Here we are with dividends again, but this time will focus on quarterly paying stocks and their annual dividend and P/E ratio. A P/E ratio of a company is derived from dividing its share price by its earnings per share. Using this ratio, you will see how a company trades compared to their earnings, and is a solid indicator for the true valuation of a stock. While no specific ratio is a lock to determine a quality investment, companies with a P/E ratio between 10 and 30 are usually strong. As the P/E ratio gets higher it means a stock’s share price is very large while the earnings they are putting out doesn’t compare.
Using our most recent dividend analysis, we have compiled quality findings on which stocks you could enter to today to start collecting hundreds in dividends every quarter from properly value or even undervalued companies!
Each stock on the bottom is measured by two figures, their P/E Ratio (Orange), and the amount of their Annual Dividend (Blue). Stocks where the blue is much higher than the orange are what we consider the ideal stocks of this analysis. $HD, $CLX, $ABBV, $ITW, $JNJ, $SHW, and $VZ are the 7 stocks fitting this criteria, but are not the only ones to pay mind too…
If you read our most recent post, (I would hope you did!) you would be aware of the strong performance Home Depot ($HD) showed in the growth department. Once again, Home Depot is a standout of the analysis, mostly due to its P/E ratio of 25. This may be leaning towards the higher end of our range, but the performance of the stock market in 2020 has a lot of major stocks riding very high. Based on the chart, Home Depot probably has the most blue area compared to any other stock, due to its incredible $6 annual dividend. We now see Home Depot has the growth behind it, and a proper valuation to it, to really trust it and take advantage of its rewarding $6 dividend.
In the last post, Verizon ($VZ) was also praised for its modest yet relative growth measures. Prior to seeing the analysis’ outcome, we knew this was going to be the area where Verizon would thrive. With an incredible P/E ratio of 14 while providing a $2.51 dividend, all while trading at $58, you can stack up on Verizon at a good price and know it is properly valued. Combine this with Verizon’s innovation with 5G, and you have one of the best and safest dividend buys on the market.
A Clean Investment
The household name cleaning company Clorox ($CLX) was a surprising addition to the list after posting non-enticing growth figures yesterday. However, its $4.44 annual dividend is making it extremely ideal for our analysis. Clorox also has one of the lower P/E ratios on the list at 20, creating a high dividend, fair value steal. Currently trading at $194, Clorox is in a sector of the market you do not have to worry about for future investing, people aren’t going to stop cleaning any time soon. For the past 6 months the stock is slightly down but has made a considerable jump the past month, potentially solidifying a bottom.
Big Names Lost
Everyone’s favorite growth investments of $AAPL and $MSFT are possibly one of the worst performers in this analysis. Their P/E ratios of 33 and 35 respectively ruined their case, and their annual dividends were not enough to counter the ratio. Compared to the price they trade at, their dividends arguably are just not enough, especially in the case of Apple. Their dividend yield, which is the share price divided by their annual dividend, is a mere .67%. Certainly nothing to tip your cap to, especially when you could look at Verizon which has a 4.27% dividend yield. This occurs because Apple is all about innovation and growth, making them better for capital gains, not so much dividends.
Abbott Laboratories ($ABT) was another big name with an atrocious performance, simply occurring because of its 49 P/E ratio. $ABT is extremely overvalued right now so it is best to stay clear of it if investing for dividend purposes.
Combining these analysis’ are great, but always remember to do your own research! Find what you value in your dividend stocks and compare with us or just even flat out ask us! Follow us on social media and subscribe to stay in the loop, there are not many places you can go to for free to get investing advice.