The Best Undervalued Dividend Stocks To Buy For 2019

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Includes: AAPL, ABBV, AMT, AOS, AVGO, BAM, BEP, BIP, BLK, BPR, C, CAH, ENB, EPD, ET, FDX, GS, HD, IRM, ITW, KIM, LAZ, LEG, LMAT, MA, MO, MPLX, NEP, OKE, PM, SKT, SNA, TERP, THO, TRP, TXN, V, WBA, XOM
by: Dividend Sensei
Summary

Wild market volatility continues, creating incredible opportunities for bargain hunting in low-risk, quality dividend growth stocks.

I've been busily preparing my new Deep Value Dividend Growth Portfolio to cash in on what's likely to be modest recovery for stocks in 2019.

My focus is purely on undervalued, low-risk SWAN stocks that will maintain safe and likely growing dividends in any economic/industry or interest rate environment.

The increasingly diversified portfolio is already outperforming the S&P 500 in both rising and falling weeks, which is precisely what it's designed to do.

This week there are 38 great undervalued dividend stocks to buy, including dividend aristocrats/kings, fast growers, and high-yield blue-chips. These stocks are likely to outperform the market in 2019.

(Source: imgflip)

Note that due to reader requests, I've decided to break up my weekly portfolio updates into three parts: commentary, economic update, and the new "best stocks to buy right now" series. This is to avoid excessively long articles and maximize the utility to my readers.

This week's commentary reveals the three most valuable investing lessons for 2019.

Due to the holidays this week, there is no economic update.

Introduction

As I explained in my portfolio update 63, I'm now focused on paying down margin and thus won't be making changes to my real money portfolio for the foreseeable future. In fact, I've now realized the wisdom of Buffett's warning against using margin.

My partner Charlie says there is only three ways a smart person can go broke: liquor, ladies and leverage...Now the truth is - the first two he just added because they started with L - it's leverage... It is crazy in my view to borrow money on securities... It's insane to risk what you have and need for something you don't really need... You will not be way happier if you double your net worth." - Warren Buffett (emphasis added)

Now as with all Buffettisms this one needs clarification. Margin is not necessarily evil, it's merely a powerful financial tool that must be used with extreme caution. I know several investors who cap their leverage at 20% or maintain home equity lines of credit that can be used to pay down 100% of margin quickly in a market meltdown.

The reason that Buffett is warning the average investor against leverage is that it amplifies both financial gains/losses but also emotions.

Since emotions are the Achilles heel of most investors and results in terrible market timing that badly hurts long-term returns, for the vast majority of investors margin is a tool that's best avoided.

Why am I personally not planning to use even modest amounts of margin in the future? The worst December for stocks since 1931 has shown me that it's not enough to minimize the risk of being wiped out (via a margin call). The risk of a total loss of capital must be zero. After all, even if the odds of losing 100% of your money is 1/1000, eventually, you'll still get wiped out. Thus, even decades of painstaking saving and smart investing could be lost, which is indeed insane.

Because while I'm unlikely to face disaster this time (I'm still a portfolio decline of 45% away from a margin call and have $60,000 in emergency funds I can tap if need be), the core of my investing strategy stems from being able to "be greedy when others are fearful" and take advantage of the market becoming insanely stupid and provide quality companies at obscene discounts to fair value.

“You’re neither right nor wrong because other people (the market) agree with you. You’re right because your facts are right and your reasoning is right - that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else.”- Warren Buffett (emphasis added)

With margin, you absolutely have to worry about other people. If our leaders (specifically President Trump or Fed Chairman Jerome Powell) mess up badly enough, the economy and the stock market could be sent spiraling into a crash that could make even the smartest long-term strategy fail catastrophically.

In other words, to paraphrase Einstein, there are two things that are infinite, the universe and short-term market stupidity, and I'm not quite sure about the universe. On October 19, 1987 (Black Monday), the Dow fell 22.6% in a single day. That's a 20 standard deviation event that is theoretically (using standard probability theory) supposed to occur once every 4.6 billion years (roughly the age of the earth).

