This news article is part of a monthly series that highlights five large-cap dividend-paying companies offering discounts compared to their historical valuations. The author explains their filtering process to select these stocks, which involves scanning thousands of companies listed on U.S. exchanges. The article also discusses the recent challenges faced by the market, such as concerns about increasing interest rates, a strike by auto workers, a government shutdown, and indications of a slowdown in consumer spending. Despite these challenges, the author emphasizes the importance of regularly investing in solid dividend-paying stocks with attractive valuations and keeping cash reserves for any market scenario.
In this series of articles, the primary goal is to shortlist companies with a strong history of paying and raising dividends. The author looks for companies with strong fundamentals, low debt, and relatively cheap valuations. These stocks may not provide immediate wealth, but they can offer sustainable and meaningful dividend growth over time. The article highlights three groups of stocks with different average dividend yields for conservative investors, investors seeking higher yields, and yield-hungry investors. However, the author cautions that nothing is absolutely safe in investing and recommends maintaining a well-diversified portfolio with at least 15-20 stocks.
The article explains the selection process for shortlisting the stocks, which involves filtering down the initial list of over 7,500 companies to a smaller subset. The author’s goals are to find safe, dividend-paying companies trading at a discount to the broader market. They aim for income that beats inflation over time and capital growth with a minimum cumulative growth rate of 9%-10%. The article emphasizes the importance of maintaining a balanced dividend growth portfolio with a mix of high-yield, low-growth stocks and high-growth, low-yield stocks. The criteria for shortlisting the stocks include market capitalization, trading volume, positive dividend growth over the last five years, and relatively cheaper valuations compared to the 52-week high.
