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10 High-Quality Dividend Growth Stocks Trading Well Above Fair Value

Published Mon, 15 Apr 2019 08:15:00 -0400 on Seeking Alpha

In a recent companion article, I presented ten high-quality dividend growth stocks that are trading well below fair value. I presented 7-year yield channel charts for each stock to illustrate how the price line has moved lower to meet the undervalued yield line.
This article considers the opposite scenario, presenting ten high-quality dividend growth stocks that are trading well above fair value (at least when considering current yield relative to historical yield patterns).
In my view, it is useful to know when a stock becomes overvalued. I don't want to buy shares of a stock at premium prices. And, in some scenarios, replacing an overvalued stock with an equivalent undervalued stock can be quite lucrative. One could earn a higher yield and also increase the upside potential of your investment dollars. On the other hand, when selling an overvalued stock you're likely making a profit, which will be taxed as capital gains in the case of taxable accounts.
Below, I present yield channel charts for ten high-quality dividend growth stocks trading at overvalued yields. For each stock, I provide a short description of the company, a 7-year yield channel chart created from weekly yield data, and some key metrics to help with a superficial analysis of each stock. In addition to the price and yield, I provide 1-year and 5-year dividend growth rates, as well as the quality indicators used by David Van Knapp in a recent article:
Value Line's Safety Rank Value Line's Financial... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
VERIZON COMM 57.08   14.7 3.88 2.41 4.13
MERCK & CO 74.73   32.2 2.32 2.20 2.99
XCEL ENERGY 55.41   22.4 2.47 1.62 2.96
PROCTER & GAMBLE 103.69   24.7 4.20 2.98 2.81
NEXTERA ENERGY 190.06   31.5 6.04 5.00 2.63
MCDONALDS 197.63   26.2 7.54 4.64 2.39
AFLAC 48.89   13.0 3.76 1.08 2.22
INTEL 58.72   13.1 4.48 1.26 2.14
MICROSOFT 125.01   29.0 4.31 1.84 1.49
VISA 161.49   34.8 4.64 1.00 0.62


Older articles featuring Verizon Comm (VZ):
Crown Castle International Corp: 1 Top Dividend Stock For the Next 10 Years
This REIT Has 11% ROIC Along With 23% Dividend Growth
Verizon Earnings: Will VZ Stock Increase Its Dividend in 2019?
The Retirees' Dividend Portfolio - John And Jane's March Taxable Account Update - Tax Season
Road To Financial Independence: New Dividend Record In March
March To Freedom Fund 1st Quarter Update: 12%+ Portfolio Growth And 31% Increase In Dividends
High Quality High-Yield Dividend Growth Stocks
My Dividend Growth Portfolio: Q1 2019 Summary
The Barking Dow Dogs: IBM Tops Again By Yield, UnitedHealth Tops By Broker Targets For April
Why Dividends Matter