Abbott Laboratories (NYSE: ABT) raised their dividend by 14.29% to $0.320 a share with ex-date on January 14th, 2019 and pay date on February 15th, 2019 from previous $0.280 a share dividend rate.
This makes ABT a dividend challenger with a track record of 7 consecutive years of dividend increases. However, in our watch list, the stock is still not a buy despite the recent market correction. The stock still seems overvalued at the current price of $69.08 a share.
Our calculated fair value is $30.30 a share, average 5 year dividend yield 2.05%, there fore we rank this stock as a hold.
Re Watch list for IRA A/C. I would be interested in knowing what parameter you employ to rank the stock. Does that make you a value investor, and how does that influence your the strategy you select for trading these stocks?
I trade options but invest in stocks for long haul and for dividend income. Options generate income which is then reinvested into the dividend stocks.
I use three criteria:
1) “correction” mode
2) 5 year average dividend yield
3) fair value
In order to buy the stock, all three criteria must be met at the same time.
The stock must be in correction mode. That means 10% below its 52 wk high.
The stock must have current yield above the 5 year average yield.
The stock must trade below my calculated fair value.
I calculate a fair value using:
1) minimum desired annual stock growth rate at 4% or more.
2) analysts consensus future EPS growth
3) forward PE
4) current EPS
5) current dividend yield
6) 3 year average dividend growth
Put all this together I calculate a fair value (PV).
Of course, there are many methods to do that. You can use discounted dividends method, or any other method. That’s why you get tons of different fair values, for example when you look at Graham formula, you get a different number, if you use DFC method you get a different number, etc. but the point is to pick a method and stick to it and use that one only method.
Once those planetary constellations are met, I buy the stock and hold it forever (ideally).
Hope this helps. Thanks for stopping by.