Would I be correct in saying it depends on what the yield on cost is at that time?

Are Dividend Growth Stocks In A Bubble? – Seeking Alpha

Are Dividend Growth Stocks In A Bubble? – Seeking Alpha: Introduction and Background

There has been a spate of recent articles and comments stating or implying that dividend growth stocks are in a bubble. David Jackson, the founder and CEO of Seeking Alpha, stated the following in a recent comment.

I haven’t found any other asset class [beside dividend growth stocks] where there are similar causes or indicators of potential overvaluation risk, specifically:
1. macro factors (interest rates, demographics, and tax rates),
2. a significant preponderance of positive articles on SA, with relatively few “challenging” articles,
3. high and rising interest from novice investors. (Please note: I’m *not* saying that all dividend investors are novices; there are many deeply experienced and sophisticated dividend investors.)

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