In the past week, share prices started going down for the first time in a few months. As a buyer of quality businesses, I’m excited. When prices for good businesses decrease, I’m able to purchase them at lower valuations, and I am also able to get more dividend income for every dollar I put to work.
I screened my list of dividend ideas and came up with the following group of companies that I purchased. I am mostly looking for value these days – cheap dividend growth at a low price multiple. I was lucky that last week prices of many companies started falling. If I am more lucky, prices will finally start a correction, and I will be able to put my future contributions to work at lower prices.
I was able to allocate the funds for the next two months, which is why I won’t be able to make another purchase until sometime in September.
14 Dividend Growth Stocks to Buy on a Dip
Aflac (AFL), through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance products in Japan and in the U.S. I really like Aflac stock, particularly given the low valuation and dedication to dividend growth. Unfortunately, AFL stock is one of my top 10 holdings, which is why I’m not likely to add to my positions now. Aflac is a dividend champion that has been able to increase dividends for 31 years in a row. Over the past decade, AFL has been able to boost dividends by 16.8%/year. Aflac stock is selling for 9.1 times forward earnings and yields 2.5%. Check my analysis of Aflac.
Baxter International (BAX) makes products for people with hemophilia, immune disorders, infectious diseases, kidney diseases, trauma, and other chronic and acute medical conditions. Baxter has been able to increase dividends for eight years in a row. Over the past decade, Baxter has been able to boost dividends by 12.4%/year. BAX stock is selling for 13.8 times forward earnings and yields 2.8%. I like the low valuation on Baxter stock and the opportunities for further growth in earnings and distributions. BAX stock was a dividend champion until a spinoff 1998, but then froze its payout for eight years. Currently, Baxter is in the process of splitting in two parts sometime in 2015, a move that could unlock some value for BAX shareholders. Check my analysis of Baxter.
Chubb (CB), through its subsidiaries, provides property and casualty insurance to businesses and individuals. Chubb stock is a dividend champion that has been able to increase dividends for 32 years in a row. Over the past decade, Chubb has been able to boost dividends by 9.2%/year. CB stock is selling for 11.2 times forward earnings and yields 2.3%. I like the valuation for Chubb, and I believe that management is of great quality and integrity. Therefore, I believe Chubb has the discipline to keep earning more over time and allocate company resources intelligently. Chubb’s management has been on a mission to repurchase a large amount of shares each year since 2006. My position is small, but I would welcome even lower prices in order to build it higher and provide me more exposure to financials with dividend growth streaks. Check my analysis of Chubb.
Deere (DE) makes agriculture, construction and forestry equipment worldwide. Deere stock is a dividend achiever that has been able to increase dividends for 11 years in a row. Over the past decade, Deere has been able to boost dividends by 16.3%/year. DE stock is selling for 11.2 times forward earnings and yields 2.8%. As I discussed in my analysis of Deere, the company is cyclical, which means that earnings rise and fall with the economic cycle. But I believe a growing and more affluent global population will drive demand for Deere’s equipment.