We all know the secret to successful investing is buying low and selling high. But what does that mean, exactly – do we simply buy companies growing their top lines aggressively in today’s low-growth world?
There are dangers in this approach, which put you at risk for drastic losses.
Smart, cautious investors avoid these dramatic losses by buying high quality, established companies when their earnings are cheap. Even better, they buy stocks that pay dividends – and raise them consistently.
This is why Warren Buffett’s favorite holding time for an investment is “forever.” He wants to buy good quality stocks that will pay him to keep those stocks. This is also the secret to dividend growth investing, which has been a winning strategy for conservative investors for decades.
If you’re investing for retirement, dividend growth investing is your best bet to securing a growing passive income stream in the future. There’s only one problem: there are thousands of dividend paying companies out there, and not all of them are promising investments.
Sure, you could buy an ETF but a fund like this is blindly managed, meaning it will hold a lot of winners AND losers. It will also buy stocks when they are overpriced—a big concern now that the market continues to climb higher and higher.
With a bit of research, we can find dividend growth stocks that haven’t gotten to absurdly high levels in the last year with the broader market—yet they are stocks that also pay a solid and growing dividend.
How do we do this? Our goal should be to find stocks that have consistently grown earnings per share over the last 10 years but haven’t gone up more than 8% in the last year. This is getting harder to do, because returns for stocks are declining.
There are four great stocks that fit the bill and that are worth buying right now.
Here are the results...
Cummins -- Yield: 3.51%
Cummins (NYSE:CMI) employs 55,200 people, generates revenue of $19,110.00 million and has a net income of $1,470.00 million. The current market capitalization stands at $18.28 billion.Cummins’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2,500.00 million. The EBITDA margin is 13.08% (the operating margin is 10.76% and the net profit margin 7.69%).
Financials: The total debt represents 10.83% of Cummins assets and the total debt in relation to the equity amounts to 22.13%. Due to the financial situation, a return on equity of 18.46% was realized by Cummins.
Twelve trailing months earnings per share reached a value of $7.33. Last fiscal year, Cummins paid $3.51 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.96, the P/S ratio is 1.03 and the P/B ratio is finally 2.77. The dividend yield amounts to 3.51%.
Stock Charts:
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| Long-Term Stock Price Chart of Cummins (CMI) |
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| Long-Term Dividend Payment History of Cummins (CMI) |
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| Long-Term Dividend Yield History of Cummins (CMI) |
Public Storage -- Yield: 3.21%
Public Storage (NYSE:PSA) employs 5,300 people, generates revenue of $2,381.70 million and has a net income of $1,317.69 million. The current market capitalization stands at $38.49 billion.Public Storage’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,658.02 million. The EBITDA margin is 69.61% (the operating margin is 51.73% and the net profit margin 55.33%).
Financials: The total debt represents 3.26% of Public Storage assets and the total debt in relation to the equity amounts to 3.48%. Due to the financial situation, a return on equity of 20.50% was realized by Public Storage.
Twelve trailing months earnings per share reached a value of $6.32. Last fiscal year, Public Storage paid $6.50 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 35.49, the P/S ratio is 16.34 and the P/B ratio is finally 7.58. The dividend yield amounts to 3.21%.
Stock Charts:
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| Long-Term Stock Price Chart of Public Storage (PSA) |
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| Long-Term Dividend Payment History of Public Storage (PSA) |
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| Long-Term Dividend Yield History of Public Storage (PSA) |
AvalonBay Communities -- Yield: 3.02%
AvalonBay Communities (NYSE:AVB) employs 2,981 people, generates revenue of $1,856.03 million and has a net income of $741.73 million. The current market capitalization stands at $25.03 billion.AvalonBay Communities’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,171.39 million. The EBITDA margin is 63.11% (the operating margin is 29.54% and the net profit margin 39.96%).
Financials: The total debt represents 38.14% of AvalonBay Communities assets and the total debt in relation to the equity amounts to 65.62%. Due to the financial situation, a return on equity of 7.84% was realized by AvalonBay Communities.
Twelve trailing months earnings per share reached a value of $5.82. Last fiscal year, AvalonBay Communities paid $5.00 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 30.75, the P/S ratio is 13.23 and the P/B ratio is finally 2.49. The dividend yield amounts to 3.02%.
Stock Charts:
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| Long-Term Stock Price Chart of AvalonBay Communities (AVB) |
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| Long-Term Dividend Payment History of AvalonBay Communities (AVB) |
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| Long-Term Dividend Yield History of AvalonBay Communities (AVB) |
Gilead Sciences -- Yield: 2.41%
Gilead Sciences (NASDAQ:GILD) employs 8,000 people, generates revenue of $32,639.00 million and has a net income of $18,106.00 million. The current market capitalization stands at $104.10 billion.Gilead Sciences’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $23,287.00 million. The EBITDA margin is 71.35% (the operating margin is 68.00% and the net profit margin 55.47%).
Financials: The total debt represents 42.65% of Gilead Sciences assets and the total debt in relation to the equity amounts to 119.01%. Due to the financial situation, a return on equity of 106.64% was realized by Gilead Sciences.
Twelve trailing months earnings per share reached a value of $11.35. Last fiscal year, Gilead Sciences paid $1.29 in the form of dividends to shareholders.
Market Valuation: Here are the price ratios of the company: The P/E ratio is 6.86, the P/S ratio is 3.15 and the P/B ratio is finally 5.98. The dividend yield amounts to 2.41%.
Stock Charts:
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| Long-Term Stock Price Chart of Gilead Sciences (GILD) |
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| Long-Term Dividend Payment History of Gilead Sciences (GILD) |
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| Long-Term Dividend Yield History of Gilead Sciences (GILD) |