However, according to a 2005 Harvard study, a 1987-style one-day crash is actually a once in a 104-year event.

(Source: Market Watch)

What's more, 5% and 10% single-day crashes are expected to occur, on average, every 1.6 years and 13 years, respectively. And as Mark Hulbert, author the Hulbert Financial Digest points out, the last 5% single-day decline was in August 2011, and the last 10% daily decline was over 30 years ago.

So not just are we overdue for some even wilder single-day declines, but we can't forget how margin actually works at most brokers. Brokers borrow at very short-term rates to extend margin loans to clients. In the event of another 2008-2009 style financial crisis (a low probability but inevitable event over 50+ years), then brokers could change their margin rules overnight. That's because most margin agreements state that:

  • brokers can change their margin maintenance requirements at any time (potentially from 15% to 50% or higher).
  • brokers are able to liquidate your stocks to eliminate margin even without notifying you or providing time to send in additional funds.

While brokers normally provide two to five days to cover a margin call, in the event of either a seizing up of credit markets (that could put the broker's survival in jeopardy) or a full-blown market panic (like 1987), even modest amounts of margin could become dangerous and trigger forced selling at ludicrously low valuations of even the highest quality, low-risk stocks.

Since my time horizon is 50+ years I must not just minimize my portfolio's risk of succumbing to a critical point of failure by eliminating all such risks of a permanent loss of capital (across the entire portfolio).

This is why my new plan is to pay off all the margin as quickly as possible ($9K per month in savings and net dividends) and then initiate a new capital allocation strategy. This should be accomplished by the end of Q1 2020.

  • Only buy deeply undervalued blue chips (off my watchlists) during a market decline.
  • Save up all weekly cash and wait for pullbacks/corrections/bear markets.
  • During a pullback (average one every six months since WWII), deploy 50% of cash in stages.
  • If the pullback becomes a correction, deploy 50% of remaining cash (in stages).
  • If the correction becomes a non-recessionary bear market (what we might be facing now), deploy the remaining 50%.

This approach ensures that I'll be able to avoid hoarding cash for years on end (because 5-9.9% pullbacks are frequent) but avoid situations like now when I'm forced to sit back and watch the best bargains in a decade (or ever in some cases) pass me by.

But while I may be suffering from my foolish and risky use of leverage, that doesn't mean I can't help others cash in on the golden opportunities now raining down all around us.

This is why I've launched a new series, the "best dividend stocks you can buy today." This is my collection of watchlists for Grade A quality dividend growth blue chips that make fantastic buys right now. If you've wondered "where should I put my money today?" this list is it. The goal is to highlight stocks that can realistically deliver 13+% long-term total returns (over the next decade) via a combination of yield, long-term cash flow/dividend growth, and valuation returning to fair value. Every single stock on these watchlists is one I consider a sleep well at night, or SWAN, stock.

I use the same valuation-adjusted total return model that Brookfield Asset Management (BAM) uses, and they have a great track record of delivering 12-15% CAGR total returns (in fact, it's their official goal as a company, and they usually exceed that target).

There are four carefully curated lists designed to focus on:

  • Quality companies
  • Safe dividends (they are all low-risk stocks)
  • Strong long-term growth potential
  • The maximum margin of safety (dirt-cheap valuations)

The portfolio also has 25% firm sector caps, to minimize the chances that, no matter how great the bargains, we'll never become so concentrated in one sector (a mistake I made with my real money portfolio) as to be at risk of industry-wide devastation harming the portfolio's long-term income or returns.

And to show the power of long-term, deep-value dividend growth investing (and live vicariously through this new portfolio while I pay off margin on my real money one), I'm also going to be tracking these recommendations going forward. That's in my Deep Value Dividend Growth Portfolio or DVDGP. Note that when my margin paydown is complete in 2020, the approach I'm using in these articles will become my official policy for deploying all of my own real money.

