5 Discounted Dividend Contenders

5 Discounted Dividend Contenders

Is Facebook Getting a New Name?Is Facebook Getting a New Name?0 seconds of 1 minute, 4 secondsVolume 0%Press shift question mark to access a list of keyboard shortcutsKeyboard ShortcutsEnabledDisabledPlay/PauseSPACEIncrease Volume↑Decrease Volume↓Seek Forward→Seek Backward←Captions On/OffcFullscreen/Exit FullscreenfMute/UnmutemSeek %0-900:0001:0401:04 This article presents five high-quality Dividend Contenders that are discounted and offer generous and safe dividends and strong total return prospects.

Dividend Contenders are companies listed on U.S. exchanges that have dividend increase streaks of 10-24 years. There are 315 Dividend Contenders in my watchlist of dividend growth stocks, Dividend Radar , a free resource for DG investors maintained and published every Friday by Portfolio Insight . Note: Interested in getting periodic e-mail notifications when articles are published here? Drop your e-mail in the box below!

To assess the quality of dividend growth stocks, I use DVK Quality Snapshots . The system assigns quality scores to dividend growth stocks based on indicators of quality from trusted sources. To rank dividend growth stocks, I sort them by quality scores and use tie-breaking metrics when necessary.

In many of my articles, I provide fair value estimates of the stocks I cover. There are many ways to do stock valuation, but I prefer to use a survey approach. I reference fair value estimates and price targets from several sources and calculate a single, representative fair value [FV]. Quality and Valuation Screens

I generally consider five stock-picking criteria when evaluating dividend growth stocks for my DivGro portfolio. The criteria relate to stock quality, dividend safety, growth outlook, income outlook, and stock valuation.

For this article, in addition to considering only Dividend Contenders, I used the following screens:

> Stock Quality: High-quality stocks with quality scores of 19-25.

Dividend Safety: Stocks with Very Safe and Safe Dividend Safety Scores, according to Simply Safe Dividends .

Growth Outlook: Stocks likely to deliver annualized total returns of at least 8%, according to the Chowder Rule .

Income Outlook: Stocks with a 5-year yield on cost of 3.5% or higher.

Stock Valuation: Stocks trading below my FV estimate and stocks whose forward dividend yield exceeds their 5-year average dividend yield.

I rate dividend growth stocks according to their quality scores: Exceptional (25), Excellent (23-24), Fine (19-22), Decent (15-18), Poor (10-14), and Inferior (0-9). Only stock rated Exceptional , Excellent , or Fine qualified for this article. High-quality Discounted Dividend Contenders

Here are the Dividend Contenders that pass my quality and valuation screens:

Note that I’m long all these stocks in my DivGro portfolio . 1. Lockheed Martin Corporation (LMT)

Founded in 1909 and headquartered in Bethesda, Maryland, LMT is a global security and aerospace company engaged in researching, designing, developing, manufacturing, integrating, and sustaining advanced technology systems. LMT operates through four segments, Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space Systems. 2. Bristol-Myers Squibb Company (BMY)

BMY discovers, develops, licenses manufactures, markets, distributes, and sells biopharmaceutical products worldwide. The company’s pharmaceutical products include chemically synthesized drugs administered as tablets or capsules. It also uses biologics to produce products administered through injections or by infusion. BMY was founded in 1887 and is headquartered in New York, New York. 3. Amgen Inc. (AMGN)

Based in Thousand Oaks, California, AMGN is a biotechnology company. The company discovers, develops, manufactures, and delivers human therapeutics worldwide. It offers products for the treatment of severe illnesses in oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology, and neuroscience. AMGN was founded in 1980. 4. Snap-on Incorporated (SNA)

SNA manufactures and markets tools, equipment, diagnostics, repair information, and systems solutions. It serves aviation and aerospace, agriculture, construction, government and military, mining, natural resources, power generation, technical education industries, and vehicle dealerships and repair centers. SNA was founded in 1920 and is headquartered in Kenosha, Wisconsin. 5. The Allstate Corporation (ALL)

Founded in 1931 and headquartered in Northbrook, Illinois, ALL is a holding company engaged in property-liability insurance and life insurance in the United States and Canada. The company sells automobiles, homes, and other properties insurance products under the Allstate, Esurance, and Encompass brand names. It also sells life insurance and voluntary accident and health insurance products. I always encourage readers to do their due diligence research before investing in any of these stocks. Key Metrics and Fair Value Estimates Below, I present key metrics of interest to dividend growth investors, along with quality indicators and fair value estimates: Yrs : years of consecutive dividend increases Qual : DVK Quality Snapshots quality score Fwd Yield : forward dividend yield for a recent share Price 5-Avg Yield : 5-year […]

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