Explanation of the P/E Interest Rates Graph – Premium Subscribers:
I never invest in a common stock without a clear expectation of the future returns that it can generate for me. Consequently, I consider this one of the most important steps in my research and due diligence process. Unfortunately, my experience in dealing with investors has led me to conclude that this important step is rarely taken. Most investors possess only a vague idea of what they might earn from investing in a given stock. Many people simply buy a stock hoping that it will go up, and if it pays a dividend, hopeful that the dividend will increase over time. […]
Much of what I write about is related to the importance of valuation in one way or another. I do this, because I am a fervent believer that one of the most important metrics that investors should be considering before investing in a stock is the relative valuation of the shares they are purchasing.
To summarize what I’m saying, if they are interested in investing in a company and discover that the current market valuation is very high, I contend they should either wait or look elsewhere for better valuation. In contrast, if valuation is fair or sound, then I contend they could comfortably go ahead and make the investment. Finally, if the valuation is significantly undervalued, I contend they might consider investing aggressively. […]
As a value investor, I must admit to being very frustrated with the valuations I’m seeing on high-quality blue-chip dividend growth stocks. I have been vigorously searching for fairly valued dividend growth stocks to invest in. I have thoroughly screened and evaluated every company in the S&P Dividend Aristocrats, all three of the CCC (Champions, Contenders and Challengers) lists produced by David Fish, every dividend paying stock on the S&P 500, Fortune 500, NASDAQ 100, S&P 100 Large-cap, Dow Jones Industrial Average, and even the S&P 400 mid-cap universe.
Investing in blue-chip dividend growth stocks such as the Dividend Aristocrats or Champions has become very popular with retirees. This is understandable considering the low interest rate environment we find ourselves in. Traditional fixed income investments do not currently offer enough yield for the retired investor to live on. Consequently, current low interest rates, coupled with the possibility of a steadily increasing level of dividend income have made dividend growth stocks a viable and even attractive alternative.
It is no secret that the stock market in the general sense is trading at a higher valuation than normal. On the other hand, I would argue that it’s far from bubble territory. Regardless, I must admit that finding attractive valuations is getting harder with each passing day. This is especially true for the conservative retired investor looking for safe sources of income in order to fund their golden years. But at the same time, that does not mean that good value or sound investments cannot be found. […]
- Retired investors should appropriately be more concerned about safety and growth of income than about earning high returns.
- Retired investors no longer have the opportunity for pay raises associated with working.
- Most recognized blue-chip dividend paying stocks have been in business for many decades, and in some cases for a century or more.
- Many Dividend Champions have increased their dividends for 40, 50 or more years in a row.
- The notion that blue-chip Dividend Champions are too risky for retired investors is greatly exaggerated.
- The stock market as measured by the S&P 500 continues to hover near an all-time high.
- It is getting harder to find reasonably valued dividend growth stocks to invest in today.
- There are still high-quality attractive blue-chip dividend growth stocks available for current investment.
- 25 Dividend Champion research candidates at or near fair value currently.
Introduction Chuck Carnevale Retired investors seeking high income to live off of during retirement, face greater challenges today than almost ever before. The days of high yields available from bonds and other fixed income vehicles are long gone. Consequently, generating an adequate level of current income on retirement portfolios is difficult to say the least. Read more about Stocks for 2014: High Yield and Fairly Valued Dividend Stocks for High Current Income – Part 5[…]
Introduction Proponents of indexing as the best investment strategy seemed to take great delight in reporting how the vast majority of professionally managed portfolios (mutual funds, separately managed accounts, hedge funds, ETFs, etc.) fail to outperform the S&P 500. Therefore, they argue, it is best not to even try. Investors should simply invest in index Read more about Trying To Beat The Market Is A Fool’s Errand[…]