4 Attractively Priced Dividend Stocks Boosting Distributions

by Dividend Growth Investor | April 29, 2013 1:00 am

With many stocks close to all-time-highs[1], it is getting increasingly difficult to find places where to park new cash. Luckily, the companies below not only fit the characteristics of dividend growth stocks, but they are also attractively priced. It is crucial to acquire solid companies only when they are fairly priced Putting new money to work at overvalued prices could lead to mediocre results for the first five – ten years of your investment. The companies boosting dividends include:

Johnson & Johnson (NYSE:JNJ[2]), together with its subsidiaries, engages in the research and development, manufacture, and sale of various products in the health care field worldwide. This dividend king[3] raised quarterly distributions by 8.20% to 66 cents per share. This marked the 51st consecutive annual dividend increase for the company. Despite the recent run, the company is attractively priced at 15.70 times forward earnings and a yield of 3.10%. The dividend is adequately covered, and has been raised by 11.70% per year over the past decade. I added to my position in Johnson & Johnson in April. Check my analysis[4] of Johnson & Johnson.

Chevron (NYSE:CVX[5]), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. This dividend champion[6] raised quarterly distributions by 11.10% to $1 per share. This marked the 26th consecutive annual dividend increase for Chevron. The stock is trading at 9.70 times forward earnings, has an adequately covered dividend and yields 3.40%. The company has managed to boost annual distributions by 9.60% per year over the past decade. I recently added to my position in Chevron in April. Check my analysis of Chevron[7].

ExxonMobil (NYSE:XOM[8]) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products. This dividend champion raised quarterly distributions by 10.50% to 63 cents per share. This marked the 31st consecutive annual dividend increase for Exxon. Over the past decade, Exxon has managed to boost annual dividends by 9% per year. The stock trades at 11 times forward earnings, yields 2.90% and has a sustainable dividend coverage. Back in 2012 I replaced Exxon Mobil with ConocoPhillips (NYSE:COP[9]), because Exxon seemed stingier than its peers with dividend payments. Instead, the company has been one of the most active share repurchasers in the U.S. for several years in a row.

Ameriprise (NYSE:AMP[10]), through its subsidiaries, provides a range of financial products and services in the United States and internationally. The company boosted quarterly dividends by 15.60% to 52 cents per share. This was the second dividend increase over the past year, bringing the total increase to 48.605 since the second quarter of 2012. The company has only raised distributions for 7 years, and has been public since 2005

It was spun off from American Express (NYSE:AXP[11]) in 2005, and since then it has managed to boost earnings from $2.32 per share to $4.70 per share by 2012. Forward earnings expectations are for $6.60 per share in 2013 and $7.26 per share by 2014, which means that Ameriprise would have no problem becoming a dividend achiever by 2015. I like the fact that the company is attractively valued at 11.10 times forward earnings, yields 2.80% and has a sustainable dividend coverage. I plan on analyzing the stock before committing any funds to it.

These four stocks are a testament that income investors can find quality companies at reasonable valuations even in this overheated market. By looking through the list of dividend increases[12], I was once again able to uncover a hidden dividend gem, Ameriprise, which has the potential to pay dividends in my portfolio for the next 20 years.

Full Disclosure: Long JNJ, CVX, COP

  1. to all-time-highs: http://www.dividendgrowthinvestor.com/2013/03/how-to-invest-when-market-is-at-all.html
  2. JNJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=JNJ
  3. dividend king: http://www.dividendgrowthinvestor.com/2013/01/the-dividend-kings-list-keeps-expanding.html
  4. my analysis: http://www.dividendgrowthinvestor.com/2012/02/johnson-johnson-jnj-reliable-dividend.html
  5. CVX: http://studio-5.financialcontent.com/investplace/quote?Symbol=CVX
  6. dividend champion: http://www.dividendgrowthinvestor.com/2011/02/dividend-champions-best-list-for.html
  7. analysis of Chevron: http://www.dividendgrowthinvestor.com/2012/08/chevron-corporation-cvx-dividend-stock.html
  8. XOM: http://studio-5.financialcontent.com/investplace/quote?Symbol=XOM
  9. COP: http://studio-5.financialcontent.com/investplace/quote?Symbol=COP
  10. AMP: http://studio-5.financialcontent.com/investplace/quote?Symbol=AMP
  11. AXP: http://studio-5.financialcontent.com/investplace/quote?Symbol=AXP
  12. list of dividend increases: https://investorplace.com/2013/04/19-companies-increasing-dividends-april-22-26-aapl-xom-cvx-wfc/

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