Dividend-News

The Most Undervalued And Overvalued Dividend Aristocrats - December 2020

Published Tue, 15 Dec 2020 15:55:20 -0500 on Seeking Alpha

Seeking AlphaDividend StrategyThe Most Undervalued And Overvalued Dividend Aristocrats - December 2020Dec. 15, 2020 3:55 PM ET|| Includes: XOMby: The Part-time InvestorThe Part-time Investor Long Only, long-term horizon, Dividend Investing, ValueThe Part Time Investor.cls-1{fill:#024999;}SummaryA stock with a yield higher than usual may be undervalued.
A stock with a yield lower than usual may be overvalued.
Here is the latest month's list of the most undervalued and overvalued Dividend Aristocrats based on a comparison to their historical yield.
The market always offers many opportunities to buy some great companies at great prices. But you must confirm the quality of the company before you buy it. Even in a rising market like we have had since March, a purchase of a company with weak underlying fundamentals could lead to a significant loss. Conversely, even quality companies should be avoided if they are overvalued. At all times, there are companies which are overvalued and ones which are undervalued.
As a dividend growth investor, I narrow the universe of stocks I'm willing to consider for investment to only those stocks which have demonstrated a commitment to increasing their dividend every year, year after year. The Dividend Aristocrats is a group of such stocks, all in the S&P 500, which have raised their dividend for at least the last 25 years in a row without interruption. To me, this is a strong indication of the quality of these companies.
But quality is not the only criteria for purchase. A company must be undervalued, or at worst fairly valued, for me to invest in. I am not interested in buying a company that is overvalued, no matter how good that company is. The S&P was down over 30% in March but has moved back up and is again hitting new highs. With these wild swings, there are many individual stocks which may have moved up or down even more. Considering this, I keep track of the "PAAY" of each of the Dividend Aristocrats, so... Read more