Welcome back to this series on the market and finding undervalued dividend growth stocks to research.
Market Commentary:
The tides are turning, or are we just exhausted?
After 7-8 months of nearly constant declines, the market has been on a strong run lately. Are the tides turning in the market and economy, or are we just exhausted with the negative? Are we ready to just forget about the “wall of worry” and move on?
Earnings season so far has produced mostly positive signaling, the unemployment rate is now at 3.5%, gas prices have come down significantly, as well as mortgage rates.
The standard gauges of sentiment are getting stronger, with the Fear and Greed Index now at neutral, where it was at extreme fear only a few months back.
https://www.cnn.com/markets/fear-and-greed
The VIX, a gauge of volatility in the market, is down 23% in the past month, signaling there is less uncertainty.
Finally, the most recent Investor Sentiment survey shows higher Bullish and lower Bearish votes, indicating a shift to the positive.
https://www.aaii.com/sentimentsurvey
All this data suggests that market participants are feeling good about putting money to work and that the general economy is getting better.
Contrast these points to a still high inflation figure, rising interest rates, and supply chain and labor shortages and it is somewhat hard to paint the rosy picture after all. We are in a technical recession (2 quarters of negative GDP growth), although it is not official until the NBER confirms it, and there are the beginnings of layoff announcements and job postings being removed.
Maybe the market is just in a good summer mood and the Fall will bring in more worries, or maybe the tides have indeed shifted and this is the beginning of another bull market.
That is what is so intriguing about the market, so many inputs, possibilities, differing opinions and facts. Through it all, no matter which way the tides turn, the best course of action is to stay invested, continue to buy, and hold for the long term through any ebbs and flows that we might encounter.
Market Results:
The market was relatively flat this week. 6 sectors finished in the green and 5 in the red. Energy was the biggest loser of the week, followed by Real Estate. The best performing sectors were Technology and Communication Services. Energy was a change from the past year which may indicate a change in investors mindset on the energy prices and demand now that the summer travel season is coming to an end.
Broadening the view, this week was a mix of results as well, with the Dow down 0.13%, the S&P 500 was up 0.36%, and the Nasdaq was up 2.15%. The broad indices are now down 9.73%, 13.03%, and 19.10% year to date, respectively. Interestingly, this is the first week in many months that all three indexes are not in bear market territory (down 20% from the recent high).
Dividend News This Coming Week:
Earnings season is wrapping up but there are still some notable dividend growth companies reporting, including:
Monday:
Dominion Energy (D), Tanger Factory Outlets (SKT)
Tuesday:
H&R Block (HRB), Sysco (SYY)
Wednesday:
Manulife Financial (MFC), Wendy’s (WEN)
Thursday:
Brookfield Asset Management (BAM), Cardinal Health (CAH), Flower Foods (FLO), Utz Brands (UTZ)
Friday:
Broadridge Financial (BR)
As earnings season wraps up, it will give investors a chance to further analyze the company’s results and determine what is coming next.
Upcoming Ex-Dividend Dates. There are a lot of great companies going Ex-Dividend this week. Note: you must own the stock before the ex-dividend date to receive the payment.
