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|
|MERCK & CO||74.73||32.2||2.32||2.20||2.99|
|PROCTER & GAMBLE||103.69||24.7||4.20||2.98||2.81|
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