Stocks with dividend growth potential and cheap price ratios originally published at "long-term-investments.blogspot.com". I often publish sheets and lists of dividend growth stocks. Mostly I use Dividend Champions, Achievers or Contender lists. All stocks from the lists have a consecutive dividend growth of more than 10 years.
I ever try to discover the best stocks with the most attractive fundamentals in order to get the best results. But these lists have one big failure: They include also stocks with high debt and low growth. Not enough some of them pay a dividend which is bigger than the earnings per share of the recent quarters.
Those companies are on the edge to cut the dividend payments. If they do so, they would be kicked off the lists and you sit on a low yielding stock and wait for a recovery which could costs you 5 or 10 years to realize a positive return.
I am a dividend growth investor and made most of my money with dividend growth stocks. But if I am honest, the biggest returns I made were with stocks at a lower yield and higher growth. That's the reason why I always look for stocks with not a perfect dividend growth history but a more attractive debt and growth situation.
Today I like to highlight some dividend potentials, stocks with potential to boost dividends over the next five years or so. My list includes 110 companies and I show you the cheapest stocks measured by a forward P/E ratio of less than 10.
Thirteen companies have such a low P/E ratio of which twelve are currently recommended to buy. This alone shows the quality of my screen compared to the Dividend Champions lists.
Here is the full table with some fundamentals:
Take a closer look at the full list. The average P/E ratio amounts to 10.33 and forward P/E ratio is 8.69. The dividend yield has a value of 2.13 percent. Price to book ratio is 1.25 and price to sales ratio 1.38. The operating margin amounts to 15.95 percent and the beta ratio is 1.20. Stocks from the list have an average debt to equity ratio of 0.29.
Related stock ticker symbols:
STO, TX, GLW, GD, AFL, NDAQ, RGA, AET, BVN, HMY, HUM, TSN, APA