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Where Can A Dividend Growth Investor Find Value In April?

Wyo Investments profile picture
Wyo Investments


  • For the dividend growth investor there are no companies that are "hand over fist" deals. However, plenty of fairly valued to slight bargains do exist.
  • Many of the companies that were fantastic deals six months ago are the same ones offering the best value today.  This is in spite of recent run ups in prices.
  • Many deals exist in the healthcare and financial sectors across a broad spectrum of companies. Other sectors offer a few select reasonable values.

In 2009, I decided to switch to dividend growth investing. This style was the investing strategy that resonated the most with me. By focusing on high-quality companies that steadily grow the income over time, I can sleep well at night and see steady progress towards my retirement goals. I want to say it has only been smooth sailing on my DGI journey, but this would be a lie.

Over the past dozen years, I have made many mistakes. I am guilty of falling into chasing yield at times. At times I have sacrificed quality to chase promising dividend growth. And my personal favorite is not buying anything because there are no great bargains – when plenty of fair-priced companies were available.

That is where I find the market today, at least with the DGI companies that I follow. There aren't that many "great" deals out there. Perhaps Altria (MO) could be considered a great deal, as any time the stock has been available at a 7% yield has historically proven to be a fantastic time to buy. Even so, the few companies that might be great deals or even fair deals are not as appealing as they were just a few months ago.

Finding high-quality stocks at a bargain price is hard enough. Finding them with a good initial yield and strong dividend growth can be almost impossible. The last time I found it difficult to find appealing investments was most of 2017, when seemingly everything was high. To be sure, there are still fair-priced companies out there, just not many exciting deals. There is nothing I am buying "hand over fist."

Where's the Value?

Last month I wrote about Home Depot (HD). It approached my buy point of $240 (2.75% yield) when it promptly reversed course and is now sitting near an

This article was written by

Wyo Investments profile picture
I spent 20 years in the natural resource sector in project development, project management, and business development. I typically invest in dividend growth stocks, although I do have an large investment property portfolio. In the past I have invested using momentum strategies, option strategies, and focused on growth stocks. However in 2009 I converted almost entirely to dividend growth investing as I found this was most in line with my investing goals, and allowed me to sleep easy at night! While I "retired" at 42, so I could be home to take my daughter to school, pick her up, and attend her events every day.  My many areas of investing allowed me to do this relatively comfortably, although time will tell if I stay retired. UPDATE: I recently accepted a position, not because I had to, but because I wanted to. It's amazing the difference work is when you are choosing to be there, rather than having to work.

Analyst’s Disclosure: I am/we are long MO, LOW, ABBV, AMGN, CVS, BMY, WBA, JNJ, PEP, SJM, BLK, AMP, AFL, PRU, CINF, LMT, GD, EPD. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (36)

Yes, an article that outlines the DGI possibilities - at a reasonable price. Frankly, I am fully invested at lower prices. I have some dividend income to re-invest, and I'm finding some value in REITS. I do like MO. I think BTI is a good buy, as it offers a return even higher than MO right now, and it just did a div increase. ENB is good in a retirement account in my opinion - it has a long history of nice, annual dividend increases. I will follow Discover. It's interesting, but I'm invested in V and MA at covid prices, and I have a small investment in ARKF to patch in some fintech too. Thanks for the article. I'd love to catch Lowes or HD in a correction. I missed it.
Wyo Investments profile picture
@Sam_12 Thanks for reading! The big bear market drops are tough to buy everything you want because everything is on sale. That's how I've never gotten HD, but was fortunate enough to get Lowes. I just throw out a bunch of very optimistic buy orders (or pessimistic depending on how you look at it) and see what fills.

I used to be concerned about not wanting to buy more of a company that I was in at a lower price, especially when I was up big. It's kind of nice to see those large percent gains in your account! But in the last couple of years I have been better at recognizing that a great stock at a fair price will look good 20 years from now, especially if it has good dividend growth!
Ramon_13 profile picture
Clean, simple article
Wyo Investments profile picture
That was the goal! Thanks for reading!
LHX in the Defense industry is worth a look.
BM Cashflow Detective profile picture
Well I've found value in your featured stocks and articles alike.


The average gives the world continuance
the extraordinary but its value.

Thank you for the overview.
Wyo Investments profile picture
Thanks for reading and glad you are finding value in the articles! In this series, I am trying to put out some overall ideas and give just a little more detail about companies that reader's might not be as familiar with. Most people are aware of LMT, but I think HII is interesting as well. Although I do consider LMT to be best of breed.
PA1975 profile picture
Great article. long MO, ABBV, BMY, WBA, BLK, PRU, LMT, NOC, EPD
Wyo Investments profile picture
Thanks for reading! All great choices!
Long PRU, ABBV, MAA and CCI dividend stocks.
Market Map profile picture
The "folklore" of picking individual stocks harkens back to an era ( pre year 2000 ) where investment personalities became famous through a presence in sources such as Wall Street Week, Barron's, Wall Street Journal, etc. for their prowess in portfolio management, with the legend of untold portfolio growth capturing the imaginations of retail investors. However, in any endeavor, a small handful of "statistical outliers" are the ones that capture the attention, and it is widely understood a vast majority of investment managers and retail investors fail to outperform the "index".  

Fortunately, with the advent of mutual / exchange traded funds that are managed as "indexes" representative of asset class styles or factors, an investor seeking a decent income stream accompanied by terminal portfolio growth, doesn't have to reside within the "vast majority" cohort of investors who underperform the index through the constant pursuit of picking the "correct" individual companies for inclusion within the portfolio.

