It's always a lot easier and a lot more fun to research and write about great companies every investor wants to own, but that often leads readers to think that any great company will be a great investment. And that's often not the case.
Great companies are found by reading and studying the myriad of financial documents and news releases filed by hundreds of public companies. It's their ability to consistently produce increasing revenues, earnings and dividends over an extended period of time that makes them great. And it is these companies held over an extended period of years that make shareholders extremely wealthy.
But great companies bought at the wrong time makes for a very painful experience. Great companies bought at the wrong time can actually lose money for investors in the short term. In fact shares of companies that are bought when they are overextended can actually lose money for a period of years before they begin to produce wealth.
Today's markets have been going up for a number of years now and some of the great companies listed on the exchanges are over priced and not good investments at their current price. While I wouldn't short any of these stocks (they're great companies with great financial track records), I definitely wouldn't be putting any money into any of them today either.
Below are just three companies that are expected to continue to distribute a very nice growing dividend but they appear to be over priced and unfortunately their stock prices are estimated to fall faster than their dividend will increase over the next year. To me this is a potential catastrophe for most investor's portfolio. And while some dividend growth investors may admire the growing dividends that these companies distribute, the overall loss in owning these stocks is not very appealing to me. As a result, I am currently avoiding the following stocks this year with the intention of re-evaluating their potential again in 2016.
Great companies are found by reading and studying the myriad of financial documents and news releases filed by hundreds of public companies. It's their ability to consistently produce increasing revenues, earnings and dividends over an extended period of time that makes them great. And it is these companies held over an extended period of years that make shareholders extremely wealthy.
But great companies bought at the wrong time makes for a very painful experience. Great companies bought at the wrong time can actually lose money for investors in the short term. In fact shares of companies that are bought when they are overextended can actually lose money for a period of years before they begin to produce wealth.
Today's markets have been going up for a number of years now and some of the great companies listed on the exchanges are over priced and not good investments at their current price. While I wouldn't short any of these stocks (they're great companies with great financial track records), I definitely wouldn't be putting any money into any of them today either.
Below are just three companies that are expected to continue to distribute a very nice growing dividend but they appear to be over priced and unfortunately their stock prices are estimated to fall faster than their dividend will increase over the next year. To me this is a potential catastrophe for most investor's portfolio. And while some dividend growth investors may admire the growing dividends that these companies distribute, the overall loss in owning these stocks is not very appealing to me. As a result, I am currently avoiding the following stocks this year with the intention of re-evaluating their potential again in 2016.
| The Clorox Company Price $109.79 1yr Target $106.82 Analysts 11 1yr Cap Gain -2.73% Dividend $2.96 Yield 2.70% 1yr Est Tot Return -0.04% Market Cap $14.40 Bil Beta 0.39 EPS (ttm) $4.43 Payout Ratio 66.81% EPS next yr $4.84 P/E 24.78 PEG 3.85 Forward P/E 22.70 Debt/Equity 7.17 ROA 12.90% ROE 246.80% ROI 22.80% Sales $5.61 Bil Income $587.00 Mil Profit Margin 10.46% | Dover Corporation Price $77.78 1yr Target $74.69 Analysts 16 1yr Cap Gain -3.97% Dividend $1.60 Yield 2.06% 1yr Est Tot Return -1.92% Market Cap $12.47 Bil Beta 1.48 EPS (ttm) $4.38 Payout Ratio 36.52% EPS next yr $4.70 P/E 17.76 PEG 2.05 Forward P/E 16.55 Debt/Equity 0.79 ROA %13.40 ROE 31.50% ROI 13.40% Sales $7.67 Bil Income $725.30 Mil Profit Margin 9.45% | McCormick & Co. Price $78.78 1yr Target $75.50 Analysts 6 1yr Cap Gain -4.16% Dividend $1.60 Yield 2.03% 1yr Est Tot Return -2.13% Market Cap $10.06 Bil Beta 0.58 EPS (ttm) $3.27 Payout Ratio 48.92% EPS next yr $3.75 P/E 24.09 PEG 3.29 Forward P/E 21/02 Debt/Equity 0.79 ROA 9.70% ROE 23.10% ROI 14.90% Sales $4.26 Bil Income $425.90 Mil Profit Margin 9.97% |
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