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For dividend growth investors, opportunities exist for long-term DGI investments in almost all market conditions. With the market overbought, opportunities may be limited, but for the prudent DGI investor, bargain stocks can still be found.

Part one of this series (found here) covered investment opportunities for dividend growth investors in Healthcare, Financials, Consumer Goods and Technology.

Part two of this series will identify some of these potential bargain stocks in the Oil and Gas, Industrials, Telecom and Consumer Services sectors.

Oil and Gas

In the Oil and Gas sector there are dividend greats like Exxon-Mobil (XOM), Chevron (CVX) and ConocoPhillips (COP), but the stock I have identified as a potential target for DGI investors in this industry is none of these.

I have my eye on Schlumberger Limited (SLB). Schlumberger is the world's largest provider of technology and expertise to the oil and gas exploration and production industry. As demand for oil continues to grow demand for SLB's expertise and products will grow as well.

The stock is currently trading at a TTM P/E ratio of 18.8, representing only a slight value to the 5-year average of 20.2, but the real value of SLB comes with its continued growth. Over the past 12 months EPS grew by 10%, and EPS is expected to grow at a rate of 19% next year and 21% over the next 5. With relatively low debt, and a dividend payout ratio of 26% the company should be able to continue growing the dividend at or above its 5-year growth rate of 11%. While it only yields 1.4% at its current price SLB can trade much higher, and grow the dividend along the way.

Industrials

The industrial segment is no stranger to great dividend stocks. Conglomerates 3M (MMM), GE (GE), and Honeywell (HON) all occupy this market space, but transports and more importantly rail stocks get my attention right now.

Norfolk Southern Corp., (NSC) one of two major east coast rail operators issued lowered Q3 earnings guidance on September 19, and in the wake of that announcement the share price has plummeted. The following day, shares dropped more than 9%, and provided long-term DGI investors a great entry point.

With shares trading with a TTM P/E ratio of 11.3 the stock looks like a bargain compared with the 5-year industry average of 17.1. NSC expects double-digit earnings growth over the next five years, and has grown its divided 14% annually over the last five. With a 30% payout and growing earnings NSC could be a great bargain for the long-term investor.

(Find more complete analysis of railroad stocks here)

Telecoms

Telecom stocks have become known for high payout ratios, high yield, and low growth over the past years. Dividend giants like Verizon (VZ) and AT&T (T) yield over 4.5%, but offer investors low dividend growth. For the investor worried more about yield for the future than their current payout, consider Nippon Telegraph and Telephone Corporation (NTT).

This Japanese telecom giant ranks as the second-largest telecom in the world by revenue, but has been able to grow nearly 10% over the last 5 years. The company is poised to continue with this growth, and is expected to grow by 9.2% over the next 5 years. NTT pays out just 39% of earnings to shareholders as dividends and has been able to grow its dividend payment 21% a year over the past 5 years.

The downside with NTT is that it pays a twice annual dividend versus the typical quarterly structure most stocks pay, but for investors looking for a dividend play that offers an opportunity for share price appreciation and dividend growth NTT may be the answer.

Lastly we will examine the Consumer Services market sector.

In a sector with stocks like Walmart Stores (WMT), Home Depot (HD), and Walgreen (WAG) I look to TJX Companies (TJX) for my DGI portfolio value.

TJX operates a number of retail chains across the U.S., Europe, and Canada that offer brand name and designer merchandise at prices below what can be found at most retailers. With brands T.J. Maxx, Marshalls, and HomeGoods leading the way in the U.S., TJX has been able to deliver 18.8% growth over the last five years. Even with this great growth history behind it, TJX expects to grow EPS 12.4% annually over the next five years.

Shares currently pay a $0.46 annual dividend equating to a current yield of 1.02%, but this dividend has grown 20% over the past 5 years. While shares of TJX trade at a slight premium to the 5-year P/E ratio, this low debt company with a low dividend payout appears poised to continue growth of its dividend and share price.

As the economy continues to struggle to gain footing consumers look to save money without sacrificing quality. TJX affords consumers this opportunity through the retail outlets it operates, and should continue to benefit as the economy sputters and (hopefully) begins to recover.

Conclusion

While this listing of dividend growth stocks may not provide a complete in-depth review of all market sub-sectors, it was designed to demonstrate that even in an overbought market opportunities to purchase stocks at and below fair value still exists. Dividend growth investors should analyze and scrutinize companies closely prior to investing, but at nearly any time, quality DGI stocks can be found at a price that is right for long-term DGI investors.

Source: Undervalued Dividend Growth Stocks Across Market Sectors: Part 2

Additional disclosure: Investors should conduct their own research prior to deciding whether a stock is right for them and their goals.