Undervalued Dividend Growth Stocks to Research This Week (07/11/2022)

Welcome back to this series on the market and finding undervalued dividend growth stocks to research.

Market Commentary:

The Reports Are Coming, the Reports Are Coming!

Just like the story of Paul Revere, the militiaman racing through streets of the colony of Massachusetts warning that “The British Are Coming” during the Revolutionary War, we have our own heads up this week.  Major inflation and earnings reports are coming out this week that will give investors and the Federal Reserve and other policymakers insight into the rate of inflation as well as business and consumer spending and confidence. The consumer price index (CPI) report comes out on Wednesday, and many economists expect the rate to be even higher than the May report was at 8.6%.  The June producer price index report comes out on Thursday, which indicates the increase in prices that producers had to pay to make their goods.  On Friday, two big reports come out – consumer sentiment and retail sales.  

In addition to these inflation reports, this week kicks off the earnings season, with many companies reporting.  Will we see earnings revisions down due to the higher inflation and lower consumer spending, or will they reinforce prior estimates?  The analysts covering companies have generally not reduced their estimates as of yet, but with this series of earnings reports, there may be some shocks that investors will have to digest.

The market was up over the past 5 business days, with the Dow, S&P 500, and Nasdaq up 1.83%, 3.01%, and 5.50%, respectively for the week.  This solid increase was a pleasant reprieve from the market drops that we have had this year.  The markets are now down 13.76%, 18.19%, and 25.63% year to date, respectively. 

Dividend News This Coming Week:

Earnings season kicks off this week with a number of dividend paying companies reporting. PepsiCo (PEP) kicks things off on Tuesday, followed by most of the big banks, including JPMorgan Chase (JPM), Morgan Stanley (MS), Wells Fargo (WFC), Citigroup ( C), and PNC Financial (PNC) the rest of the week.  These reports and the commentary from the leaders will provide insights on the overall economy and the strength of the consumer.  The banks have insights on important credit, spending, and global money flows that can help determine if a downturn is happening. 

Upcoming Ex-Dividend Dates.  Note: you must own the stock before the ex-dividend date to receive the payment

Undervalued Dividend Stocks:

This week’s results of the valuation screening shows 43 companies on my tracker are now undervalued based on my 5 criteria. 

1. Discount to Analyst Price Target
2. 10% or more off the 52-week high
3. Discounted Cash Flow (DCF)
4. P/E Mean Reversion
5. 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, AXP, BAC, BLK, BMO, BR, CAT, CNI, DLR, DOW, ECL, HBI, HD, IIPR, INTC, IP, ITW, JPM, LEG, LOW, MDT, MMM, MSM, NKE, RY, SBUX, SMG, SPG, STOR, SWK, TD, TGT, TROW, TSCO, TU, TXN, 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!