Getting a discount of 10%, 20% or even more is awesome. When it is on a big ticket item like a automobile, there are a lot of dollars to be saved and people have been known to drive great distances to receive the discount. Everyone loves a sale!
Well, maybe not everyone. When stocks go on sale it seems to depress a large number of market participants. However, for those of us that like buying stocks at a discount, a market pullback provides us a little relief.
My fair value model was constructed back in 2007 at a time many stocks had already fell from grace. It was designed to focus on only the best companies. I took an extremely conservative stance with my model. Ultimately, determining fair value requires the investor to accurately forecast free cash flow, dividend growth rates and other metrics on a forward looking basis, which is no simple task.
This week week, I screened my dividend growth stocks database for select stocks trading at a double-digit discount. The results are presented below:
McDonald's Corporation (MCD) is the largest fast-food restaurant company in the world, with about 33,700 restaurants in 119 countries. The company has paid a cash dividend to shareholders every year since 1969 and has increased its dividend payments for 40 consecutive years.
Yield: 3.1% | Discount: 11.3%
TECO Energy Inc. (TE) owns Tampa Electric Co., which serves the Tampa Bay region in west central Florida and has significant diversified operations related to its core business. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 36 consecutive years.
Yield: 5.1% | Discount: 15.8%
Exxon Mobil Corp. (XOM) , formed through the merger of Exxon and Mobil in late 1999, is the world's largest publicly owned integrated oil company. The company has paid a cash dividend to shareholders every year since 1882 and has increased its dividend payments for 30 consecutive years.
Yield: 2.6% | Discount: 16.1%
Royal Gold, Inc. (RGLD) acquires, manages precious metals royalties; seeks to acquire existing royalties or to finance projects in/near production in exchange for royalty interests. The company has paid a cash dividend to shareholders every year since 2000 and has increased its dividend payments for 12 consecutive years.
Yield: 1.2% | Discount: 17.8%
Aflac Incorporated (AFL) provides supplemental health and life insurance in Japan (80% of earnings) and the U.S. Products are marketed at work sites and help fill gaps in primary coverage. The company has paid a cash dividend to shareholders every year since 1973 and has increased its dividend payments for 30 consecutive years.
Yield: 2.8% | Discount: 18.4%
Darden Restaurant Inc. (DRI) operates the Red Lobster, Olive Garden, Bahama Breeze, Seasons 52, LongHorn Steakhouse and Capital Grille chains. The company has paid a cash dividend to shareholders every year since 1995 and has increased its dividend payments for 8 consecutive years.
Yield: 4.2% | Discount: 20.1%
ConocoPhillips Co. (COP) is one of the largest independent oil and gas exploration and production (E&P) companies in the world, COP spun off its downstream assets in May 2012. The company has paid a cash dividend to shareholders every year since 1934 and has increased its dividend payments for 12 consecutive years.
Yield: 4.5% | Discount: 22.1%
Southside Bancshares Inc. (SBSI) owns Southside Bank, which primarily provides financial services to individuals, businesses, municipal entities, and non-profit organizations. The company has paid a cash dividend to shareholders every year since 1969 and has increased its dividend payments for 17 consecutive years.
Yield: 3.7% | Discount: 23.7%
John Wiley & Sons (JW-A) produces print and electronic products, providing content and solutions to customers worldwide. The company has paid a cash dividend to shareholders every year since 1982 and has increased its dividend payments for 19 consecutive years.
Yield: 1.8% | Discount: 31.6%
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for low yields and/or poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 220+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long MCD, AFL, COP in my Dividend Growth Portfolio and TE in my High-Yield Portfolio. See a list of all my Dividend Growth holdings here.
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