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2021-05-26
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7 High-Quality Dividend Growth Stocks Trading Below Fair Value
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{"i18n":{"language":"zh_CN"},"detailType":1,"isChannel":false,"data":{"magic":2,"id":136836423,"tweetId":"136836423","gmtCreate":1622004378862,"gmtModify":1634184738063,"author":{"id":3583290509321840,"idStr":"3583290509321840","authorId":3583290509321840,"authorIdStr":"3583290509321840","name":"ehkay","avatar":"https://static.tigerbbs.com/bf21fdc0ee5fa36576d29e4a9e31e1a8","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[],"fanSize":5,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body><p>👍</p></body></html>","htmlText":"<html><head></head><body><p>👍</p></body></html>","text":"👍","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://laohu8.com/post/136836423","repostId":1199211917,"repostType":4,"repost":{"id":"1199211917","kind":"news","pubTimestamp":1621995950,"share":"https://www.laohu8.com/m/news/1199211917?lang=&edition=full","pubTime":"2021-05-26 10:25","market":"us","language":"en","title":"7 High-Quality Dividend Growth Stocks Trading Below Fair Value","url":"https://stock-news.laohu8.com/highlight/detail?id=1199211917","media":"seekingalpha","summary":"Summary\n\nThese high-quality dividend growth stocks are discounted now.\nI rate the stocks either Exce","content":"<p><b>Summary</b></p>\n<ul>\n <li>These high-quality dividend growth stocks are discounted now.</li>\n <li>I rate the stocks either Exceptional or Excellent based on their quality scores as determined by DVK Quality Snapshots.</li>\n <li>For each stock, I present key metrics, quality indicators, and a fair value estimate.</li>\n <li>In my view, these stocks are great candidates for further research and possible investment.</li>\n</ul>\n<p>As a dividend growth investor, I invest in high-quality dividend growth stocks trading at reasonable valuations. I useDVK Quality Snapshotsto assess the quality of dividend growth stocks and systematically determine fair value estimates for all the dividend growth stocks inDividend Radar.</p>\n<p>This article presents seven undervalued dividend growth stocks. One stock is rated Exceptional with a perfect quality score of 25, while the others are rated Excellent with quality scores of 23-24 (out of 25). Based on closing prices on Monday, 24 May, these stocks are available at discounts of 1%-19% to my fair value estimates.</p>\n<p><b>Estimating Fair Value</b></p>\n<p>I collect fair value [FV] and price target data from reliable online sources like Morningstar and Finbox.com. Additionally, Iestimatethe FV of dividend growth stocks in Dividend Radar by dividing each stock’s annualized dividend by its historical 5-year average dividend yield.</p>\n<p>With as many as 11 available estimates per stock, I ignore the lowest and highest and average the mean and median of the remaining values to arrive at my FV estimate for each stock. With a survey approach, I can quickly determine reasonable fair value estimates for hundreds of stocks.</p>\n<p>Assessing Quality</p>\n<p>I useDVK Quality Snapshotsto assess the quality of dividend growth stocks. The system provides an elegant and effective approach to quality assessment, assigning 0-5 points to each of five quality indicators for a maximum quality score of 25 points.</p>\n<table>\n <tbody>\n <tr>\n <td><img src=\"https://static.tigerbbs.com/8730a5b025a51dea2cdea59a85db271e\" tg-width=\"1280\" tg-height=\"324\" referrerpolicy=\"no-referrer\"></td>\n </tr>\n <tr>\n <td><i>DVK Quality Snapshots scoring system (left) and the author’s rating system (right)</i></td>\n </tr>\n </tbody>\n</table>\n<p>My rating system is simply a mapping of different quality score ranges. For this article, I looked only at dividend growth stocks rated Exceptional or Excellent.</p>\n<p>The Seven Candidates</p>\n<p>The following table presents the tickers of seven high-quality dividend growth stocks trading below my FV estimates. I own all these stocks in myDivGro portfolio. The tickers are presented in rank order, with the top-scoring stock first:</p>\n<p><img src=\"https://static.tigerbbs.com/4a9b8846c08699080e2b6e582fc5c442\" tg-width=\"610\" tg-height=\"199\" referrerpolicy=\"no-referrer\">The following company descriptions are the author's summary of company descriptions sourced from Finviz.