A lot of these types of companies are pretty well known by most investors. As a consequence they generally have a lot of followers and they're often overbought or overpriced. That doesn't make them bad investments, just expensive investments. And while I'd love to own those companies simply because of their consistent dividend growth, I'll only consider them when they're inexpensive to buy.
Some investors tend to look at a stock's P/E ratio and some investors look at a stock's PEG (both can be found below) when they're trying to determine if a stock is cheap. I've found both methods to be excellent selection techniques, but both methods are looking backwards. There's one more method that I often use in addition to those two which is a method that looks at future estimates, and that's the difference between the current selling price and the analyst's estimated one year price target for the stock.
The following chart contains a list of a dozen companies that have excellent double digit dividend growth rates as well as one year estimated capital gains expectations of ten percent or better. Together I calculate a one year estimated return on invested capital for each stock. This result will give me an estimate of my increase in wealth over the next 12 months. It's a good estimate to know!
In this article I'll look at the second half dozen companies on the list above. For information on the first half dozen please read the previous article "A Half Dozen Great Ideas". For each company I'll lay out a company description, some basic fundamentals and some convenient links. Hopefully this information will assist other dividend growth investors in deciding if any of these companies fits their individual investing strategy.
22 March 2015 Price $82.68 1yr Target $95.63 Analysts 16 1yr Cap Gain 15.66% Dividend $2.32 Yield 2.80% 1yr Est Tot Return 18.46% 3yr DivGR 14.23% 5yr DivGR 25.39% P/E 29.53 PEG 2.68 | Market Cap $37.54 Bil Beta 1.60 EPS (ttm) $2.80 Payout Ratio 82.85% EPS next yr $10.32 Forward P/E 8.01 Debt/Equity 0.71 ROA 0.20% ROE 3.40% ROI 2.00% Sales $54.16 Bil Income $1.36 Bil Profit Margin 2.51% |
22 March 2015 Price $59.49 1yr Target $65.60 Analysts 10 1yr Cap Gain 10.27% Dividend $1.60 Yield 2.68% 1yr Est Tot Return 12.95% 3yr DivGR 29.47% 5yr DivGR 21.29% P/E 12.58 PEG 1.32 | Market Cap $4.61 Bil Beta 1.73 EPS (ttm) $4.73 Payout Ratio 33.82% EPS next yr $5.50 Forward P/E 10.81 Debt/Equity 0.57 ROA 4.80% ROE 9.20% ROI 7.00% Sales $10.45 Bil Income $371.50 Mil Profit Margin 3.55% |
22 March 2015 Price $117.45 1yr Target $131.79 Analysts 28 1yr Cap Gain 12.20% Dividend $2.20 Yield 1.87% 1yr Est Tot Return 14.07% 3yr DivGR 25.48% 5yr DivGR 28.74% P/E 20.43 PEG 1.49 | Market Cap $103.51 Bil Beta 0.92 EPS (ttm) $5.75 Payout Ratio 38.26% EPS next yr $7.47 Forward P/E 15.72 Debt/Equity 0.54 ROA 10.00% ROE 24.20% ROI 17.20% Sales $23.99 Bil Income $5.18 Bil Profit Margin 21.59% |
22 March 2015 Price $34.02 1yr Target $37.88 Analysts 17 1yr Cap Gain 11.34% Dividend $0.66 Yield 1.94% 1yr Est Tot Return 13.28% 3yr DivGR 16,77% 5yr DivGR 14.86% P/E 21.53 PEG 3.59 | Market Cap $8.55 Bil Beta 1.38 EPS (ttm) $1.58 Payout Ratio 41.77% EPS next yr $3.94 Forward P/E 8.63 Debt/Equity 0.33 ROA 0.70% ROE 4.60% ROI 5.10% Sales $10.52 Bil Income $413.40 Mil Profit Margin 4.02% |
22 March 2015 Price $61.55 1yr Target $69.23 Analysts 13 1yr Cap Gain 12.47% Dividend $1.60 Yield 2.60% 1yr Est Tot Return 15.07% 3yr DivGR 46.15% 5yr DivGR 29.45% P/E 8.82 PEG 1.82 | Market Cap $31.69 Bil Beta 1.91 EPS (ttm) $6.98 Payout Ratio 22.92% EPS next yr $5.95 Forward P/E 10.35 Debt/Equity 0.31 ROA 7.70% ROE 17.8% ROI 15.20% Sales $130.84 Bil Income $3.69 Bil Profit Margin 2.82% |
22 March 2015 Price $48.28 1yr Target $54.50 Analysts 14 1yr Cap Gain 12.88% Dividend $2.32 Yield 4.80% 1yr Est Tot Return 17.68% 3yr DivGR 44.43% 5yr DivGR 40.19% P/E 17.06 PEG 0.95 | Market Cap $36.11 Bil Beta 1.37 EPS (ttm) $2.83 Payout Ratio 81.97% EPS next yr $1.31 Forward P/E 36.77 Debt/Equity 2.47 ROA 5.20% ROE 27.8% ROI 1.10% Sales $7.64 Bil Income $2.11 Bil Profit Margin 27.61% |