Any Dividend Growth Stocks on Sale?

[Kerim]

So I just posted over in the thread about Alex's portfolio that I'm content to accumulate cash right now as nothing on my watch list of dividend growth stocks looks like much of a value at current prices. The only possible exception I see is TGT, which I bought above $70, right before it tanked to the low $60s. I could accumulate more and lower my price per share.

With taper talk dead for now and the solid recent run up in prices, do you guys see any DG stocks still on sale right now?

[EricL]

I think these names are all at attractive prices right now.

AFL, DE, CVX, MSFT, QCOM, TGH, CSCO, BP, COP, MO, WFC.

Long all but CSCO.

[hendi_alex]

Most are trading near or at the upper range of five year price chart. Valuations might look o.k. but just looking at the price alone makes me very gun shy. Valuations are very fickle things, as earnings have the ability to fall off of a cliff during the unfolding of very uncertain events. This is looking like the 70's and 80's to me, where we are just at the front end. When this relentless government printing press catches up with us, high interest rates are going to put us into an entirely different ball game. According to what I've heard and read that interest rates run over very long cycles. The current trend has been in place since the early 1980's and has reached what is obviously an unsustainable level. I think that the bottom took place in July of 2012, and now we are on the other side of the slope, for very many years to come. The entire investing horizon for many of us will take place under a totally different set of rules. None of us even have a clue what effect 1980's style rates will have on our investment portfolios. IMO now is a time to stay nimble, and to remain poised to feather into the new reality, not to be caught anywhere close to 100% long in any particular investment class. There will come a time when bonds are the place to be, and at that time stocks will be dramatic under performers, both in terms of cash flow and in terms of total return.

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Also, it is good to keep in mind that virtually 100% of the current stock market valuation is artificial, created by Fed manipulation of interest rates. Free money to banks and to industry has inflated profits to the point that [they look too good to be true]. We all know the usual result when things look 'too good to be true'.

[fiveoh]

Wouldn't bonds underperform as interest rates rise? Obviously their rates(cash flow) will go up but their value will be dropping. They outperformed when rates were dropping.

This is part of the reason AFL is my largest holding. Higher interest rates should be great for insurance companies.

Kerim: I agree not much looking too attractive right now.

Edit: I will say I think DLR and SO are attractive since their earnings related drops but you might be catching a falling knife. Both face headwinds in the short term. Oh and AAPL looks good with their great recent earnings report and new products rolling out.(In fact I bought a few shares right before earnings)

[hendi_alex]

I have very limited experience with bonds, but would expect short to medium duration government bonds to fare better than stocks or corporate bonds. I would shy away from anything that doesn't have a mandatory redemption date. As far as entry points, even though bonds will be hurt with rising rates, when there is blood in the streets, bargain prices may be sufficient to compensate for any rising rate risk. In any event, I'll not be jumping in all at once on any of the fixed rate kinds of investments.

One thing for sure, it is not hard to imagine the effect on portfolios that 7%-10% yields on utility stocks, property REITs, MLPs, and BDCs will represent. Also, if rates move back just to more historic norms of say 5% on a medium duration CD, how attractive will 2% or 3% yielding common stocks be? That kind of change would likely have a tremendous impact on demand for many of the DG types of stocks. Of course that will be a time for slow and steady accumulation, won't it?

[fiveoh]

(10-31-2013, 10:35 AM)hendi_alex Wrote: I have very limited experience with bonds, but would expect short to medium duration government bonds to fare better than stocks or corporate bonds. I would shy away from anything that doesn't have a mandatory redemption date. As far as entry points, even though bonds will be hurt with rising rates, when there is blood in the streets, bargain prices may be sufficient to compensate for any rising rate risk. In any event, I'll not be jumping in all at once on any of the fixed rate kinds of investments.

One thing for sure, it is not hard to imagine the effect on portfolios that 7%-10% yields on utility stocks, property REITs, MLPs, and BDCs will represent. Also, if rates move back just to more historic norms of say 5% on a medium duration CD, how attractive will 2% or 3% yielding common stocks be? That kind of change would likely have a tremendous impact on demand for many of the DG types of stocks. Of course that will be a time for slow and steady accumulation, won't it?

If a rotation from DG stocks to bonds/cds happens it will drive their prices down and their yields up higher than 2-3%. It could make for some attractive entry points as long as company fundamentals remain the same.

All of this is speculation and TBH no one knows what will happen. I try not to make my investment decisions based on speculation. I'll continue to look for attractive entry points into div stocks to deploy capital.

[hendi_alex]

To me that is the kicker, determining what is an attractive entry point.

[KenBob]

I don't try to time the market either. As long as there are stocks attractively prices compared to corporate bonds, I will continue to invest in stocks monthly.

The best stock values by my method are in order CRWS, RFIL, ELRC, GCI, MSFT, PETS, CA, CSCO, KLAC, & NPBC. These are primarily smaller capitalization stocks or technology.

[rnsmth]

RCI - Rogers Communication

Morningstar has it at about 80% of fair value. I have a position.

[NilesMike]

(12-15-2013, 09:40 AM)rnsmth Wrote: RCI - Rogers Communication

Morningstar has it at about 80% of fair value. I have a position.

Based on dividend yield, one of my main entry criteria, it may already be 10% above the sale price indicated by outsized yield in late June-early July.

Similar to May 2012