</p>\n<p><b>1 Merck & Co., Inc. (MRK)</b></p>\n<p>Founded in 1891 and headquartered in Kenilworth, New Jersey, MRK is a global health care company that offers health solutions through prescription medicines, vaccines, biologic therapies, and animal health products. MRK markets its products to drug wholesalers and retailers, hospitals, government entities and agencies, physicians, physician distributors, veterinarians, distributors, animal producers, and managed health care providers.</p>\n<p><b>2. General Dynamics Corporation (GD)</b></p>\n<p>Headquartered in Falls Church, Virginia, GD is an aerospace and defense company offering products and services in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. Formed in 1952, GD has grown steadily through the acquisition of many businesses.</p>\n<p><b>3. Lockheed Martin Corporation (LMT)</b></p>\n<p>Founded in 1909 and headquartered in Bethesda, Maryland, LMT is a global security and aerospace company engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems. LMT operates through four segments, Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space Systems.</p>\n<p><b>4. Bristol-Myers Squibb Company (BMY)</b></p>\n<p>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.</p>\n<p><b>5. Pfizer Inc. (PFE)</b></p>\n<p>Headquartered in New York and founded in 1849, PFE is one of the world's largest pharmaceutical firms. The company discovers, develops, and manufactures healthcare products. PFE offers medicines and vaccines in various therapeutic areas, serving wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, and individual provider offices, as well as disease control and prevention centers.</p>\n<p><b>6. 3M Company (MMM)</b></p>\n<p>MMM is a diversified technology company with worldwide operations. The company has leading positions in consumer and office; display and graphics; electronics and telecommunications; health care; industrial; safety, security and protection services; transportation; and other businesses. MMM was founded in 1902 and is headquartered in St. Paul, Minnesota.</p>\n<p><b>7. Amgen Inc. (AMGN)</b></p>\n<p>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 serious illnesses in oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology, and neuroscience. AMGN was founded in 1980.</p>\n<p><b>Key Metrics and Fair Value Estimates</b></p>\n<p>Below, I present a table with key metrics of interest to dividend growth investors. These include the years of consecutive dividend increases (<b>Yrs</b>), the quality score according to DVK Quality Snapshots (<b>Qual.</b>), the forward dividend Yield for a recent Price, and the 5-year compound annual dividend growth rate (<b>5-Yr DGR</b>). Also included are the five quality indicators used by DVK Quality Snapshots.</p>\n<p>I also provide my fair value estimates (<b>Fair Val.</b>) and each stock's discounts (<b>Disc.</b>).</p>\n<p><img src=\"https://static.tigerbbs.com/f85937c00f3e0d10c8ddaaf38a3288a3\" tg-width=\"1355\" tg-height=\"417\" referrerpolicy=\"no-referrer\"><i>Created by the author with data sourced from Dividend Radar and Value Line, Morningstar, S&P Capital IQ, and Simply Safe Dividends.</i></p>\n<p><b>Commentary</b></p>\n<p>Here's a comparative analysis of an equal-weighted portfolio of these stocks, courtesy of Finbox.com:</p>\n<p><img src=\"https://static.tigerbbs.com/32f302039f536e0d7b0a3fd63933fc55\" tg-width=\"1280\" tg-height=\"662\" referrerpolicy=\"no-referrer\"><i>Source: Finbox.com</i></p>\n<p>From a price-performance perspective, the portfolio would have underperformed the S&P 500 over the last five years. TheFinbox.comFV’s agree with my assessment that these stocks are all undervalued.</p>\n<p>Only two of the stocks have outperformed the S&P 500 on a total return basis over the past ten years, LMT and AMGN:</p>\n<p><img src=\"https://static.tigerbbs.com/f0b92d3968b5813a477fd7518f657b0b\" tg-width=\"1280\" tg-height=\"593\" referrerpolicy=\"no-referrer\"><i>Source: Portfolio-Insight.com</i></p>\n<p>I like to review a stock’s earnings history and estimates, as earnings form the basis for dividend payouts and sustainable dividend growth. Let’s consider the Non-GAAP EPS charts for the fiscal years since 2011 and two years of estimates, courtesy of Portfolio-Insight.com.