Monday, May 7, 2018

6 Dividend Stocks Trading at a Double-Digit Discount

Getting a discount of 10%, 20% or even more is awesome. When it is on a big ticket item like a automobile, there are a lot of dollars to be saved and people have been known to drive great distances to receive the discount. 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 4/27/18 closing price). The results are presented below:

3M Co. (MMM) provides enhanced product functionality in electronics, health care, industrial, consumer, office, telecommunications, safety & security and other markets via coatings, sealants, adhesives and other chemical additives. The company has paid a cash dividend to shareholders every year since 1969 and has increased its dividend payments for 55 consecutive years.
Yield: 2.5% | Discount: 38.1%

Cracker Barrel Old Country Store (CBRL) develops and operates the Cracker Barrel Old Country Store restaurant and retail concept in the United States. The company has paid a cash dividend to shareholders every year since 1972 and has increased its dividend payments for 16 consecutive years.
Yield: 2.9% | Discount: 36.7%

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 14 consecutive years.
Yield: 3.2% | Discount: 51.3%

The Coca-Cola Company (KO) is the world's largest soft drink company, and also has a sizable fruit juice business. The company has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 55 consecutive years.
Yield: 3.5% | Discount: 10.8%

Abbvie Inc. (ABBV) is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013. AbbVie's key drug is Humira for rheumatoid arthritis. The company has paid a cash dividend to shareholders every year since 1926 and has increased its dividend payments for 46 consecutive years.
Yield: 4.0% | Discount: 32.8%

AT&T Inc. (T) provides telephone and broadband service and holds full ownership of AT&T Mobility. The company has paid a cash dividend to shareholders every year since 1984 and has increased its dividend payments for 35 consecutive years.
Yield: 6.0% | Discount: 31.3%

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 200+ 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 MMM, CVS, ABBV, CBRL, KO, T in various Dividend growth Stock Portfolios. See a list of all my Dividend Growth Portfolio holdings here.

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