Be Safe From A Market Crash With These 5 Undervalued Low-Risk Dividend Aristocrats

Sep. 05, 2020 11:36 AM ETT, AFL, WBA, FRT, ED315 Comments


  • On Thursday and Friday, markets turned sharply lower. Especially, high-flying growth stocks sold off considerably.
  • This may be the beginning of a phase of increased volatility, following a smooth ride upwards during August.
  • Going with reliable, recession-proof income stocks could be a good idea.
  • This article takes a look at five inexpensive Dividend Aristocrats.
  • Looking for more investing ideas like this one? Get them exclusively at Cash Flow Kingdom. Get started today »

Article Thesis

On Thursday, markets experienced a considerable downturn, with declines in high-flying stocks being most pronounced. This does not have to mean anything, but it may be the first sign of a more volatile equity market this fall, following a summer of gains in broad indices. Those investors that want to move out of expensive tech stocks, or that want to reduce risk levels overall, may find the following five Dividend Aristocrats investable, as those trade at rather inexpensive valuations on a relative basis.

Buffett buy low sell highSource:

Buying low and selling high has been a great strategy forever, although it sometimes is not really easy to determine whether prices are currently on the low side or the high side - this always is way easier in retrospect for sure. Nevertheless, it looks like many of the stocks that have been driving broad markets to new all-time highs in summer 2020 are quite richly valued right now:

ChartData by


In this chart, we see that earnings multiples have grown quite a lot this year for high-flyers such as Apple (AAPL), Tesla (TSLA), Salesforce (CRM), Amazon (AMZN), Facebook (FB), and Alphabet (GOOG) (GOOGL). Determining at what P/E multiple those stocks would be fairly valued is no easy task, but it does not seem very logical for these stocks to trade at 1.5 times or 2 times the valuations they traded at one year ago. Share price gains have been driven by multiple expansion, rather than underlying growth, at least over the last couple of quarters. Does this mean that these stocks will come crashing down? Not necessarily, but significant declines cannot be ruled out. On Thursday and Friday, broad markets, and especially some of these high-flyers, saw their prices decline quite meaningfully:

ChartData by


Compared to the rather smooth ride-up

Is This an Income Stream Which Induces Fear?

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The primary goal of the Cash Flow Kingdom Income Portfolio is to produce an overall yield in the 7% - 10% range. We accomplish this by combining several different income streams to form an attractive, steady portfolio payout. The portfolio's price can fluctuate, the income stream not so much.

This article was written by

Jonathan Weber profile picture
Leader of Cash Flow Club
The Investment Community where "Cash Flow is King"
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I work together with Darren McCammon on his Marketplace Service Cash Flow Club.

Disclosure: I am/we are long WBA. 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.

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