</p>\n<p><b>Merck</b></p>\n<p><img src=\"https://static.tigerbbs.com/b71f4187c86fe573e0ea31d6fa1ed224\" tg-width=\"1280\" tg-height=\"682\" referrerpolicy=\"no-referrer\"></p>\n<p>Merck’s earnings are accelerating, as can be seen by examining the ratio of its 5-year and 10-year EPS growth rates (1.86). I call this ratio the acceleration factor, with values above 1.00 indicating accelerating earnings.</p>\n<p>In comparison, MRK’s dividends are accelerating by a factor of 1.29, which can be found by dividing its 5-year DGR of 6.50% by its 10-year DGR of 5.02%. In this case, I’m using the stock’s FY 2020 DGR’s:</p>\n<p><img src=\"https://static.tigerbbs.com/a294719d3b4d173769df083b8328c3ce\" tg-width=\"1280\" tg-height=\"262\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Portfolio-Insight.com</i></p>\n<p>According to Simply Safe Dividends, MRK’s payout ratio of 43% is low for most companies, and I believe the stock offers a goodrisk/rewardin the current market.</p>\n<p><b>General Dynamics</b></p>\n<p><img src=\"https://static.tigerbbs.com/595fed2084677df939d61a78349f91f6\" tg-width=\"1280\" tg-height=\"682\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Portfolio-Insight.com</i></p>\n<p>With an acceleration factor of 0.80, it is clear that General Dynamics’ earnings are decelerating. In comparison, the company’s dividends are decelerating, though at a slower pace (0.98).</p>\n<p>According to Simply Safe Dividends, GD’s payout ratio is 41%, which is low for most companies. The company experienced asurge in new ordersand should generate strong free cash flow this year.</p>\n<p><b>Lockheed Martin</b></p>\n<p><img src=\"https://static.tigerbbs.com/0ae9853ccfec92ac6997a9334d76acc4\" tg-width=\"1280\" tg-height=\"682\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Portfolio-Insight.com</i></p>\n<p>Lockheed Martin’s earnings history looks impressive, and, certainly, the stock’s earnings acceleration factor of 1.38 provides confirmation. In contrast, the company’s dividend payouts are decelerating, with an acceleration factor of only 0.70.</p>\n<p>LMT’s payout ratio is low for most companies at only 40%, so the company has ample room for future dividend increases. I believe the stock will perform well for long-term dividend growth investors.</p>\n<p><b>Bristol-Myers Squibb</b></p>\n<p><img src=\"https://static.tigerbbs.com/257138cdb4a00c5018957b44b77af7d2\" tg-width=\"1280\" tg-height=\"682\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Portfolio-Insight.com</i></p>\n<p>Bristol-Myers Squibb’s earnings history looks very impressive, with an earnings acceleration factor of 2.27. In contrast, the company’s dividend payouts are decelerating, with an acceleration factor of only 0.70.</p>\n<p>At 29%, BMY’s payout ratio is low for biotechs, so the company has ample room for future dividend increases. The companygenerates excellent cash flow, and its 2019 acquisition of Celgene adds a compelling growth component.</p>\n<p><b>Pfizer</b></p>\n<p><img src=\"https://static.tigerbbs.com/b036b13095c65d376c9c97e4e10f48fa\" tg-width=\"1280\" tg-height=\"682\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Portfolio-Insight.com</i></p>\n<p>Of the stocks covered in this article, PFE’s earnings history and outlook are the least impressive. As a dividend growth investor, I prefer to see a reasonable amount of consistency in earnings growth, and PFE falls a bit short in that regard. As for dividend growth, the stock’s dividend payouts are slowing down with an acceleration factor of 0.8.</p>\n<p>PFE’s payout ratio is 54%, which is low for most companies, according to Simply Safe Dividends. The company isunderappreciated by the market, especially considering the contribution of Pfizer’s vaccine to the company’s bottom-line over the next 2-3 years.</p>\n<p><b>MMM</b></p>\n<p><img src=\"https://static.tigerbbs.com/6c579165b171ef15e1d2bb57ed9aae76\" tg-width=\"1280\" tg-height=\"682\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Portfolio-Insight.com</i></p>\n<p>MMM’s earnings dropped in 2019 and 2020, breaking a decent uptrend in recent years. Fortunately, the outlook looks better. The company’s earnings acceleration factor of 0.68 essentially matches its dividend acceleration factor of 0.69. Given that MMM’s earnings payout ratio is edging high at 63%, we shouldn’t expect fireworks as far as future dividend increases are concerned.