Welcome back to this series on market valuation and finding undervalued dividend growth stocks to research and buy. I will be publishing this report on a monthly basis going forward to provide dividend stock ideas to consider and do further due diligence. I am a big proponent of buying quality businesses at fair prices. Conducting multiple valuation calculations will allow you to have a better understanding of which companies are attractively priced.
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Market Results:
Is this rally real or just a rug-pull waiting to happen? While we may be rejoicing on the significant results so far, with all three major U.S. Indexes in the green, the overall picture of the economy and the news that comes out regularly paints a somewhat conflicting picture. The market is forward looking, but is the telescope just blurry or is this the real thing? That said, the Dow is up 0.38%, NASDAQ up an astounding 16.77%, and the S&P 500 up over 7% year to date. Investors may have more to cheer in April too. Historically April is a good month for stocks, with April returning 1.5% between 1950-2017 on average.
The market rally that we have seen this month has been relatively widespread across sectors, with only 4 out of 11 sectors ending the month in the red. The best returning sector for the month was Technology (+10.61%), and Financials was the worst returning sector at -9.99% for the month of March. This certainly makes sense given the turmoil we have seen in the financial sectors, specifically the regional banks.
Year to date returns are similarly mixed, with only 4 of the 11 sectors in the red for the year. Energy, Financials, Healthcare and Utilities are down. The biggest returns have been in the Technology, Communications Services, and Consumer Discretionary sectors.
Market Valuation:
Market Valuation across the board are still lower than they were in 2022 but have changed since last month’s report. The Large Cap Index went from 17.6 to 18.1 P/E. The Mid went from 14.2 to 13.6 and Small Cap Indexes from 13.7 to 13.0. Large cap stocks are now slightly more expensive than in February and Mid cap and Small cap are now slightly cheaper. As with last month, Large cap is much more expensive than the other categories, likely as investors are pushing into perceived safety of the large companies. Small and mid cap appear to be where the value is for the investor who is willing to perhaps take on more risk in return for value.
Undervalued Dividend Stocks:
As prices continued to go up this month, the number of undervalued stocks dropped from 23 to 20. This month’s results of the valuation screening shows 20 dividend growth 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 undervalued dividend growth stocks to research this month.
Here is a list of the quality dividend growth stocks that are appearing undervalued based on all 5 of my valuation methods:
Stocks Listed: ABT, AMT, APD, BLK, BMO, BR, DLR, DOW, IIPR, INVH, JNJ, MDT, MMM, NEP, O, SPG, SYY, TD, UNH, UNP
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 month for more undervalued stock ideas!
Great content I own SYY, O, DOW, UNP and JNJ. A few go ex-dividend this month and will try to catch more shares as well as the dividends.
I have a Facebook Page called Fubar Financial, since I’m not a Youtuber, so the facebook page is as close as it will get for me. Feel free to stop over and visit the page. P.S. I shared your blog. Have a great week.