Tuesday, December 10, 2013

Dogs Of The Dividend Aristocrats Index

The Dogs of the Dow Jones strategy gained a major popularity within the recent years. The strategy is very simple: You only need to invest money into the 10 cheapest stocks of the Dow Jones, measured by expected growth and price to earnings ratios.

This investment rule can also be used for other indices or adjusted by several criteria. 

Toady I've used the formula in order to find the cheapest stocks from the Dividend Aristocrats index. The index has 54 constituents with more than 25 years of consecutive dividend growth.

I selected only those stocks with a forward P/E of less than 15 as well as future earnings growth of 5 percent for the next five years. Only eleven stocks fulfilled these criteria. The top five results by dividend yield ratio are listed below.
In general, I'm a real fan of long-term dividend growth stocks but due to the low interest policy of the Federal Reserve, stock prices also skyrocket and valuations are really high. It's not good to buy highly valuated stocks.

5 Top Dogs of Dividend Aristocrats

AT&T (NYSE:T) has a market capitalization of $183.43 billion. The company employs 246,740 people, generates revenue of $127.434 billion and has a net income of $7.539 billion. AT&T’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $32.168 billion. The EBITDA margin is 25.24 percent (the operating margin is 10.15 percent and the net profit margin 5.92 percent).


Financial Analysis: The total debt represents 25.65 percent of AT&T’s assets and the total debt in relation to the equity amounts to 75.62 percent. Due to the financial situation, a return on equity of 7.34 percent was realized by AT&T. Twelve trailing months earnings per share reached a value of $1.41. Last fiscal year, AT&T paid $1.77 in the form of dividends to shareholders. Forward P/E: 12.99 at 6.47 percent expected 5-Year earnings 
growth forecasts.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 24.60, the P/S ratio is 1.44 and the P/B ratio is finally 2.10. The dividend yield amounts to 5.18 percent and the beta ratio has a value of 0.51.



Long-Term Stock Price Chart Of AT&T (T)
Long-Term Dividend Payment History of AT&T (T)
Long-Term Dividend Yield History of AT&T (T)

Chevron (NYSE:CVX) has a market capitalization of $235.63 billion. The company employs 62,000 people, generates revenue of $235.020 billion and has a net income of $26.336 billion. Chevron’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $53.086 billion. The EBITDA margin is 22.59 percent (the operating margin is 16.78 percent and the net profit margin 11.21 percent).


Financial Analysis: The total debt represents 5.23 percent of Chevron’s assets and the total debt in relation to the equity amounts to 8.93 percent. Due to the financial situation, a return on equity of 20.30 percent was realized by Chevron. Twelve trailing months earnings per share reached a value of $12.22. Last fiscal year, Chevron paid $3.51 in the form of dividends to shareholders. Forward P/E: 10.18 at 7.0 percent expected 5-Year earnings 
growth forecasts.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 10.02, the P/S ratio is 1.00 and the P/B ratio is finally 1.75. The dividend yield amounts to 3.26 percent and the beta ratio has a value of 0.95.



Long-Term Stock Price Chart Of Chevron (CVX)
Long-Term Dividend Payment History of Chevron (CVX)
Long-Term Dividend Yield History of Chevron (CVX)

Target (NYSE:TGT) has a market capitalization of $39.71 billion. The company employs 361,000 people, generates revenue of $73.301 billion and has a net income of $2.999 billion. Target’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $7.513 billion. The EBITDA margin is 10.25 percent (the operating margin is 7.33 percent and the net profit margin 4.09 percent).


Financial Analysis: The total debt represents 37.86 percent of Target’s assets and the total debt in relation to the equity amounts to 110.13 percent. Due to the financial situation, a return on equity of 18.52 percent was realized by Target. Twelve trailing months earnings per share reached a value of $3.73. Last fiscal year, Target paid $1.38 in the form of dividends to shareholders. Forward P/E: 13.36 at 9.28 percent expected 5-Year earnings 
growth forecasts.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 16.85, the P/S ratio is 0.54 and the P/B ratio is finally 2.45. The dividend yield amounts to 2.74 percent and the beta ratio has a value of 0.80.



Long-Term Stock Price Chart Of Target (TGT)
Long-Term Dividend Payment History of Target (TGT)
Long-Term Dividend Yield History of Target (TGT)

Stanley Black & Decker (NYSE:SWK) has a market capitalization of $12.78 billion. The company employs 45,327 people, generates revenue of $10.190 billion and has a net income of $448.70 million. Stanley Black & Decker’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.610 billion. The EBITDA margin is 15.80 percent (the operating margin is 5.18 percent and the net profit margin 4.40 percent).


Financial Analysis: The total debt represents 22.33 percent of Stanley Black & Decker’s assets and the total debt in relation to the equity amounts to 53.07 percent. Due to the financial situation, a return on equity of 6.56 percent was realized by Stanley Black & Decker. Twelve trailing months earnings per share reached a value of $3.63. Last fiscal year, Stanley Black & Decker paid $1.80 in the form of dividends to shareholders. Forward P/E: 14.71 at 10.70 percent expected 5-Year earnings 
growth forecasts.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 21.98, the P/S ratio is 1.22 and the P/B ratio is finally 1.91. The dividend yield amounts to 2.51 percent and the beta ratio has a value of 1.55.



Long-Term Stock Price Chart Of Stanley Black & Decker (SWK)
Long-Term Dividend Payment History of Stanley Black & Decker (SWK)
Long-Term Dividend Yield History of Stanley Black & Decker (SWK)


Wal-Mart Stores (NYSE:WMT) has a market capitalization of $265.23 billion. The company employs 2,200,000 people, generates revenue of $469.162 billion and has a net income of $17.756 billion. Wal-Mart Stores’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $36.302 billion. The EBITDA margin is 7.74 percent (the operating margin is 5.93 percent and the net profit margin 3.78 percent).

Financial Analysis: The total debt represents 26.65 percent of Wal-Mart Stores’s assets and the total debt in relation to the equity amounts to 70.91 percent. Due to the financial situation, a return on equity of 23.02 percent was realized by Wal-Mart Stores. Twelve trailing months earnings per share reached a value of $5.20. Last fiscal year, Wal-Mart Stores paid $1.59 in the form of dividends to shareholders. Forward P/E: 14.42 at 8.94 percent expected 5-Year earnings growth forecasts.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.63, the P/S ratio is 0.56 and the P/B ratio is finally 3.53. The dividend yield amounts to 2.31 percent and the beta ratio has a value of 0.41.


Long-Term Stock Price Chart Of Wal-Mart Stores (WMT)
Long-Term Dividend Payment History of Wal-Mart Stores (WMT)
Long-Term Dividend Yield History of Wal-Mart Stores (WMT)

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*I am long WMT. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.

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