</p>\n<p><b>AMGN</b></p>\n<p><img src=\"https://static.tigerbbs.com/37f4a7dce9ac2fd4a7b5ee975ffd24b7\" tg-width=\"1280\" tg-height=\"682\" referrerpolicy=\"no-referrer\"></p>\n<p><i>Source: Portfolio-Insight.com</i></p>\n<p>AMGN’s earnings growth history is a model of consistency, although its growth rate is slowing down a bit (acceleration factor 0.80). Likewise, the company’s dividend growth history is a model of consistency, though we don’t yet have a 10-year DGR for the stock. As for AMGN’s payout ratio, at 41%, it is edging high for biotechs, according to Simply Safe Dividends.</p>\n<p>The company hasimproved its risk profilethrough acquisition and by diversifying its revenue stream. We think AMGN represents a compelling opportunity for investors looking for dividend income, dividend growth, and capital appreciation.</p>\n<p><b>Concluding Remarks</b></p>\n<p>This article presented seven undervalued dividend growth stocks. With quality scores of 23-25 according to DVK Quality Snapshots, these are some of the highest-quality dividend growth stocks and great candidates for further research and possible investment.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>7 High-Quality Dividend Growth Stocks Trading Below Fair Value</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\n7 High-Quality Dividend Growth Stocks Trading Below Fair Value\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-26 10:25 GMT+8 <a href=https://seekingalpha.com/article/4431072-7-high-quality-dividend-growth-stocks-trading-below-fair-value><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nThese high-quality dividend growth stocks are discounted now.\nI rate the stocks either Exceptional or Excellent based on their quality scores as determined by DVK Quality Snapshots.\nFor each ...</p>\n\n<a href=\"https://seekingalpha.com/article/4431072-7-high-quality-dividend-growth-stocks-trading-below-fair-value\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMGN":"安进","LMT":"洛克希德马丁","BMY":"施贵宝","PFE":"辉瑞","MRK":"默沙东","GD":"通用动力","MMM":"3M"},"source_url":"https://seekingalpha.com/article/4431072-7-high-quality-dividend-growth-stocks-trading-below-fair-value","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1199211917","content_text":"Summary\n\nThese high-quality dividend growth stocks are discounted now.\nI rate the stocks either Exceptional or Excellent based on their quality scores as determined by DVK Quality Snapshots.\nFor each stock, I present key metrics, quality indicators, and a fair value estimate.\nIn my view, these stocks are great candidates for further research and possible investment.\n\nAs a dividend growth investor, I invest in high-quality dividend growth stocks trading at reasonable valuations. I useDVK Quality Snapshotsto assess the quality of dividend growth stocks and systematically determine fair value estimates for all the dividend growth stocks inDividend Radar.\nThis article presents seven undervalued dividend growth stocks. One stock is rated Exceptional with a perfect quality score of 25, while the others are rated Excellent with quality scores of 23-24 (out of 25). Based on closing prices on Monday, 24 May, these stocks are available at discounts of 1%-19% to my fair value estimates.\nEstimating Fair Value\nI collect fair value [FV] and price target data from reliable online sources like Morningstar and Finbox.com. Additionally, Iestimatethe FV of dividend growth stocks in Dividend Radar by dividing each stock’s annualized dividend by its historical 5-year average dividend yield.\nWith as many as 11 available estimates per stock, I ignore the lowest and highest and average the mean and median of the remaining values to arrive at my FV estimate for each stock. With a survey approach, I can quickly determine reasonable fair value estimates for hundreds of stocks.\nAssessing Quality\nI useDVK Quality Snapshotsto assess the quality of dividend growth stocks. The system provides an elegant and effective approach to quality assessment, assigning 0-5 points to each of five quality indicators for a maximum quality score of 25 points.