This is currently a paper portfolio I'll be maintaining on Morningstar and Simply Safe Dividends to not just provide in-depth portfolio stats but also the total returns over time. The rules for the portfolio are:

  • Each month, I buy $500 worth (rounded up to the nearest whole share) of any existing portfolio positions that remain on the buy list (still insanely undervalued).
  • Each week, I buy $500 worth of any new stocks that make it onto the list (stocks rotate on and off).
  • Dividends are reinvested.
  • Stocks are only sold if the thesis breaks or a stock becomes 25% overvalued (then sell half) or 50% overvalued (sell all of it), and the capital is reinvested into new recommendations.

Again, this is purely a tracking (paper) portfolio. I'm not yet putting real money into it until the first pullback of 2020, once I've eliminated all risk from my actual portfolio (margin hits zero and cash starts piling up). The purpose of this series is to try to show the power of this approach, which I've adapted from Investment Quality Trends, which has been using it to sensational effect since 1966.

So, with that introduction out of the way, here are the best low-risk dividend growth stocks you can buy for 2019.

The Best Dividend Growth Stocks You Can Buy Today

This group of dividend growth blue chips represents what I consider the best stocks you can buy today. They are presented in four categories, sorted by most undervalued (based on dividend yield theory using a 5-year average yield).

  • High yield (4+% yield)
  • Fast dividend growth
  • Dividend Aristocrats
  • My Bear Market Buy List

The goal is to allow readers to know what are the best low-risk dividend growth stocks to buy at any given time. You can think of these as my "highest-conviction" recommendations for conservative income investors. Note that these are not meant to represent a diversified or complete portfolio, but merely highlight the best opportunities for low-risk income investors available in the market today.

The valuations are determined by dividend yield theory, which Investment Quality Trends, or IQT, has proven works well for dividend stocks since 1966, generating market-crushing long-term returns with far less volatility.

(Source: Investment Quality Trends)

That's because, for stable business income stocks, yields tend to mean-revert over time, meaning cycle around a relatively fixed value approximating fair value. If you buy a dividend stock when the yield is far above its historical average, then you'll likely outperform when its valuation returns to its normal level over time.

For the purposes of these valuation-adjusted total return potentials, I use the Gordon Dividend Growth Model, or GDGM (which is what Brookfield Asset Management uses). Since 1956, this has proven relatively accurate at modeling long-term total returns via the formula: Yield + Dividend growth. That's because, assuming no change in valuation, a stable business model (doesn't change much over time) and a constant payout ratio, dividend growth tracks cash flow growth.

The valuation adjustment assumes that a stock's yield will revert to its historical norm within 10 years (over that time period, stock prices are purely a function of fundamentals). Thus, these valuation total return models are based on the formula: Yield + Projected 10-year dividend growth (analyst consensus, confirmed by historical growth rate) + 10-year yield reversion return boost.

For example, if a stock with a historical average yield of 2% is trading at 3%, then the yield is 50% above its historical yield. This implies the stock is (3% current yield - 2% historical yield)/3% current yield = 33% undervalued. If the stock mean-reverts over 10 years, then this means the price will rise by 50% over 10 years just to correct the undervaluation.

That represents a 4.1% annual total return just from valuation mean regression. If the stock grows its cash flow (and dividend) at 10% over this time, then the total return one would expect from this stock would be 3% yield + 10% dividend (and FCF/share) growth + 4.1% valuation boost = 17.1%.

Top 5 High-Yield Blue Chips To Buy Today

Company Ticker Sector Yield Fair Value Yield Historical Yield Range Discount To Fair Value Expected 10-Year Annualized Dividend Growth

Valuation Adjusted Total Return Potential

Tanger Factory Outlet Centers (SKT) REIT 6.8% 3.5% 2.2% to 6.8% 48% 4.7% 17.4%
Enbridge (ENB) Energy 7.3% 3.8% 2.3% to 6.6% 48% 6% 19.3%
Kimco Realty (KIM) REIT 7.5% 4.1% 2.7% to 24.5% 45% 3.8% 17.8%
Brookfield Property REIT (BPR) REIT 8.0% 4.9% 1.2% to 7.4% 39% 6.5% 18.7%
Altria (MO) Consumer Staples 6.6% 4.0% 3.1% to 14.4% 38% 8% 18.8%

(Sources: Management guidance, GuruFocus, F.A.S.T. Graphs, Simply Safe Dividends, Dividend Yield Theory, Gordon Dividend Growth Model)

Top 5 Fast-Growing Dividend Blue Chips To Buy Today

Company Ticker Sector Yield Fair Value Yield Historical Yield Range Discount To Fair Value Expected 10 Year Annualized Dividend Growth

Valuation Adjusted Total Return Potential

FedEx (FDX) Industrial 1.6% 0.7% 0.3% to 1.2% 52% 11.9% 19.5%
Thor Industries (THO) Consumer Discretionary 3.0% 1.6% 0.8% to 2.7% 46% 12.0% 20.0%
A.O. Smith (AOS) Industrials 2.1% 1.1% 0.8% to 3.4% 45% 9.9% 16.6%
Snap-on (SNA) Industrials 2.6% 1.6% 1.2% to 5.6% 39% 11.0% 18.0%
Illinois Tool Works (ITW) Industrial 3.2% 2.1% 1.5% to 4.5% 35% 9.8% 16.8%

(Sources: GuruFocus, F.A.S.T. Graphs, Simply Safe Dividends, IQ Trends, Gordon Dividend Growth Model)

Top 5 Dividend Aristocrats To Buy Today

Company Ticker Sector Yield Fair Value Yield Historical Yield Range Discount To Fair Value Expected 10 Year Annualized Dividend Growth

Valuation Adjusted Total Return Potential

Cardinal Health (CAH) Healthcare 4.3% 2.1% 0.9% to 3.9% 49% 8.5% 19.1%
AbbVie (ABBV) Healthcare 4.7% 3.3% 0.9% to 5.5% 30% 10.3% 19.3%
Leggett & Platt (LEG) Consumer Discretionary 4.2% 3.0% 2.4% to 9.7% 30% 8% 15.9%
Walgreens Boots Alliance (WBA) Consumer Staples 2.6% 1.9% 1.0% to 3.1% 29% 10.4% 16.5%
Exxon Mobil (XOM) Energy 4.8% 3.5% 1.5% to 4.8% 27% 6.5% 14.4%

(Sources: GuruFocus, F.A.S.T. Graphs, Simply Safe Dividends, IQ Trends, Gordon Dividend Growth Model)

My Bear Market Buy List

These are the blue chips which I expect to generate 13+% total returns at their target yields. Note that all total return estimates are for a 10-year annualized basis. That's because total return models are most accurate over longer time frames (5+ years) when prices trade purely on fundamentals and not sentiment. This allows valuations to mean-revert and allows for relatively accurate (80% to 95%) modeling of returns.

The list itself is ranked by long-term CAGR total return potential from target yield. Bolded stocks are currently at my target yield and thus "Strong Buys."

Company Current Yield Fair Value Yield/Share Price Target Yield Historical Yield Range Long-Term Expected EPS Growth (Analyst Consensus, Expected Dividend Growth)

