Dividends, the share of their revenues that companies pay to their shareholders, are a big deal:
Over the past century, they’ve accounted for roughly half of total returns earned by stock investors. And if stock returns flatten out over the next few years, as many economists anticipate, dividends will matter even more in driving growth for investors.
But these days, it’s unusually difficult to find dividend-paying stocks that look like good buys.
Stock valuations in the category are lofty after years of outperforming the broader market. The forward price/earnings ratio of the top 25% of S&P 500 stocks by dividend yield is 17, vs. a 36-year average of 12.
And the dividends themselves can seem relatively stingy: The number of companies increasing their dividend has been shrinking, and the number of decreases is accelerating. And there’s also the danger that if interest rates rise, as is expected, investors could flee the sector and send stocks careening downward.
With those in mind, we asked ourself what could be the best investment ideas for 2017. Here are 11 stocks where the experts see opportunity and safety.
These are the results...
Berkshire Hathaway CEO Warren Buffett built his $60 billion-plus fortune by buying high-quality businesses at discounts. The Oracle of Omaha summed up his love for bargains with this quote: "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down."
Focus on high quality and buy it at cheap prices, that's the key to get rich. One way to find cheap high-quality dividend paying stocks is to search the lists of long-term dividend growth stocks by market price multipes.
Today I will share a few of the longest dividend growers with really cheap price levels, measured by a low forward P/E.
Dividend Aristocrats are those unique kinds of stocks that rarely go on sale. For more than 25 years, these companies have been churning out ever-increasing dividend payments that show they are more than capable of handling the ups and downs of the economy -- or their respective industry cycles.
Every once in a while, though, the market forgets the long-term earnings power of these companies, and their stocks become good bargains.
Here are the cheapest Dividend Aristocrats now...
The tobacco industry has delivered solid returns over the long run despite facing plenty of challenges along the way.
Between litigation, regulation, taxation, health concerns, and changing consumer preferences, the world's largest producers and marketers of cigarettes and other tobacco products have had to change gears in order to adapt to the new environment in the industry.
However, many tobacco stocks have outperformed the S&P 500 over the past year due to the popularity of high-yielding dividend stocks in a low interest rate environment.
Meanwhile, the profitability of many tobacco companies improved as they used higher prices, cost cutting measures, and buybacks to offset weaker sales. Therefore, investors should be familiar with three of the top names in the industry.
Attached I've compiled some of the best names from the industry. For sure, there is not much competition. Market consolidatioin and strong market entry barriers are have created such a low competitor branch.
Here is my compilation of the best tobacco stocks...
Stock buybacks, also known as share repurchases, occur when companies buy shares of their own stock to reduce the number of shares outstanding.
Stock buybacks can be used to offset stock issued to employees as compensation, or to improve earnings per share by reducing the number of shares by which earnings are divided. Sometimes, companies repurchase stock simply because they believe their shares are undervalued.
Buyback proponents say they reward these long-term shareholders by effectively increasing their ownership of the company, and they help boost the value of a stock by raising the company's earnings per share. And when there's no other compelling use for a company's cash, this is a better alternative than risky spending on takeovers or other big investments.
But the other view on buybacks is that — like the restaurant removing tables — their only impact is in making things look better than they seem. Yes, earnings per share rise, but that's not because earnings are growing. Even their fiercest proponents — somewhat hypocritically — say they're overused.
With that in mind, I've compiled all stocks with a billion dollar buyback announcement during the year 2016. In total, there are exactly 82 companies with such a big share buyback volume.
Here are the results...
When you purchase individual stocks, risk is inherent. Sometimes bad things happen to good stocks. Eventually, every investor will hold a stock that falls out of favor and endures a double-digit decline. Understanding this from the onset makes it easier to deal with. To minimize the risk of significant declines, your core portfolio should focus on blue-chip dividend growth stocks.
Listed below are companies that have recently elected to raise their payout and yield by increasing their cash dividends to shareholders. In total, there were 28 companies with higher dividend payments.
Each month, I’ll be sharing with you, for free, the top dividend growth stocks for the US market. You can find them in the list below:
