Introduction
This is the second of a five-part series presenting 50 dividend growth stocks that I have screened for current fair value. With this article, I will be covering 10 additional dividend growth research candidates in addition to the initial 10 that I presented in part 1 found here.
Furthermore, I wanted to be clear that these are not necessarily my favorite, nor what I consider the best dividend growth stocks out there. Instead, I believe these 50 research candidates currently represent the small minority of attractively valued dividend growth stocks in today’s highly valued marketplace. Simply stated, I believe it’s extremely difficult to find good value, especially in high quality dividend growth stocks, considering today’s low interest rate environment.
Nevertheless, that is also not to say that there are not any high-quality dividend growth stocks available. Many of the dividend growth stocks I will be covering in this series are of high quality. Some are Dividend Aristocrats, Dividend Champions, and Contenders, etc. Additionally, there are many different flavors of dividend growth stocks I will be presenting in this series. Some are higher yield as we’ve seen with parts 1 and this part 2, however, all 50 possess their own unique characteristics regarding growth and the ability to generate above-average total returns. Therefore, I suggest that the reader pick and choose among the companies presented that will meet their own specific and/or unique goals and objectives.
Price and Value Are Not the Same Thing
The number 1 rule to follow when investing in common stocks is “buy low and sell high.” This rule seems simple enough at first glance, but the seminal question is: how do you know when a stock is low and conversely, how do you know when high is high enough to sell? Of course, the straightforward answer is to apply prudent or sensible valuation principles when evaluating any stock that you are interested in buying or selling.
Moreover, it is also important to understand a couple of additional principles. For starters, a low price does not always indicate a low valuation. Conversely, a high price does not necessarily indicate a high valuation. It always comes down to price relative to fundamental value – past, present and perhaps most importantly future. However, it’s imperative to consider that past is easy enough to examine as is the present, however, the future always contains a level of uncertainty.
The key point in the above paragraph is that price and value are not the same thing. As I will illustrate with a few following examples, it is possible to find a company with a very low market price but a high valuation relative to fundamentals (i.e. earnings). Note: these are just 2 examples illustrating that price and value are not the same. They are not part of the 10 dividend growth stocks I will be covering later in the article.
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