My 3 Cheap Dividend Champions with Double-Digit Earnings Growth

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Feb 05, 2013
Some of us like dividend growth and want to invest money into the best long-term growth picks. I also like to make money by holding a passive stake of a well-managed company and see how it creates more and more value over time.

A great source for high-quality stocks is Dividend Champions. These are stocks with a dividend growth history of 25 or more consecutive years. Companies numbering 105 have created such a fantastic trust relationship with their shareholders.

Today I want to highlight the best growth picks with acceptable price ratios. Sure, cheap stocks with high growth don’t exist, especially when you are looking for low-risk stocks. Something must be wrong. But see this screening result as an informative tool with which you can adjust your own asset allocation and ask yourself if your current holdings with less growth and higher P/Es are worthy to buy or hold.

Twelve Dividend Champions fulfilled my criteria of a low forward P/E (less than 15) at double-digit earnings per share forecast for the next five years. The best yielding pick is Walgreens, the leading drug store operator. Eleven of the results are currently recommended to buy. See the table linked and leave a comment below which of the results you would buy or sell.

Here are my favorite stocks:

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Walgreen (WAG) has a market capitalization of $37.81 billion. The company employs 171,000 people, generates revenue of $71.633 billion and has a net income of $2.127 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $4.630 billion. The EBITDA margin is 6.46 percent (the operating margin is 4.84 percent and the net profit margin 2.97 percent).

Financial Analysis: The total debt represents 16.11 percent of the company’s assets and the total debt in relation to the equity amounts to 29.57 percent. Due to the financial situation, a return on equity of 12.86 percent was realized. Twelve trailing months earnings per share reached a value of $2.23. Last fiscal year, the company paid $0.95 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.94, the P/S ratio is 0.53 and the P/B ratio is finally 2.07. The dividend yield amounts to 2.75 percent and the beta ratio has a value of 1.02.

Target Corporation (TGT) has a market capitalization of $39.60 billion. The company employs 365,000 people, generates revenue of $69.865 billion and has a net income of $2.929 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $7.453 billion. The EBITDA margin is 10.67 percent (the operating margin is 6.38 percent and the net profit margin 4.19 percent).

Financial Analysis: The total debt represents 38.73 percent of the company’s assets and the total debt in relation to the equity amounts to 114.14 percent. Due to the financial situation, a return on equity of 18.71 percent was realized. Twelve trailing months earnings per share reached a value of $4.51. Last fiscal year, the company paid $1.15 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 13.48, the P/S ratio is 0.57 and the P/B ratio is finally 2.57. The dividend yield amounts to 2.37 percent and the beta ratio has a value of 0.92.

Dover Corporation (DOV) has a market capitalization of $12.52 billion. The company employs 34,000 people, generates revenue of $8.104 billion and has a net income of $833.12 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1.622 billion. The EBITDA margin is 20.03 percent (the operating margin is 15.61 percent and the net profit margin 10.28 percent).

Financial Analysis: The total debt represents 26.81 percent of the company’s assets and the total debt in relation to the equity amounts to 56.92 percent. Due to the financial situation, a return on equity of 16.92 percent was realized. Twelve trailing months earnings per share reached a value of $4.47. Last fiscal year, the company paid $1.33 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.63, the P/S ratio is 1.54 and the P/B ratio is finally 2.55. The dividend yield amounts to 2.00 percent and the beta ratio has a value of 1.38.

Take a closer look at the full list of Cheap Dividend Champions. The average P/E ratio amounts to 16.01 and forward P/E ratio is 12.78. The dividend yield has a value of 1.74 percent. Price to book ratio is 2.99 and price to sales ratio 1.57. The operating margin amounts to 12.47 percent and the beta ratio is 1.09. Stocks from the list have an average debt to equity ratio of 0.51.

Related stock ticker symbols:

WAG, VFC, TGT, BRC, MHP, DOV, PNR, FDO, EGN, CSL, BEN, SCL

Selected Articles:

· 20 Most Recommended Dividend Champions

· 17 Of The Safest Dividend Champions With Acceptable P/E Ratios

· 12 Dividend Champions With Lowest Debt

· The 20 Best Yielding Dividend Champions

* Dividend Champions with strongest growth and cheap forward P/E ratios originally published at long-term-investments.blogspot.com.