Last week I shared with you a list of nine dividend champions, which I believed were attractively valued. Today I am sharing with you a few more companies, which I believe are attractively valued. These companies have managed to boost dividends for at least a decade, have a P/E ratio below 20, and a current yield above 2% which is covered by earnings. These are companies which are good candidates for further research. The companies include:
Abbott Laboratories (ABT) manufactures and sells health care products worldwide. Abbott is a dividend aristocrat, which has managed to boost dividends for 43 years in a row.
The company split into Abbott and Abbvie in early 2013. I bought and held shares of the legacy Abbott for years now, but my last purchase was right before the spin-off. I received plenty of disagreement for this decision of course, but I stayed the course.
Due to the split, analyzing historical data for Abbott is a little bit more challenging. The information prior to 2013 includes results for both Abbvie and Abbott. The only information for Abbott only is for the years since early 2013.
Currently, Abbott is in talks to acquire medical device maker St. Jude Medical (STJ) for $25 billion in cash and stock, which could provide a strong tailwind to earnings going forward. The company has also announced a $5.80 billion acquisition of diagnostics test maker Alere early in 2016. Right now, the stock is selling at 19.60 times expected earnings and yields 2.40%. I may consider adding to the stock for the first time in over three years.
United Technologies Corporation (UTX) provides technology products and services to building systems and aerospace industries worldwide. The company has raised dividends for 23 years in a row. The ten year dividend growth rate is 11.30%/year. Currently, the stock is selling for 16.10 times forward earnings and yields 2.50%. Check my analysis of United Technologies for more information.
Ameriprise Financial, Inc. (AMP), through its subsidiaries, provides various financial products and services to individual and institutional clients in the United States and internationally.
The company’s stock was beaten badly on Brexit. There was a UK property fund, managed by one of its international subsidiaries, which has stopped redemptions. This is bad news, but it is likely overblown as well. It is also likely that Ameriprise has more sticky assets than mutual fund companies such as T.Rowe Price, due to client-adviser relationships. The company has raised dividends for 12 years in a row. The ten year dividend growth rate is 37.10%/year, but that was mostly as a result of the rapid expansion in the dividend payout ratio over the past decade. Future dividend growth will more closely trail growth in earnings per share. Currently, the stock is selling for 10.30 times earnings and yields 3.10%. Check my analysis of Ameriprise Financial for more information.
Verizon Communications Inc. (VZ), through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has slow earnings growth, but increased competition with its smaller rivals. However, it does have the scale and quality of service that lets current customers stick to it. The company has raised dividends for 11 years in a row. The ten year dividend growth rate is 3.30%/year. Currently, the stock is selling for 14.50 times forward earnings and yields 4%. Check my analysis of Verizon for more information.
Full Disclosure: Long ABT, AMP, UTX, VZ
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- Dividend Aristocrats List for 2016
- How to become a successful dividend investor
- How to value dividend stocks