The other day, I shared with you a list of four attractively valued consumer staples for further review. The companies had attractive valuations, a record of dividend and earnings growth, and well covered distributions.
Today, I will share with you a short list of a few consumer staples with good track records of dividend growth and solid earnings growth. Unfortunately, these shares are overvalued today or are close to the top of the valuation range. In general, I prefer to buy shares at a P/E ratio below 20. However, the lower the entry price, the better my chances of earning good returns and locking in a higher yield from the start.
The companies I am considering on dips include:
The Clorox Company (CLX) manufactures and markets consumer and professional products worldwide. It operates through four segments: Cleaning, Household, Lifestyle, and International. The company is a dividend aristocrat, with a 41 year history of annual dividend increases. Over the past decade, it has managed to increase its dividends at a rate of 8%/year. Earnings per share grew at an annual rate of 8%/year over the past decade to $5.35/share in 2017.The company is expected to earn $6.19/share in 2018. The stock is selling at 19.70 times forward earnings and yields 3.15%. I see it as attractive below $107/share. Check my analysis of Clorox for more information about the company.
Church & Dwight Co., Inc. (CHD) develops, manufactures, and markets household, personal care, and specialty products. The company operates through three segments: Consumer Domestic, Consumer International, and the Specialty Products Division. The company is a dividend achiever, with a 22 year history of annual dividend increases. Over the past decade, it has managed to increase its dividends at a rate of 26.10%/year. Earnings per share grew at an annual rate of 12.30%/year over the past decade to $1.94/share in 2017.The company is expected to earn $2.27/share in 2018. The stock sells at 20.60 times forward earnings and yields 1.90%. I see it as an attractive opportunity below $45/share. Check my analysis of Church & Dwight for more information about the company.
McCormick & Company, Incorporated (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. The company operates through two segments, Consumer and Industrial. The company is a dividend aristocrat, with a 32 year history of annual dividend increases. Over the past decade, it has managed to increase its dividends at a rate of 8.90%/year. Earnings per share grew at an annual rate of 8%/year over the past decade to $3.72/share in 2017. The company is expected to earn $4.93/share in 2018. The stock is selling at 20.50 times forward earnings and yields 2.10%. I see it as an attractive opportunity on dips below $98/share. Check my analysis of McCormick for more information about the company.
Hormel Foods Corporation (HRL) produces and markets various meat and food products in the United States and internationally. The company operates through five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other. The company is a dividend king with a 52 year history of annual dividend increases. Over the past decade, it has managed to increase its dividends at a rate of 16.30%/year. Earnings per share grew at an annual rate of 11.30%/year over the past decade to $1.57/share in 2017. The company is expected to earn $1.88/share in 2018. The stock is selling at 19 times forward earnings and yields 2.10%. I see it as an attractive opportunity on dips below $37/share. Check my analysis of Hormel for more information about the company.
WD-40 Company (WDFC) engages in the development and sale of maintenance products, and homecare and cleaning products. The company is a dividend challenger, with a 9 year history of annual dividend increases. Over the past decade, it has managed to increase its dividends at a rate of 7%/year. Earnings per share grew at an annual rate of 7.40%/year over the past decade to $3.72/share in 2017. The company is expected to earn $4.09/share in 2018. I see it as an attractive opportunity on dips below $82/share.The stock is selling at 34.90 times forward earnings and yields 1.50%.
The companies listed above are growing, which is great for future dividend growth. This is also a great characteristic, which will help ensure that the business grows intrinsic value over time, even if inflation and interest rates increase dramatically over the next decade.
Popular Posts
-
Realty Income (O) stock reached an all-time-high of $82.29/share in February 2020, or about five years ago. Today, the stock is selling at $...
-
I review the list of dividend increases every week as part of my monitoring process. Dividend increases provide signaling value to me in my ...
-
As a shareholder, there are two ways to make profits from a stock. The first way is when you sell your stock for a gain, after it has incre...
-
I came upon an interesting story about another dividend investor, this time a famous actor. This is Sean William Scott, who starred in such ...
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me monitor existing positions. I a...
-
I am a big fan of diversification. That doesn't just mean owning a lot of companies however. It means spreading the risk. You need to un...
-
I tend to focus my attention on companies that regularly increase dividends to shareholders . A long history of annual dividend increases is...
-
I review the list of dividend increases every week as part of my monitoring process. Dividend increases provide signaling value to me in my ...
-
I was reviewing my old files and re-visited an interesting paper from Standard & Poor's from a few years ago about the importance of...
-
In terms of a somewhat succint summary, it is good to think in terms of trade-offs in the full picture. The expected returns formula I use r...
