Value Investing News

It seems that every financial adviser or financial publication is proclaiming that you should own dividend stocks. Each are eschewing the virtues of dividend stocks from their own perspective. To that I have two questions:

Who wouldn't like to earn a safe 15% on their original investment? Normally double-digit returns are the fodder of con artists or associated with extraordinarily risky investments. In either of these cases, the person is usually left holding despair in one hand and an empty wallet in the other. However, I have discovered that you can actually enjoy high yields with minimal risk...

Growth or yield? In a perfect world, income investors would want both from their investments and are not interested in investments that offer neither. This is where the common ground ends, and the debate begins. Without the benefit of a perfect world, we are left with the middle ground which is a balancing act between growth and yield.

Most CEOs give lip-service to their commitment to shareholders, but what happens when times are hard. When the economy turns down and the future looks bleak, will the company hoard cash and stop its dividend or put action behind its words? The key to successfully selecting dividend growth stocks is the ability to identify companies that will not only maintain but grow their dividend.

A declining market is what value and dividend investors long for. There have been times in the past where I struggled to find stocks worthy of purchasing. Now, the challenge is to pick the best available stocks that will maximize my chances of future success. When looking for value priced stocks, the Price-To-Book (P/B) ratio is one that I like to focus on.

Once a company reaches a certain size, significant growth is difficult to sustain. Knowing this, savvy investors looking for growth will turn to small-cap stocks. This week week, I screened my dividend growth stocks database for Small- and Mid-Cap stocks with a yield and dividend growth at or above 4%. The results are presented below:

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Vectren Corp. is an energy holding company that delivers gas and/or electricity to more than one million utility customers in Indiana and Ohio, and offers other energy related products and services. Linked here is a detailed analysis and commentary.

This week week, I screened my dividend growth stocks database for stocks that will be yielding 10% in 10 years at current yield and dividend growth rate (based on Monday's close). The results are presented below:

If we were able to design the perfect dividend stock it would be one that is both high-yield and provide a high dividend growth rate. Its share price would appreciate ratable with its increasing dividend. All of this would be driven by increasing earnings and cash flow.

A person’s character is determined by how they behave when no one else is looking and during difficult times. In much the same way, we can learn a lot about a company’s management when they face adversity. One metric I look at closely during a downturn is cash generation relative to earnings.