Long-Term Valuation Adjusted Annualized Total Return Potential At Target Yield

Mastercard (MA) 0.7% 0.7% 0.7% 0.1% to 0.8% 20.5% 21%
Brookfield Asset Management 1.6% 1.5% 1.5% 1.1% to 4.2% 18.0% 20%
BlackRock (BLK) 3.2% 2.5% 3.0% 1.2% to 3.5% 13.7% 19%
Energy Transfer LP (ET) (uses K1) 9.6% 6.4% 9.0% 2.2% to 18.3% 7.0% 19%
LeMaitre Vascular (LMAT) 1.2% 1.1% 1.1% 0.3% to 2.0% 17.5% 18%
Lazard (LAZ) 4.8% 2.8% 4.0% 0.8% to 4.8% 10.1% 18%
Citigroup (C) 3.5% 2.3% 3.0% 0% to 78.6% 12.4% 18%
Visa (V) 0.8% 0.7% 0.7% 0.1% to 0.8% 17.4% 18%
Philip Morris International (PM) 6.8% 4.5% 6.0% 0.8% to 6.8% 8.7% 18%
ONEOK (OKE) 6.5% 5.1% 6.0% 2.4% to 12.8% 10.0% 18%
Texas Instruments (TXN) 3.3% 2.5% 2.9% 0.9% to 3.5% 12.6% 17%
NextEra Energy Partners (NEP) 4.3% 3.9% 3.9% 0.4% to 5.4% 13.5% 17%
Goldman Sachs (GS) 2.0% 1.3% 1.8% 0.7% to 2.6% 12.7% 17%
TransCanada (TRP) 5.9% 3.9% 5.0% 3.1% to 5.9% 8.2% 17%
Enterprise Products Partners (EPD)(uses K1) 7.2% 5.9% 7.0% 3.4% to 11.7% 6.0% 16%
Illinois Tool Works 3.2% 2.2% 3.0% 1.6% to 4.5% 10.0% 16%
A.O. Smith 2.1% 1.1% 1.5% 0.8% to 3.4% 11.5% 16%
Broadcom (AVGO) 4.2% 3.0% 3.0% 0.2% to 4.6% 12.8% 16%
Brookfield Renewable Partners (BEP)(uses K1) 7.7% 5.7% 7.0% 3.8% to 8.4% 6.5% 17%
American Tower (AMT) 2.1% 1.9% 1.9% 0.6% to 2.1% 13.4% 15%
MPLX (MPLX) (uses k1) 8.5% 6.1% 7.0% 0.5% to 9.3% 5.3% 15%
Apple (AAPL) 1.9% 1.7% 1.7% 0.4% to 2.8% 13.1% 15%
Microsoft (MSFT) 1.8% 2.6% 2.6% 1.1% to 3.1% 12.7% 15%
3M (MMM) 2.9% 2.5% 3.0% 1.8% to 4.8% 9.5% 15%
Brookfield Infrastructure Partners (BIP)(uses K1) 5.6% 4.6% 5.0% 3.7% to 8% 9.0% 15%
Iron Mountain (IRM) 8.0% 6.0% 5.0% 0.2% to 8% 5.6% 15%
Home Depot (HD) 2.4% 2.1% 2.1% 1.6% to 5% 12.0% 14%
TerraForm Power (TERP) 6.9% 5.0% 6.0% 0.5% to 16.3% 6.5% 14%
Realty Income (O) 4.2% 4.6% 5.5% 3.3% to 11.2% 5.9% 13%
Average 4.2% 3.2% 3.8% 11.1% 17%

(Sources: Dividend Yield Theory, Gordon Dividend Growth Model, Simply Safe Dividends, GuruFocus, F.A.S.T. Graphs, Moneychimp)

Note that the following stocks are at or above my target yield.

  • MA
  • BAM
  • BLK
  • ET
  • LMAT
  • LAZ
  • C
  • V
  • PM
  • OKE
  • TXN
  • NEP
  • BEP
  • AMT
  • EPD
  • ITW
  • AOS
  • AVGO
  • AAPL

That makes it a great time to either add them to your portfolio or add to an existing position.

New Buys/Sells This Week

$500 initial positions were purchased in each of these stocks:

  • Goldman Sachs
  • MPLX
  • Exxon Mobil
  • Visa
  • Mastercard
  • Brookfield Infrastructure Partners
  • TransCanada
  • Iron Mountain
  • Home Depot

A busy week of buying thanks to the market continuing to be highly undervalued and individual stocks being even more so. A heavier focus on energy this week (though still well below 25% sector cap) due to that being the most undervalued sector on Wall Street right now.

