5 Fantastic Blue Chip Bargains You Won't Want To Miss

Summary

• With the S&P 500 now 16% to 21% overvalued, short-term volatility risk is high and proper risk-management is more important than ever.
• Fortunately, no matter how overvalued the broader market, something great is always on sale.
• In this article, I walk you through a reasonable and prudent method of screening dividend stocks for valuation, quality and PEG ratios.
• I show why BMY, PII, CAT, AVGO and GD are all great long-term investments you can safely make today.
• I also show why rebalancing just once per year is likely the optimal strategy for most investors, because it balances prudent risk-management while avoiding overtrading and unnecessary tax bills.
• Looking for more stock ideas like this one? Get them exclusively at The Dividend Kings. Get started today »

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For this week's "best dividend stocks to buy now" article, I wanted to highlight a great way to screen dividend stocks for all the fundamental things that result in exponentially growing income and great returns over time.

7 Proven Ways To Beat The Market

(Source: Ploutos)

I'm in the process of updating the Dividend King Master List which is a comprehensive database covering 370 companies (soon to be 400) that includes everything an income investor needs to make reasonable and prudent decisions with their hard-earned savings.

• Yield
• Sector
• Quality score (11 point scale)
• Dividend safety score (5 point scale)
• Fair value (for any given year's expected fundamentals)
• Discount to fair value
• Good buy price (based on quality and risk)
• Potential trim/sell price
• 5-year CAGR total return potential range
• Dividend growth streak
• 5-year CAGR dividend growth rate
• Long-term analyst consensus growth rate
• Forward PE (or P/FFO or P/EBITDA depending on industry)
• PEG ratio
• The historical fair value PE ratio (or industry equivalent)
• Realistic growth potential range
• Most appropriate F.A.S.T Graphs time period (similar fundamentals and growth rate)
• Joel Greenblatt Return On Capital (for all appropriate companies)
• ROC industry percentile

Needless to say, maintaining such a database for 400 companies (I'll swap out lower quality names for higher quality blue chips as I find them) is a lot of work. However, I consider it time well spent and preparation for the market's unavoidable and usually irrational overreactions.

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In other words, if a quality watchlist is worth its weight in gold, then the Master List is worth its weight in diamond.

The market is near record highs today, as it is most of the time.

(Source: UBS)

Since 1945 stocks have been at record highs 34% of the time and 66% of the time they are within 10% of record

Analyst’s Disclosure:I am/we are long BMY, CAT, PII, AVGO. 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.

Dividend Kings owns BMY, Cat, PII, AVGO, and GD in our portfolios.