Dividend Growth Stocks
The dividend growth stocks in this video are: Oracle (ORCL), Broadcom (AVGO), NetApp (NTAP), NXP Semiconductors (NXP)
Value investing is not a singular investment concept. In truth, value investing is multifaceted and applies to several strategies that can be implemented. With this in mind, it is important to recognize that value and growth are functionally related. Only being willing to invest in anything when it is fairly valued is prudent. However, value does not automatically suggest a high rate of return. Higher returns come with higher growth. Therefore, when value and growth are combined above average returns at below average risk become possible.
Furthermore, faster growing companies (stocks) are valued more generously than their slower growing counterparts. In other words, it makes sense to pay more for faster growth, but only at reasonable limits. The legendary investor Peter Lynch introduced the concept that fair value for fast-growing stocks exists when the P/E ratio is equal to the company’s earnings growth rate.
The 4 dividend growth stocks covered in this video offer above average growth at reasonable valuations. Above average growth in earnings also leads to above average growth of the dividend income. Therefore, investors can seek lower current yields on faster growing businesses because future yields offer the potential to be much higher. Therefore, when you are investing for the future growth of the business, the income can make a great deal of sense. In recent markets this was hard to find. Nevertheless, the current environment is providing opportunities for GARP. This is an acronym for growth at a reasonable price. In this video I offer growth opportunities at reasonable prices in the information technology sector.
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Disclosure: Long ORCL, AVGO at the time of writing.
Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.