Plan For The Next Week

The stock I'm planning on adding to the BMBL next week are:

  • Philip Morris
  • ONEOK
  • Citigroup
  • American Tower
  • Brookfield Asset Management

My goal for the next few weeks is to continue building out my bear market buy list before stocks run up too much to make most of the new additions out of range. The following five companies are being added this week (I've already included them in the official BMBL watchlist).

Since all five are currently above their target yields, these are the five stocks I plan to initiate starter positions in next week.

Going forward, the goal of the portfolio is to balance out new weekly additions (mostly from BMBL) by sector.

  • one financial company (JPM and BAC are coming up soon)
  • one energy company (CVX is the last addition coming)
  • one REIT (CCI, EQIX, and DLR coming but no guarantee they actually get bought)
  • one tech company (LRCX is on tap)
  • one variable sector (wild card spot)

The monthly "dollar cost average" week is the middle of the month. That's when we add $500 more of any stock that remains either on the three "top 5" lists or is at target yield or better on the BMBL.

The ultimate goal is to get to about 50 stocks (in the near term). Over time the portfolio might potentially grow larger, though at a much slower pace. It might begin to approximate an index fund, though one with superior quality, yield, and valuation to that of the average S&P 500 company.

The Deep Value Dividend Growth Portfolio

(Source: Morningstar) - data as of December 28st close (S&P 500 fell 0.12% that day)

Sector Concentration (25% Sector Caps In Place)

(Source: Simply Safe Dividends)

Eventually, this portfolio is going to be diversified into every sector. However, since the goal is to buy the best bargains at any given time, it will take a while for new names to rotate off each week's list and into the portfolio. I'm imposing a firm 25% sector cap for diversification purposes. No matter how undervalued a sector, it's not wise to go above 25% (your personal sector cap may vary and could be lower).

Currently, we are most concentrated in energy, because that's the most undervalued sector of the market.

Income Concentration

(Source: Simply Safe Dividends)

The portfolio's income is likely to be highly concentrated into the highest-yielding names, at least until it becomes more diversified over time. A good rule of thumb is you want to limit income from any one position to 5% or less. We're getting close to achieving that and within two weeks should achieve that goal.

Annual Dividends

(Source: Simply Safe Dividends)

While we may never fully get to the dream of daily dividend payments, we're currently getting paid every week. And the monthly income flow will smooth out nicely over time.

(Source: Simply Safe Dividends)

Note that the 10-year dividend growth figures are artificially low because my tracking software doesn't average in anything that hasn't existed for those time periods. Some of these stocks have IPO-ed in the last five years, and so, the 1-year and 5-year growth rates are the most accurate. These figures are purely organic growth rates and assume no dividend reinvestment.

The dividend declines during the Financial Crisis were due to REITs (such as Kimco) which cut their dividend (as 78 REITs did during the Great Recession). Fortunately, since then, the sector has deleveraged and enjoys the strongest sector balance sheet in history.

(Source: Hoya Capital Real Estate)

This means that during the next recession, most REITs will not cut their payouts, especially Kimco, which has a BBB+ credit rating and will be getting an upgrade to A- in 2019 or 2020.

Similarly, as we add more bank stocks the income will show a sharp decline during the Great Recession. Rest assured I am confident that every bank we own (C, JPM, BAC, GS) will maintain its dividends through future recessions (though they are likely to be frozen).

There is no official dividend growth target, though I'd like to at least maintain long-term dividend growth (either 1-year or 10-year which is above the market's historical 6.4% payout growth rate).

(Source: Simply Safe Dividends)

Fundamental Portfolio Stats

(Source: Morningstar)

The quality of these stocks can be seen in the far-above-average returns on assets and equity of this portfolio. What's more, it's also far more undervalued, offers a much higher yield, and has projected long-term EPS (and thus, dividend growth) that's far superior to the broader market.

