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Long only, value, growth, dividend investing
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Summary

  • The high-flying growth stocks keep declining and those dollars keep getting put to work in value dividend stocks.
  • Each of these companies are inexpensive with respect to their individual industries.
  • These stocks shouldn't be bought now but placed on your radar.

This last week was a big one for the Dow Jones Industrial Average Index as it rose to close at a record high. This all happened while the Nasdaq closed out its worst week in a month, indicating that money managers are again shuffling their money from growth to value stocks. The Dow Jones Industrial Average Index increased 0.2% for the week while the S&P 500 dropped 0. 1% and the Nasdaq was down 1.3%. I don't believe that high flying growth stocks are done going down, and in times like these I love picking up some more shares of value dividend stocks.

Call me a pessimistic optimist, but for now I will continue the course and purchase value stocks for my dividend portfolio. Value investing is the bread and butter of Warren Buffett's money-making strategy. The essence of value investing is basically purchasing a stock at less than market value based on certain metrics. My philosophy on dividend investing is to utilize the forward price to earnings ratio and use a one-year PEG ratio, along with a dividend. I don't necessarily look for a stock with a high yield because I like to see capital appreciation. Because the market may be correcting itself from all-time highs I maintain that it is difficult to find good stocks these days. That's why I'm highlighting a select set of excellent value companies in my dividend portfolio, which have had ex-dividend dates or paid out a dividend during this past week or early next week that people should place on their radar.

Apple Inc. (NASDAQ:AAPL)

Apple designs, manufactures and markets mobile communication and media devices, personal computers, and portable digital music players, and a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications. On 23Apr14, Apple reported second quarter 2014 earnings of $11.62 per share. This result beat the $10.18 consensus of the 47 analysts covering the company and beat last year's second quarter results by 15.16%. Apple's PE ratio is among the lowest of any stock in the computer hardware industry and signals that investors have not been willing to pay a premium for this company's business prospects, making it a value story. However, during the past year, earnings growth has lagged its historical five year growth rate.

The company went ex-dividend on 08May14 with a $3.29 per share dividend which will be paid on 15May14 for a yield of 2.25%. In terms of news pertaining to the company this week, supply chain sources tell Taiwan's Economic Daily News that iPhone 6 launch is reportedly set for August/September. In other news it has been reported that Apply is on the verge of purchasing Beats for about $3.2 billion as the company is making about $1 billlion in sales per year. Canaccord boosted its price target of Apple from $610 to $660 due to the iPhone 5S being the best selling phone at all U.S. carriers during April.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is dropping from overbought territory with a current value of 66.83, while the MACD chart below shows the black line above the red line with divergence bars decreasing in height, meaning there may be some bearish momentum on the stock price. I anticipate the stock to start dropping near here and will not pull the trigger on a new batch.

(click to enlarge)

Wells Fargo & Co. (NYSE:WFC)

Wells Fargo is a bank holding company which operates in three segments: Community Banking, Wholesale Banking and Wealth, Brokerage and Retirement. On 11Apr14, Wells Fargo reported first quarter 2014 earnings of $1.05 per share. This result beat the $0.97 consensus of the 30 analysts covering the company and beat last year's first quarter results by 14.13%. Wells Fargo's PE ratio is among the lowest of any stock in the regional banks industry and signals that investors have not been willing to pay a premium for this company's business prospects, making it a value story. However, during the past year, earnings growth has lagged its historical five year growth rate.

The company went ex-dividend on 07May14 with a $0.35 per share dividend which will be paid on 01Jun14 for a yield of 2.85%. In terms of news pertaining to the company this week, it announced plans to boost the credit card business to lure more wealthy customers.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle-ground territory with a current value of 54.12, while the MACD chart below shows the black line below the red line with decreasing divergence bars, meaning there is bearish momentum on the stock price. I will not be buying a batch of the stock at this price.

(click to enlarge)

Consolidated Edison, Inc. (NYSE:ED)

ConEd is a holding company that owns Consolidated Edison Company of New York and Orange & Rockland Utilities. On 08May14, ConEd reported first quarter 2014 earnings of $1.17 per share. This result beat the $1.05 consensus of the 13 analysts covering the company and beat last year's first quarter results by 8.33%. ConEd's PE ratio is below the Electric Utilities industry average and signals that investors are not willing to pay a premium for this stock, making it a value story. However, during the past year, earnings growth has lagged its historical five year growth rate.

The company will go ex-dividend on 12May14 with a $0.63 per share dividend which will be paid on 15Jun14 for a yield of 4.48%. In terms of news pertaining to the company this week, it announced first quarter earnings but was not able to provide any sort of guidance as to the charge it will take due to the Harlem blast which occurred March of this year. On the bright side for investors the company beat estimates on the top and bottom lines for the first quarter.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle-ground territory with a current value of 47.34, while the MACD chart below shows the black line below the red line with decreasing divergence bars, meaning there is bearish momentum on the stock price. I will not be buying a batch of the stock at this price.

(click to enlarge)

Covidien plc (NYSE:COV)

Covidien is engaged in the development, manufacture and sale of healthcare products for use in clinical and home settings. On 25Apr14, Covidien reported second quarter 2014 earnings of $0.96 per share. This result was in-line with the consensus of the 22 analysts following the company and missed last year's second quarter results by 14.29%. Covidien's PE ratio is below the medical equipment & supplies industry average and signals that investors are not willing to pay a premium for this stock, making it a value story. However, during the past year, earnings growth has lagged its historical five year growth rate.

The company went ex-dividend on 03Apr14 with a $0.32 per share dividend which was paid on 05May14 for a yield of 1.78%. In terms of news pertaining to the company, no press releases were released this week.

Let's take a quick look at the technicals here to see if it can be bought at these levels or if a pullback is coming. As we can see, the relative strength index is in middle-ground territory with a current value of 58.46, while the MACD chart below shows the black line above the red line with increasing divergence bars, meaning there is bullish momentum on the stock price. I will be buying a small batch of the stock at this price.

(click to enlarge)

Conclusion

I've highlighted these names because they are poised to increase their dividends in coming years. It is important in this market to be able to hold onto companies which raise their dividend rates or initiated them, because it is a sign that the underlying company is doing well financially. The importance of these stocks I've highlighted is that they are value plays while the broader market is choppy. I believe we are at a point in the market where we have to look for value.

Disclaimer: This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing!

Source: 4 Value Dividend Stocks To Place On Your Radar