| Upcoming Ex-Dividend Dates | |||||
| Company | Amount | Yield | Ex-Dividend Date | Record Date | Payable Date |
| AA Alcoa | $0.10 | 0.85% | 8/8/2022 | 8/9/2022 | 8/25/2022 |
| AWK American Water Works | $0.66 | 1.71% | 8/8/2022 | 8/9/2022 | 9/1/2022 |
| INVH Invitation Homes | $0.22 | 2.41% | 8/8/2022 | 8/9/2022 | 8/26/2022 |
| MET MetLife | $0.50 | 3.22% | 8/8/2022 | 8/9/2022 | 9/14/2022 |
| AEP American Electric Power | $0.78 | 3.33% | 8/9/2022 | 8/10/2022 | 9/9/2022 |
| BLMN Bloomin’ Brands | $0.14 | 2.75% | 8/9/2022 | 8/10/2022 | 8/24/2022 |
| BRO Brown & Brown | $0.10 | 0.65% | 8/9/2022 | 8/10/2022 | 8/17/2022 |
| STZ Constellation Brands | $0.80 | 1.31% | 8/9/2022 | 8/10/2022 | 8/24/2022 |
| STZ.B Constellation Brands | $0.72 | 1.00% | 8/9/2022 | 8/10/2022 | 8/24/2022 |
| IBM International Business Machines | $1.65 | 5.13% | 8/9/2022 | 8/10/2022 | 9/10/2022 |
| PPG PPG Industries | $0.62 | 2.05% | 8/9/2022 | 8/10/2022 | 9/10/2022 |
| ROL Rollins | $0.10 | 1.10% | 8/9/2022 | 8/10/2022 | 9/9/2022 |
| SON Sonoco Products | $0.49 | 3.20% | 8/9/2022 | 8/10/2022 | 9/9/2022 |
| CAKE Cheesecake Factory | $0.27 | 3.70% | 8/9/2022 | 8/10/2022 | 8/23/2022 |
| DEA Easterly Government Properties | $0.27 | 5.30% | 8/10/2022 | 8/11/2022 | 8/23/2022 |
| ETR Entergy | $1.01 | 3.51% | 8/10/2022 | 8/11/2022 | 9/1/2022 |
| F Ford Motor | $0.15 | 4.30% | 8/10/2022 | 8/11/2022 | 9/1/2022 |
| PAYX Paychex | $0.79 | 2.81% | 8/10/2022 | 8/11/2022 | 8/25/2022 |
| TJX TJX Companies | $0.30 | 1.93% | 8/10/2022 | 8/11/2022 | 9/1/2022 |
| AZN AstraZeneca | $0.47 | 2.20% | 8/11/2022 | 8/12/2022 | 9/12/2022 |
| BCS Barclays | $0.21 | 4.00% | 8/11/2022 | 8/12/2022 | 9/16/2022 |
| BSET Bassett Furniture Industries | $0.16 | 2.82% | 8/11/2022 | 8/12/2022 | 8/26/2022 |
| BP BP | $0.36 | 4.30% | 8/11/2022 | 8/12/2022 | 9/23/2022 |
| DUK Duke Energy | $1.01 | 3.73% | 8/11/2022 | 8/12/2022 | 9/16/2022 |
| EMR Emerson Electric | $0.52 | 2.31% | 8/11/2022 | 8/12/2022 | 9/9/2022 |
| WTRG Essential Utilities | $0.29 | 2.10% | 8/11/2022 | 8/12/2022 | 9/1/2022 |
| XOM Exxon Mobil | $0.88 | 3.84% | 8/11/2022 | 8/12/2022 | 9/9/2022 |
| HON Honeywell International | $0.98 | 2.04% | 8/11/2022 | 8/12/2022 | 9/2/2022 |
| IVZ Invesco | $0.19 | 4.51% | 8/11/2022 | 8/12/2022 | 9/2/2022 |
| LAD Lithia Motors | $0.42 | 0.60% | 8/11/2022 | 8/12/2022 | 8/26/2022 |
| MGA Magna International | $0.45 | 2.82% | 8/11/2022 | 8/12/2022 | 8/26/2022 |
| PETS PetMed Express | $0.30 | 5.98% | 8/11/2022 | 8/12/2022 | 8/19/2022 |
| RIO Rio Tinto Group | $2.67 | 11.40% | 8/11/2022 | 8/12/2022 | 9/22/2022 |
| SHEL Shell | $0.50 | 3.75% | 8/11/2022 | 8/12/2022 | 9/19/2022 |
| SBUX Starbucks | $0.49 | 2.57% | 8/11/2022 | 8/12/2022 | 8/26/2022 |
| SCHW Charles Schwab | $0.22 | 1.30% | 8/11/2022 | 8/12/2022 | 8/26/2022 |
| SJM J. M. Smucker | $1.02 | 3.10% | 8/11/2022 | 8/12/2022 | 9/1/2022 |
| JOE St. Joe | $0.10 | 0.95% | 8/11/2022 | 8/12/2022 | 9/9/2022 |
| TFC Truist Financial | $0.52 | 4.29% | 8/11/2022 | 8/12/2022 | 9/1/2022 |
| V Visa | $0.38 | 0.71% | 8/11/2022 | 8/12/2022 | 9/1/2022 |
| WMT Walmart | $0.56 | 1.60% | 8/11/2022 | 8/12/2022 | 9/6/2022 |
