As a dividend growth investor, I place a high value on valuation (pun intended). There are several reasons for this, but two of the most important are: 1.) Better-valued stocks are less likely to deal you a capital gains disappointment over the long term and 2.) Better-valued stocks are likely to be offering a higher initial yield. The capital gains margin of safety is important even in dividend growth investing.
The higher initial yield point is obvious. Yield and price are inversely related. Yield = Dividend / Price. As price goes down, yield goes up and vice-versa. So buying at a better valuation (lower price) means that you get a higher yield right out of the starting gate. Assuming that your stock never cuts its dividend, your initial yield is the lowest yield on cost that you will ever experience for that purchase. It's locked in. So obviously, all else equal, a higher initial yield is better.
Source: Seeking Alpha
Related Articles:
- 9 High-Rated Dividend Stocks With Above Target Returns
- 9 High-Yielding Utilities With A Growing Dividends
- 3 Styles Of Successful Dividend Investing
- 8 Higher-Yielding Financial Services Stocks With Rising Dividends
- 5 Quality Dividend Stocks To Take The Emotion Out Of Investing
At What Price Should You Buy A Dividend Growth Stock?
Posted by D4L | Sunday, September 08, 2013 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
Long-term investors know that dividends can have a major impact on returns over time. When the stock market is struggling to make gains like...
-
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...
-
We decided to go on a hunt for quality stocks that for one reason or another have been buried, and not just this year. We found three incred...
-
Buy and hold ... forever? It's a tall order, but a select few companies are potentially up to the task. You can build a wealth-compoundi...
-
Does the high interest rate environment we're living in have you feeling down? Here's something to remember that can help you turn t...
-
Dividend stocks can be consistent market-beaters. However, empirical research shows that the best dividend stocks tend to generate better-th...
-
High-quality dividend stocks are always worth loading up on. This is doubly true for companies that offer shareholders an attractive mix of ...
-
Some dividend-paying companies have seen their financials struggle over the years. These companies become vulnerable to dividend cuts which ...
-
Essentially, we’re looking for more Apples – tech firms with a large market cap (at least $1-billion) and the financial means necessary to p...
-
Numerous high-quality dividend opportunities are up for grabs at the moment, which may be appealing to some investors given the uncertainty ...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.