With many stocks close to all-time-highs, it is getting increasingly difficult to find places where to park new cash. Luckily, the companies below not only fit the characteristics of dividend growth stocks, but they are also attractively priced. It is crucial to acquire solid companies only when they are fairly priced Putting new money to work at overvalued prices could lead to mediocre results for the first five – ten years of your investment. The companies boosting dividends include:
Johnson & Johnson (JNJ), together with its subsidiaries, engages in the research and development, manufacture, and sale of various products in the health care field worldwide. This dividend king raised quarterly distributions by 8.20% to 66 cents/share. This marked the 51st consecutive annual dividend increase for the company. Despite the recent run, the company is attractively priced at 15.70 times forward earnings and a yield of 3.10%. The dividend is adequately covered, and has been raised by 11.70%/year over the past decade. I added to my position in Johnson & Johnson in April. Check my analysis of Johnson & Johnson.
Chevron Corporation (CVX), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. This dividend champion raised quarterly distributions by 11.10% to $1/share. This marked the 26th consecutive annual dividend increase for Chevron. The stock is trading at 9.70 times forward earnings, has an adequately covered dividend and yields 3.40%. The company has managed to boost annual distributions by 9.60%/year over the past decade. I recently added to my position in Chevron in April. Check my analysis of Chevron.
Exxon Mobil Corporation (XOM) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products. This dividend champion raised quarterly distributions by 10.50% to 63 cents/share. This marked the 31st consecutive annual dividend increase for Exxon. Over the past decade, Exxon has managed to boost annual dividends by 9%/year. The stock trades at 11 times forward earnings, yields 2.90% and has a sustainable dividend coverage. Back in 2012 I replaced Exxon Mobil with ConocoPhillips (COP), because Exxon seemed stingier than its peers with dividend payments. Instead, the company has been one of the most active share repurchases in the US for several years in a row.
Ameriprise Financial, Inc. (AMP), through its subsidiaries, provides a range of financial products and services in the United States and internationally. The company boosted quarterly dividends by 15.60% to 52 cents/share. This was the second dividend increase over the past year, bringing the total increase to 48.605 since the second quarter of 2012. The company has only raised distributions for 7 years, and has been public since 2005. It was spun off from American Express (AXP) in 2005, and since then it has managed to boost earnings from $2.32/share to $4.70/share by 2012. Forward earnings expectations are for $6.60/share in 2013 and $7.26/share by 2014, which means that Ameriprise Financial would have no problem becoming a dividend achiever by 2015. I like the fact that the company is attractively valued at 11.10 times forward earnings, yields 2.80% and has a sustainable dividend coverage. I plan on analyzing the stock before committing any funds to it.
These four stocks are a testament that income investors can find quality companies at reasonable valuations even in this overheated market. By looking through the list of dividend increases, I was once again able to uncover a hidden dividend gem, Ameriprise Financial, which has the potential to pay dividends in my portfolio for the next 20 years.
Full Disclosure: Long JNJ, CVX, COP
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- How to invest when the market is at all time highs?
- The Dividend Kings List Keeps Expanding
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