Research shows that the "large cap value" equity asset class style has generated a reliable, time tested income stream. Using a "sale of shares" (dividends reinvested ) method of income harvesting, large cap value has sustained a "7%" inflation adjusted annual income withdrawal, accompanied with terminal portfolio growth, over seventy one rolling 20 year periods since 1932 https://tinyurl.com/y6key3v5 .

A modern investor is fortunate to have available expertly managed and well diversified, large cap value index funds ( such as the low expense Vanguard Value ( VTV ) which holds 300 plus companies, or the DFA Large Cap Value ), which may be used for this purpose. The use of funds such as these, can alleviate the "itch" of individual stock selection and low odds of outperforming "the index". And many of the popular companies mentioned in the large cap dividend growth literature, reside within these funds' portfolios already, with the wide diversification being a further bonus.
@Market Map
Of course the average investor has very poor returns, the average investor is a fairly uneducated fool who spends little time acquiring the skills required to manage a portfolio.

Think how poor would a random person be at performing surgery, engineering an aircraft or representing a client in a court of law. That’s exactly what the “average investor” is: somebody with no specific training trying to perform an extraordinarily complex task.
07 Apr. 2021
@TheHornet Was it Carlin who said "think of how stupid a person of average intelligence is. Now realize that half the people walking around everyday are dumber than that."
Qniform profile picture
@Market Map the modern investor in cap weighted indexes will have his derriere spanked along with everyone else trading on bygone market history.
I enjoyed reading your article. We own some similar stocks, ie. $JNJ, $LOW, $PRU. All bought over 5 years ago. I have a double on $LOW, I wish I had bought more. I have 31 stocks in my dividend growth portfolio. All stocks pay dividends.

At my current age in the 70's, I am trying to increase my current monthly income. Any stock I buy must yield 3.00% or greater and have increased its dividends for the last ten years. Also I must feel that the company will still be in business in 20 years. A couple of stock ideas that I have owned for a few years are $IRM, $PFE, $AAPL, and $MSFT --- own atleast 1,000 shares of each of these companies. Regards, Tom
Wyo Investments profile picture
@Tigertom73 Thanks for reading! I too own large positions in AAPL and MSFT, I wish as large as yours! Since you are currently looking for more yield have you considered swapping these out, or part of the positions anyways? It's a really difficult move to make.
@Wyo Investments The capital gains tax that I would have to report on my federal income tax form would be very large. I plan on owning $AAPL and $MSFT forever. I am always looking for income ideas that yield atleast 4 per cent. Regards Tom
jakatzman profile picture
Good article - I could not agree more about the difficulty in finding good value with quality dividend stocks at the moment. I use cash secured puts to lower price point entry and collect the premium while I wait.
Wyo Investments profile picture
Thanks for reading! I use cash secured puts in one of my accounts, but even that is getting difficult to get in at a strike I am interested in and still get a good return.
jakatzman profile picture
@Wyo Investments Agree... My use of covered calls has outpaced CS puts as the market has raced upward.
TBone1930 profile picture
My top 5 at the moment are:
Wyo Investments profile picture
@HenrikLarsen1 I will get into SHW someday, it is a fantastic company. I will wait till the starting yield is significantly higher...it could be a long time, but I am patient!
@HenrikLarsen1 not sure what the context of "top 5" means, as BIIB pays no dividend (i.e. not a DGI pick) and a few listed are at 1% or lower, at current market price... guess you meant your top 5 positions based on market value?
Steady Income profile picture
Nice and interesting article. I'm also a DGI convert since I rolled over my 401k into my IRA about five years ago. I started accumulating WBA not long ago at $47.41 and would like to add more. JNJ is my largest holding. I also own nice amounts of PRU and EPD and continue to watch BMY and PEP.
Wyo Investments profile picture
Thanks for reading!
@Steady Income you may have a chance come Monday AM with BMY. Keep a close eye on it tomorrow.
Nice article that I enjoyed reading. As a suggestion you may want to look north of the border for some excellent stocks with meaningful yields and dividend growth. Currently long a number of the names in your article plus BNS, ENB, TD, & TU 🇨🇦. BTI from the UK 🇬🇧 is also worth a look.
Wyo Investments profile picture
@twokooldad Thanks, I recently added TD to one of my portfolios. I generally shy away from foreign stocks due to the taxes but have recently started looking at Canada a bit.

Enbridge would be my next pick behind EPD. BTI is solid, but I am overweight both MO and PM which are long time holdings. I'm not as familiar with the others, I will check them out. Thanks!
Psycho Analyst profile picture
When is a deal not a great deal? When the stock has remained "undervalued" in a market where investors are desperate for anything that looks like a good buy. What is left on the bargain counter is stocks with very good reasons to be priced as they are. If SA authors were touting the stock as a bargain six months ago and it is still a bargain, beware.
Wyo Investments profile picture
@Psycho Analyst I agree, you really have to look skeptically at anything right now that is a screaming buy.
How about MMP for a 10% yield.
Wyo Investments profile picture
@Nathan5 I'm not familiar with it to comment as to its value, but it does have a long dividend growth streak. As I'm not overly optimistic on the energy sector in the long term, so I am demanding yields in the very top of the range to put money here. I do think the pipelines are the best energy stocks for the long term at present. The future is rather murky for the energy companies, at least in my crystal ball.
Buyandhold 2012 profile picture
Wyo Investments profile picture
I almost included CL and CLX as they are both right in there. I'm still hoping Clorox will continue dropping as things reopen.
Dividend Ambassador profile picture
@Buyandhold 2012 +BMY, +BTI. B’s and C’s.
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