\n\n\n\n\n\n\nDVK Quality Snapshots scoring system (left) and the author’s rating system (right)\n\n\n\nMy rating system is simply a mapping of different quality score ranges. For this article, I looked only at dividend growth stocks rated Exceptional or Excellent.\nThe Seven Candidates\nThe following table presents the tickers of seven high-quality dividend growth stocks trading below my FV estimates. I own all these stocks in myDivGro portfolio. The tickers are presented in rank order, with the top-scoring stock first:\nThe following company descriptions are the author's summary of company descriptions sourced from Finviz.\n1 Merck & Co., Inc. (MRK)\nFounded in 1891 and headquartered in Kenilworth, New Jersey, MRK is a global health care company that offers health solutions through prescription medicines, vaccines, biologic therapies, and animal health products. MRK markets its products to drug wholesalers and retailers, hospitals, government entities and agencies, physicians, physician distributors, veterinarians, distributors, animal producers, and managed health care providers.\n2. General Dynamics Corporation (GD)\nHeadquartered in Falls Church, Virginia, GD is an aerospace and defense company offering products and services in business aviation; land and expeditionary combat systems, armaments and munitions; shipbuilding and marine systems; and information systems and technologies. Formed in 1952, GD has grown steadily through the acquisition of many businesses.\n3. Lockheed Martin Corporation (LMT)\nFounded in 1909 and headquartered in Bethesda, Maryland, LMT is a global security and aerospace company engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems. LMT operates through four segments, Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space Systems.\n4. Bristol-Myers Squibb Company (BMY)\nBMY 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.\n5. Pfizer Inc. (PFE)\nHeadquartered in New York and founded in 1849, PFE is one of the world's largest pharmaceutical firms. The company discovers, develops, and manufactures healthcare products. PFE offers medicines and vaccines in various therapeutic areas, serving wholesalers, retailers, hospitals, clinics, government agencies, pharmacies, and individual provider offices, as well as disease control and prevention centers.\n6. 3M Company (MMM)\nMMM is a diversified technology company with worldwide operations. The company has leading positions in consumer and office; display and graphics; electronics and telecommunications; health care; industrial; safety, security and protection services; transportation; and other businesses. MMM was founded in 1902 and is headquartered in St. Paul, Minnesota.\n7. Amgen Inc. (AMGN)\nBased 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 serious illnesses in oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology, and neuroscience. AMGN was founded in 1980.\nKey Metrics and Fair Value Estimates\nBelow, I present a table with key metrics of interest to dividend growth investors. These include the years of consecutive dividend increases (Yrs), the quality score according to DVK Quality Snapshots (Qual.), the forward dividend Yield for a recent Price, and the 5-year compound annual dividend growth rate (5-Yr DGR). Also included are the five quality indicators used by DVK Quality Snapshots.\nI also provide my fair value estimates (Fair Val.) and each stock's discounts (Disc.).\nCreated by the author with data sourced from Dividend Radar and Value Line, Morningstar, S&P Capital IQ, and Simply Safe Dividends.\nCommentary\nHere's a comparative analysis of an equal-weighted portfolio of these stocks, courtesy of Finbox.com:\nSource: Finbox.com\nFrom a price-performance perspective, the portfolio would have underperformed the S&P 500 over the last five years. TheFinbox.comFV’s agree with my assessment that these stocks are all undervalued.\nOnly two of the stocks have outperformed the S&P 500 on a total return basis over the past ten years, LMT and AMGN:\nSource: Portfolio-Insight.com\nI like to review a stock’s earnings history and estimates, as earnings form the basis for dividend payouts and sustainable dividend growth. Let’s consider the Non-GAAP EPS charts for the fiscal years since 2011 and two years of estimates, courtesy of Portfolio-Insight.com.