We’re all fans of dividends now. Record low interest rates are here to stay and as a result, many investors have jumped on the dividend bandwagon. I don’t blame them, companies that have predictable revenue streams, great balance sheets and a history of rising dividend payments should be the cornerstone of any portfolio. But many of these names are clearly overvalued. North American REIT’s, pipelines, utilities, consumer discretionary stocks and even some telcos are trading at record valuations and well above the overall market P/E ratio. Investors should use caution buying stocks in these sectors. Sure you’ll get the dividend but you could be in for a capital loss if the market starts to reward riskier companies.
Instead of chasing yield, it’s time to look for growth at a cheap price. We think the winning formula is to buy companies with a dividend yield of at least 1.5%, a P/E ratio of 12 times this year’s earnings expectations or less, forward earnings growth of at least 10% for 2012 and a track record of raising dividends over time. Three names that fit this bill are Teva Pharmaceutical, Home Capital Group and CSX Corporation.
Source: Forex Pros
Related Articles:
- 7 Dividend Stocks To Build Your Future Security
- How To Know When To Sell A Dividend Stock
- 7 Dividend Stocks Delivering The Secret To Successful Investing
- 7 High-Yield Dividend Achievers With 25 Years of Increases
- There's Gold In Them Thar Dividend Stocks
Dividend Stocks With Rising Earnings/Low Valuations Better
Posted by D4L | Tuesday, March 06, 2012 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
GameStop (NYSE:GME) lost about 40% of its market value over the past three years, as rising digital downloads and declining mall traffic thr...
-
In a capitalistic society, opportunities to generate (mostly) passive income are all around us. Dividend growth investing is one of the most...
-
These elite income producers have rallied this year. Their brilliance at producing passive income seems to have caught the market's eye ...
-
Investors buy dividend stocks for a few reasons. For one, they provide income via dividends that act as a bonus on top of capital appreciati...
-
Buying dividend stocks can be tricky. Oftentimes, stocks that pay exorbitantly high dividends have underlying financial problems, and their ...
-
If you are looking for reliable dividends, these three Dividend Kings should be right up your alley. Dividends are paid at the discretion of...
-
While optimism in the broader market remains robust – particularly for hyped-up sectors like technology – investors may still want to consid...
-
Since the market highs in July, stocks have been under considerable pressure. Indeed, 10-year Treasury yields are at the highest level since...
-
A strong dividend investing strategy may be to focus on high-quality names that score well on several dividend-related metrics. In other wor...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.