As an added benefit, the average market cap is smaller, providing yet another alpha factor (smaller stocks tend to outperform). Note that the overall focus is on blue chips, which means that the average market cap is likely to rise over time (but remain far below the market's $100 billion average).

Portfolio Performance

  • CAGR Total Return Since Inception (December 12, 2018): -1.0%
  • CAGR Total Return S&P 500: -4.3%
  • Long-Term Expected Total Return (assuming no valuation changes and using Morningstar projected earnings/dividend growth rates): 15.4%

Worst Performers

Note that I'm adding one new slot to these tables every week until it shows our top 10 best and worst performers.

Stock Cost Basis % Gain
FDX $184.11 -13.7%
SKT $23.56 -12.1%

(Source: Morningstar)

Best Performers

Stock Cost Basis % Gain
HD $158.14 7.6%
V $121.83 7.5%

(Source: Morningstar)

FedEx was one of our earliest buys and continues to suffer over its weak 2019 guidance. Tanger is similarly in the doghouse because the turnaround isn't expected to show positive FFO/share growth until 2020 (negative growth in 2018 and 2019). Should Tanger's 2020 FFO/share guidance be negative that would break the thesis (three consecutive years of negative growth = sell).

The good news is that due to our monthly additions to all stocks that remain active buy recommendations, the more any stock falls in the short-term the lower our cost basis will become.

Home Depot and Visa benefitted from lucky buying (ahead of the big 5% rally day post-Christmas) and have continued to do well owing to their great execution and strong long-term growth prospects.

Bottom Line: These 38 Undervalued Dividend Growth Stocks Are Likely To Have A Great 2019 And Beyond

It's certainly an eventful and volatile year for stocks. But as much as it might feel unpleasant to see your portfolio crash fast and hard, or merely swing wildly from day to day while going nowhere for long periods of time, always remember one fundamental truth.

Your portfolio is NOT a form of gambling, nor is it just letters and numbers on a screen. Your portfolio is actually a business, a conglomerate that owns partial stakes in other businesses. You literally have hundreds of thousands or even millions of employees working for you, to grow your financial empire over time. Rome wasn't built in a day and similarly, your long-term financial goals will take years and decades to achieve.

This is why I'm such a fan of Steven Bavaria's "Income Factory" approach to dividend investing. While Mr. Bavaria's penchant for 10+% yielding ETFs and CEFs is not one that personally fits our goals, his great long-term approach to income growth investing certainly is one all long-term dividend growth investors should emulate.

Remember that your dividend portfolio (and in our case the DVDGP) is primarily about securing safe and growing income over time. That's the job of every stock we buy. The share price plunging 20%, 30% or even 50% in a matter of weeks, months or over a year or two does not change the reason we bought it.

What's more, remember that over time you can (and should) add to quality dividend growth stocks that fall as long as the investing thesis remains intact. That lowers your cost basis and thus boosts long-term income and total returns. And if you are DRIPing your dividends (as we are for convenience) then the longer the market irrationally hates your companies the faster your portfolio's income will grow (exponentially more shares over time due to rising dividends over time).

The 38 stocks listed here are all solid low-risk dividend growth choices for new money today. In fact, they are my highest recommendations right now (doesn't mean other stocks aren't worth buying as well), and likely to generate good total returns in 2019. More importantly, in 2020 and beyond they will continue to do the job we hired them to do (by purchasing them). Whatever the economy or market may throw at us, the DVDGP will continue churning away and exponentially building our income empire.

This is why I plan to take this portfolio's approach, the culmination of everything I've learned over the last 23 years, and apply it to my own real money investments in 2020 and beyond.

Disclosure: I am/we are long ENB, KIM, BPY, BLK, ITW, TXN, AOS, AAPL, ABBV, BEP, MMM, LEG, WBA, EPD, MMP, ET, GS, XOM, MPLX, V, MA, BIP, TERP, IRM, HD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.