7 Growing Dividend Companies For Retirement Portfolio

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Includes: AFL, DD, FE, GIS, HCN, PPL, VTR
by: Gutone

Growth companies with high-dividend yields are particularly appealing for long-term buy and hold, because the cash payout by itself provides a good margin of safety for the investment. When investing in companies in boring businesses, reinvesting dividends is a commonly adopted strategy to increase long-term returns. Moreover, growth brings the possibility of stock price appreciation. Operating with dollar cost averaging strategy, even with timing the purchase, steadily investing in dividend- paying companies can often yield much better return than hot chased stocks like Facebook (NASDAQ:FB) or Groupon (NASDAQ:GRPN).

Given the combination of good dividend payout (3%-8%), positive revenue growth, and relatively cheap valuation (mainly based on enterprise value/EBITDA ratio), the following companies can be very attractive for retirement portfolios.

AFLAC Inc. (NYSE:AFL) is an accident and health insurance company. It has a market cap of $19.93 billion. The company pays a dividend of 3.00%. Aflac provides supplemental health and life insurance. At a P/E ratio of 8.47, the stock appears fairly cheap in valuation. A low PEG ratio of 0.59 usually indicates undervaluation. AFLAC Inc. has an enterprise value / EBITDA ratio of 5.80, quite cheap. It has a profit margin of 10.17%. The company had a net income of $2.36 billion and EBITDA of $3.79 billion on revenue of $23.22 billion. Both its revenue and earnings grew in double digits over the latest quarter, by 20.30% and 101.80%, respectively. Its operating cash flow is $12.23 billion, and its free cash flow is $3.69 billion. The recent trading volume is below average.

E. I. du Pont de Nemours and Company (NYSE:DD) is a major diversified chemicals company. It has a market cap of $45.82 billion. The company pays a dividend of 3.50%. Du Pont operates as a science and technology based company worldwide. It operates in several segments, including agriculture, electronics and communications, industrial biosciences, nutrition and health, performance chemicals, performance coatings, performance materials, safety and protection, and pharmaceuticals. Du Pont has a reasonable P/E ratio of 13.10. Its enterprise value / EBITDA ratio is 8.49. The company had a net income of $3.52 billion and EBITDA of $6.82 billion on revenue of $39.62 billion. Its revenue grew by 11.70%, and its net income improved by 4.00% during the most recent quarter. Its operating cash flow is $4.76 billion, and its free cash flow is $3.9 billion. The trading volume has been stable recently. This month, 23.29 million shares are being shorted. Comparing with 18.34 million shares shorted over the previous month, the shared short has increased by 26%. The short ratio of du Pont is 4.50, accounting for 2.50% of floating shares. The trailing dividend yield is 3.40.

FirstEnergy Corp. (NYSE:FE) is an electric utilities company. It has a market cap of $20.57 billion. The company pays a dividend of 4.40%. FirstEnergy operates as a diversified energy company. The company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company also owns and operates fossil, hydroelectric, and nuclear generating facilities, as well as wind and solar facilities. In addition, the company provides energy-related products and services to wholesale and retail customers. Given that its price is only 1.50% lower than its 52-week high, the overall market sentiment appears positive. Its P/E ratio of 18.11 is on the expensive side. The PEG ratio is way above one, something to be cautious about. FirstEnergy has an enterprise value / EBITDA ratio of 9.76. This is a reasonable valuation. Its profit margin was 7.00% over the past year. The company had a net income of $1.14 billion and EBITDA of $3.99 billion on revenue of $16.27 billion. Both its revenue and earnings grew in double digits over the latest quarter, by 14.50% and 488.50%, respectively. Its operating cash flow is $2.16 billion, and its free cash flow is $195.30 million. Thinning trading volume suggests that trading interest in the company is waning. Over the past five years, the average yield is 4.60.

General Mills, Inc. (NYSE:GIS) is a processed and packaged goods company. It has a market cap of $25.14 billion. The company pays a dividend of 3.40%. General Mills manufactures and markets branded consumer foods worldwide. It also supplies branded and unbranded food products to the food service and commercial baking industries. The stock price was within a fairly narrow range over the past 12 months. Because of strong branding power, General Mills enjoys both a relatively high P/E ratio of 16.49 and a PEG ratio above one. General Mills has an enterprise value / EBITDA ratio of 10.07. This is a reasonable valuation. Its profit margin was 9.41% over the past year. The company had a net income of $1.57 billion and EBITDA of $3.21 billion on revenue of $16.66 billion. Its revenue grew by 11.90%, and its net income improved by 1.60% during the most recent quarter. Its operating cash flow is $2.4 billion, and its free cash flow is $1.63 billion. Over the past five years, the average yield is 2.90.

Health Care REIT, Inc. (NYSE:HCN) is a healthcare facilities REIT. It has a market cap of $12.62 billion. The company pays a dividend of 5.00%. Health Care REIT engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States. Health Care REIT Inc. has an enterprise value / EBITDA ratio of 18.29. It is on the expensive side. Its profit margin was 14.55% over the past year. I like Health Care REIT Inc.'s operating margin of 34.97%, a good sign for the company's financial health. The company had a net income of $137.37 million and EBITDA of $1.05 billion on revenue of $1.61 billion. Its revenue grew by 77.20% over the latest quarter. Its operating cash flow is $648.48 million, and its free cash flow is $676.61 million. The trading volume is relatively normal. This month, 8.97 million shares are being shorted. The short ratio of Health Care REIT Inc. is 6.00, accounting for 4.90% of floating shares. The trailing dividend yield is 4.10. Over the past five years, the average yield is 5.90.

PPL Corporation (NYSE:PPL) is an electric utilities company. It has a market cap of $16.19 billion. The dividend is generous at 5.10%. PPL Corporation, an energy and utility holding company, engages in the generation, transmission, distribution, and sale of electricity to wholesale and retail customers in the United States and the United Kingdom. The company is involved in the distribution and sale of natural gas to customers in Kentucky. It also owns and operates renewable energy projects; and provides energy-related products and services to commercial and industrial customers. The stock price was within a fairly narrow range over the past 12 months. At a P/E ratio of 9.85, the stock appears fairly cheap in valuation. PPL has an enterprise value / EBITDA ratio of 7.25. The EV/EBITDA ratio indicates this company is cheap. Its profit margin was 11.73% over the past year. PPL Corporation has a very healthy operating margin of 24.28%. The company had a net income of $1.63 billion and EBITDA of $4.66 billion on revenue of $13.94 billion. Both its revenue and earnings grew in double digits over the latest quarter, by 41.30% and 34.90%, respectively. Its operating cash flow is $3.04 billion, and its free cash flow is $370.75 million. The trading volume has been consolidating recently. The trailing dividend yield is 5.10. Over the past five years, the average yield is 4.20.

Ventas, Inc. (NYSE:VTR) is a healthcare facilities REIT. It has a market cap of $18.33 billion. The company pays a dividend of 3.90%. Ventas engages in investment, management, financing, and leasing of properties in the healthcare industry. It invests in the real estate markets of the United States and Canada. Its stock price is about 1.28% below its 52-week high, usually a positive technical indicator on the company. Ventas Inc. has an enterprise value / EBITDA ratio of 20.30. It is on the expensive side. It has a profit margin of 19.63%. Ventas, Inc. has a very healthy operating margin of 29.62%. The company had EBITDA of $1.21 billion on revenue of $2.07 billion. Its operating cash flow is $887.39 million. The trailing dividend yield is 3.60. Over the past five years, the average yield is 4.20.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.