Dividend Aristocrats On Sale

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• Hi, My name is Aaron and Im with Dividend Stocks
  Research, today were reviewing our recently
  published article

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Dividend Aristocrats On Sale
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After all these years, Im still infatuated. And
I still cant figure out why back in 1963, only
21,513 Corvette Sting Rays came off the line.
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Devoted Corvette guys dont always gush about the
63 the way I figure they might, but thats their
call, and theyre probably thinking more about
mechanics than styling. But that divided rear
window was styling genius.
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Today, you can easily pay more than 100K for a
63 Corvette. The most you could pay for one,
fully loaded, in 1963, was 6,200. Base price
was 4,257. Talk about premium pricing.
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But when it comes to cars, you dont have to look
at classics and collectibles to see premium
pricing at work. After all, there seem to be
plenty of people happy to shell out a few extra
bucks for a Lincoln Navigator, built on the Ford
Expedition platform.
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So when you cough up a premium for the best
dividend paying stocks, theres usually something
more at stake than leather upholstery and a
subwoofer.
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Youre paying for safety, and this kind of safety
comes in the form of a long-term track record of
paying growing dividends.
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This is what makes the SP 500 Dividend
Aristocrats such appealing stocks. Theyre big
companies that have been steadily paying out
dividends that grow for the past 25 years.
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Can You Find the Dividend Aristocrats On Sale?
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Not often. The P/E Ratio, (Price Earnings
Ratio), which measures how much you pay for
earnings, is usually steep. Youll typically pay
a higher P/E for the Aristocrats than for the
overall market because of the safety factor.
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Track records of performance come with a price.
But not always, and this is why now and then you
might turn up one of the Dividend Aristocrats on
sale.
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Sometimes, youll be able to find a fairly high
yield at a low P/E. When this happens, there are
usually a couple of different things going on.
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First, the stock price has taken a hit. Investor
sentiment has soured, and the stock has lost its
fan base. There could be worries about future
revenues, and the companys ability to keep
profits strong enough to cover the dividend.
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This is what weve seen with two SP 500 Dividend
Aristocrats in the energy business this year,
Exxon Mobil XOM and Chevron CVX.
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Theres nothing to say these two companies
couldnt cut the dividend, and be cut from the
lineup of Aristocrats. They wouldnt be the
first good companies to suffer this fate.
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GE GE, IBM IBM, all kinds of solid companies
have been cut after shanking a dividend payment.
So the challenge is to pick up an Aristocrat on
sale that isnt about to be thrown off the list,
and this is where you want to do some digging.
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Look Into the Future of The Dividend Aristocrats
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You are investing in income. You dont want to
chase high yield, but you do want to make sure
youre not paying too much for a low yield.
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An example of that would be Cintas CTAS. The
yield is 1 and the P/E ratio is 23. Another
example... PPG Industries. The yield is 2.4 and
the P/E ratio is 28.
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Those are some steep prices. When I took a look
at the Aristocrats the other day, 15 of them were
paying a yield of more than 3. This got me
wondering...
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Are any of these top dividend stocks on sale?
Am I getting lured into making a bad deal because
of a good looking yield, or is there an
opportunity here? Well, these 15 Aristocrats
bring to mind something Warren Buffet wrote...
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Be fearful when others are greedy and greedy when
others are fearful. It seems obvious that people
are fearful when it comes to energy stocks, and
just about wherever you turn, theres an energy
stock that ignites fear.
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Two Troubled Dividend Aristocrats On Sale
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A lot of people are worried about the future of
two solid companies right now, both Dividend
Aristocrats, and both good dividend stocks. One
is McDonalds MCD and the other is Procter
Gamble PG.
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Investors are worried about the sluggish sales at
the golden arches, and what the new CEO will do
to light up revenues. There are all sorts of
rumors and uncertainties.
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One of the more intriguing McDonalds rumors Ive
heard.... the company might actually spin off a
new stock, a Real Estate Invest Trust (REIT) that
is made up of the companys real estate assets.
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Who knows if this might happen... what we do know
is that same-store sales are slipping. Is
McDonaldsone of the good dividend stocks to pick
up right now? Probably not, even though the
yield is over 3. Its still a little rich for
my blood.
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What about Procter Gamble? Pretty much the
same story... definitely a contender to be one of
the best dividend stocks, but too expensive.
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It started the year at 90.44 and now its at
79.91, but the P/E is high at 25. Id let
Procter slide a bit before jumping in. The past
month its been in the high 70s. Maybe you take
a look if it gets down below 75.
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Its a terrific company and its created fortunes
for dividend investors, but this year its been
stung - really stung - by the strong U.S. dollar.
Its not selling as much outside U.S. markets.
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So... Youve got these Dividend Aristocrats on
sale. McDonalds, which traded at 93.26 and PG
at 90.44.
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And Im not fired up about either one... before
the end of the summer theyll probably be
cheaper. So what gives? Both terrific stocks to
own, but right now, both still a bit too
expensive.
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And if you pushed me to show you one of the
Dividend Aristocrats hanging on the sale rack
that you should pick up right now, heres what
Id say. Never buy a stock just because its hit
a 52-week low or because its come off its recent
highs.
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Compare the P/E ratio of the stock to its peers
other companies in the same business and to the
market as a whole. Take a look at the dividend
payout ratio, which is typically fine for the
Dividend Aristocrats.
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And dont sour on good companies that run into
some headwinds.
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The Dividend Aristocrat Knocked To The Canvas
That Got Back Up
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Remember what terrible shape Target Corp. TGT
was in not too long ago? All the bad publicity
about the 40 million credit cards compromised by
hackers in late 2013?
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And then, how Target bungled its expansion into
Canada and had to bail out?
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No wonder Target dumped CEO Gregg Steinhafel.
And no wonder investors beat up the stock, which
was at 72 before the credit card hack and
plunged to to 55 less than a year later.
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Well... Targets back. The dividend was
protected, and has now been on a 47-year growth
run. This summer, the stock is trading at all
time highs. Take a look at whats happened...
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So when you see a good company like Target take a
hit, dont bail early, dont bail on a solid
stock when it hits a rough stretch. Do you think
McDonalds or Procter Gamble are about to
vanish? No way.
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Dont listen to all the noise, and dont
overreact to bad news. (Or overreact to good
news.) Put the performance of these companies in
perspective and youll find some Dividend
Aristocrats on sale.
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And who knows? They could be a better deal than
a 63 Vette.
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