| WRK WestRock | $0.25 | 2.36% | 8/11/2022 | 8/12/2022 | 8/24/2022 |
| AWR American States Water | $0.40 | 1.86% | 8/12/2022 | 8/15/2022 | 9/1/2022 |
| ABC AmerisourceBergen | $0.46 | 1.29% | 8/12/2022 | 8/15/2022 | 8/29/2022 |
| ABR Arbor Realty Trust | $0.39 | 9.39% | 8/12/2022 | 8/15/2022 | 8/31/2022 |
| BAH Booz Allen Hamilton | $0.43 | 1.80% | 8/12/2022 | 8/15/2022 | 8/31/2022 |
| CHD Church & Dwight | $0.26 | 1.12% | 8/12/2022 | 8/15/2022 | 9/1/2022 |
| CTAS Cintas | $1.15 | 1.16% | 8/12/2022 | 8/15/2022 | 9/15/2022 |
| LLY Eli Lilly and | $0.98 | 1.20% | 8/12/2022 | 8/15/2022 | 9/9/2022 |
| ENB Enbridge | $0.67 | 5.99% | 8/12/2022 | 8/15/2022 | 9/1/2022 |
| EVA Enviva | $0.91 | 5.34% | 8/12/2022 | 8/15/2022 | 8/26/2022 |
| FTAI Fortress Transportation and Infrastructure Investors | $0.33 | 5.70% | 8/12/2022 | 8/15/2022 | 8/29/2022 |
| IP International Paper | $0.46 | 4.33% | 8/12/2022 | 8/15/2022 | 9/15/2022 |
| NVO Novo Nordisk A/S | $0.58 | 1.10% | 8/12/2022 | 8/15/2022 | 8/23/2022 |
| OGN Organon & Co. | $0.28 | 3.46% | 8/12/2022 | 8/15/2022 | 9/15/2022 |
| PZZA Papa John’s International | $0.42 | 1.79% | 8/12/2022 | 8/15/2022 | 8/26/2022 |
| SJR Shaw Communications | $0.08 | 3.42% | 8/12/2022 | 8/15/2022 | 8/30/2022 |
| KR Kroger | $0.26 | 1.86% | 8/12/2022 | 8/15/2022 | 9/1/2022 |
| SO Southern | $0.68 | 3.79% | 8/12/2022 | 8/15/2022 | 9/6/2022 |
| UMH UMH Properties | $0.20 | 4.38% | 8/12/2022 | 8/15/2022 | 9/15/2022 |
| UPS United Parcel Service | $1.52 | 3.13% | 8/12/2022 | 8/15/2022 | 9/1/2022 |
| VALE Vale | $0.39 | 21.90% | 8/12/2022 | 8/15/2022 | 9/9/2022 |
Undervalued Dividend Stocks:
With the continued rally in the market, this week’s results of the valuation screening now only shows 30 companies on my tracker are now undervalued based on my 5 criteria.
- Discount to Analyst Price Target
- 10% or more off the 52-week high
- Discounted Cash Flow (DCF)
- P/E Mean Reversion
- Dividend Yield Theory (DYT)
For information on how these valuation methods are calculated, please check out my valuation post here.
Here are the quality dividend growth stocks that are appearing undervalued based on all 5 of my valuation methods:
Stocks Listed: ABT, AOS, APD, AVGO, BAC, BLK, CAT, DLR, DOW, HBI, HD, IIPR, INTC, IP, LEG, LOW, MDT, NKE, RY, SBUX, SPG, STOR, TD, TGT, TSCO, TU, UGI, UNP, V, WBA
This list should be used to begin your research to determine if the stock meets all of your investment goals and criteria. Valuation should only be one of many aspects you look at when deciding to make an investment.
Best of luck, happy investing, and check back next week for more undervalued stock ideas!
Thanks Jeramy.
Thanks for reading and taking the time to comment!
Great, comprehensive post, I will certainly have to look into a few of these. I’ve been waiting for a good entry point into HD, but hadn’t found one as of yet. Hoping INTC can continue its dividend, maybe the CHIPS Act Bill will help them.
Thanks Jim, glad you enjoyed it! INTC is a tough one, all the metrics say they are solid but I just have a strange feeling on them that something is hiding. HD is a great one, might just be worth DCAing over time.