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A Diversified Dividend Growth Portfolio - Undervalued Stock From Each Sector

Published Fri, 14 Aug 2020 13:51:40 -0400 on Seeking Alpha

Seeking AlphaDividend StrategyA Diversified Dividend Growth Portfolio - Undervalued Stock From Each SectorAug. 14, 2020 1:51 PM ET|| Includes: ADM, APOG, BMY, CMCSA, CSCO, ENB, MGA, NUE, STOR, TD, UGIby: Dividend AthleteDividend Athlete Dividend investing, dividend growth investing, long onlyDividend Athlete.cls-1{fill:#024999;}SummaryI present 11 stocks for starting a diversified dividend growth portfolio.
A pick from each of the 11 sectors with great dividend metrics, strong balance sheet, and attractive valuation.
Estimated future 10-yr Yield-on-Cost 10.9%.
Thesis
A very common message I get on my website is "How would you invest X amount of money if you had to start a portfolio right now?"
Although everyone's financial goals and risk tolerance are somewhat different, I decided to give my thoughts on it.
For developing a model dividend growth portfolio, I selected a quality, undervalued stock from each sector.
Many of those stocks already belong in my personal portfolio.
The model portfolio has a 3.9% portfolio yield with an 8.3% yearly dividend growth potential (based on historical growth rates) trading at an average valuation of 13.3x blended earnings.
Using my Dividend Growth Calculator, I estimate that this model portfolio will deliver a 10.9% Yield-on-Cost in 10 years with dividend re-investment.
Utilities
UGI Corporation (UGI) is a gas and power distributor. The company operates in the US and Europe in 4 different business segments: Amerigas, UGI International, Gas Utility and Midstream & Marketing. UGI has paid uninterrupted dividends for 136 years, increasing the dividend for each of the last 33 years. UGI is currently trading at a blended P/E of just under 14.
Dividend Yield 5-yr CAGR Dividend Growth Earnings Payout Ratio (2020e) Debt/Equity 3.77% 8.1% 52% 1.55x

Real Estate
STORE Capital (STOR) is triple-net lease REIT focusing on single-tenant operational real estate. The company has a diverse... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ENBRIDGE 34.70   19.7 1.76 2.21 6.38
TORONTO-DOMINION BANK 56.54   11.9 4.74 2.22 4.02
ARCHER-DANIELS-MIDLAND 41.45   17.8 2.33 1.40 3.47
BRISTOL-MYERS SQUIBB 49.61   13.1 3.80 1.64 3.38
NUCOR 53.69   7.6 7.09 1.60 3.04
CISCO SYSTEMS 49.93   19.2 2.60 1.40 2.85
MAGNA INTERNATIONAL 54.06   6.9 7.80 1.46 2.73
UGI 49.31   26.4 1.87 1.30 2.67
COMCAST 46.97   17.9 2.62 0.84 1.81
APOGEE ENTERPRISES 41.44   25.4 1.63 0.70 1.76

ENBRIDGE - ENB
ENBRIDGE - ENB  


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