Everyone loves a sale!
Well, maybe not everyone. When stocks go on sale it seems to depress a large number of market participants. However, for those of us that like buying stocks at a discount, a market pullback provides us a little relief.
My fair value model was constructed back in 2007 at a time many stocks had already fell from grace. It was designed to focus on only the best companies. I took an extremely conservative stance with my model. Ultimately, determining fair value requires the investor to accurately forecast free cash flow, dividend growth rates and other metrics on a forward looking basis, which is no simple task.
This week, I screened my dividend growth stocks database for select stocks trading at a double-digit discount (based on 4/17/15 closing price). The results are presented below:
T. Rowe Price Group Inc. (TROW) operates one of the largest no-load mutual fund and life cycle fund complexes in the United States, with September 30 AUM of $731 billion. The company has paid a cash dividend to shareholders every year since 1986 and has increased its dividend payments for 28 consecutive years.
Yield: 2.5% | Discount: 12.3%
Texas Instruments Inc. (TXN) is one of the world's largest manufacturers of semiconductors, this company also produces scientific calculator products and DLP products for TVs and video projectors. The company has paid a cash dividend to shareholders every year since 1962 and has increased its dividend payments for 12 consecutive years.
Yield: 2.3% | Discount: 16.3%
CVS Health Corporation (CVS) is the largest pharmacy health care provider in the U.S. The company has paid a cash dividend to shareholders every year since 1916 and has increased its dividend payments for 12 consecutive years.
Yield: 1.4% | Discount: 19.0%
Emerson Electric Co. (EMR) designs and supplies product technology, and delivers engineering services and solutions to a wide range of industrial, commercial and consumer markets around the world. The company has paid a cash dividend to shareholders every year since 1947 and has increased its dividend payments for 59 consecutive years.
Yield: 3.2% | Discount: 20.7%
Omega Healthcare Investors Inc. (OHI) is a real estate investment trust (REIT) that invests in income-producing healthcare facilities, mainly long-term care facilities located in the United States. The company has paid a cash dividend to shareholders every year since 2003 and has increased its dividend payments for 12 consecutive years.
Yield: 5.6% | Discount: 21.5%
Cisco Systems, Inc. (CSCO) offers a complete line of routers and switching products that connect and manage communications among local and wide area computer networks employing a variety of protocols. The company has paid a cash dividend to shareholders every year since 2011 and has increased its dividend payments for 5 consecutive years.
Yield: 2.9% | Discount: 23.2%
As with past screens, the data presented above is in its raw form. Some of the companies would be disqualified for low yields and/or poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 250+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long TXN, CVS, EMR, CSCO, in my Dividend Growth Portfolio, long OHI in my High-Yield Portfolio and long TROW in my High Dividend Growth Portfolio. See a list of all my dividend growth holdings here.
- My 5 Largest Dividend Stock Positions Have Double-Digit Lifetime Returns
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- 12 Dividend Stocks With 50+ Years of Consecutive Increases
- 8 Dividend Stocks With A 15% Yield In 15 Years
- First Quarter 2014: Top And Bottom Performing Dividend Stocks
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