\nMerck\n\nMerck’s earnings are accelerating, as can be seen by examining the ratio of its 5-year and 10-year EPS growth rates (1.86). I call this ratio the acceleration factor, with values above 1.00 indicating accelerating earnings.\nIn comparison, MRK’s dividends are accelerating by a factor of 1.29, which can be found by dividing its 5-year DGR of 6.50% by its 10-year DGR of 5.02%. In this case, I’m using the stock’s FY 2020 DGR’s:\n\nSource: Portfolio-Insight.com\nAccording to Simply Safe Dividends, MRK’s payout ratio of 43% is low for most companies, and I believe the stock offers a goodrisk/rewardin the current market.\nGeneral Dynamics\n\nSource: Portfolio-Insight.com\nWith an acceleration factor of 0.80, it is clear that General Dynamics’ earnings are decelerating. In comparison, the company’s dividends are decelerating, though at a slower pace (0.98).\nAccording to Simply Safe Dividends, GD’s payout ratio is 41%, which is low for most companies. The company experienced asurge in new ordersand should generate strong free cash flow this year.\nLockheed Martin\n\nSource: Portfolio-Insight.com\nLockheed Martin’s earnings history looks impressive, and, certainly, the stock’s earnings acceleration factor of 1.38 provides confirmation. In contrast, the company’s dividend payouts are decelerating, with an acceleration factor of only 0.70.\nLMT’s payout ratio is low for most companies at only 40%, so the company has ample room for future dividend increases. I believe the stock will perform well for long-term dividend growth investors.\nBristol-Myers Squibb\n\nSource: Portfolio-Insight.com\nBristol-Myers Squibb’s earnings history looks very impressive, with an earnings acceleration factor of 2.27. In contrast, the company’s dividend payouts are decelerating, with an acceleration factor of only 0.70.\nAt 29%, BMY’s payout ratio is low for biotechs, so the company has ample room for future dividend increases. The companygenerates excellent cash flow, and its 2019 acquisition of Celgene adds a compelling growth component.\nPfizer\n\nSource: Portfolio-Insight.com\nOf the stocks covered in this article, PFE’s earnings history and outlook are the least impressive. As a dividend growth investor, I prefer to see a reasonable amount of consistency in earnings growth, and PFE falls a bit short in that regard. As for dividend growth, the stock’s dividend payouts are slowing down with an acceleration factor of 0.8.\nPFE’s payout ratio is 54%, which is low for most companies, according to Simply Safe Dividends. The company isunderappreciated by the market, especially considering the contribution of Pfizer’s vaccine to the company’s bottom-line over the next 2-3 years.\nMMM\n\nSource: Portfolio-Insight.com\nMMM’s earnings dropped in 2019 and 2020, breaking a decent uptrend in recent years. Fortunately, the outlook looks better. The company’s earnings acceleration factor of 0.68 essentially matches its dividend acceleration factor of 0.69. Given that MMM’s earnings payout ratio is edging high at 63%, we shouldn’t expect fireworks as far as future dividend increases are concerned.\nAMGN\n\nSource: Portfolio-Insight.com\nAMGN’s earnings growth history is a model of consistency, although its growth rate is slowing down a bit (acceleration factor 0.80). Likewise, the company’s dividend growth history is a model of consistency, though we don’t yet have a 10-year DGR for the stock. As for AMGN’s payout ratio, at 41%, it is edging high for biotechs, according to Simply Safe Dividends.\nThe company hasimproved its risk profilethrough acquisition and by diversifying its revenue stream. We think AMGN represents a compelling opportunity for investors looking for dividend income, dividend growth, and capital appreciation.\nConcluding Remarks\nThis article presented seven undervalued dividend growth stocks. With quality scores of 23-25 according to DVK Quality Snapshots, these are some of the highest-quality dividend growth stocks and great candidates for further research and possible investment.","news_type":1},"isVote":1,"tweetType":1,"viewCount":377,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":2,"xxTargetLangEnum":"ORIG"},"commentList":[],"isCommentEnd":true,"isTiger":false,"isWeiXinMini":false,"url":"/m/post/136836423"}
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