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Dividend paying stocks attractive to buy today

Today’s trading session brought a couple of stocks I own in my TD and ROTH IRA accounts which reversed enough to be once again attractive to buy or in other words: to add to my portfolio.

PPL Corporation is an energy and utility holding company. The Company operates in four segments: Kentucky Regulated, U.K. Regulated, Pennsylvania Regulated and Supply. Through its subsidiaries, PPL generates electricity from power plants in the northeastern, northwestern and southeastern United States; markets wholesale or retail energy primarily in the northeastern and northwestern portions of the United States; delivers electricity to customers in Pennsylvania, Kentucky, Virginia, Tennessee and the United Kingdom, and natural gas to customers in Kentucky. As of December 31, 2012, the Company’s subsidiaries were PPL Energy Supply, LLC (PPL Energy Supply), PPL Electric Utilities Corporation (PPL Electric), LG&E and KU Energy LLC (LKE), PPL Global, LLC (PPL Global), PPL EnergyPlus LLC (PPL EnergyPlus), PPL Generation LLC (PPL Generation), Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU).

The stock corrected significantly from its top, see the chart

PPL

The stock paid and increased dividend for 13 consecutive years. It increased its dividend to $0.367500 (2.1% increase) and its current yield is 4.60%. The 5yr dividend growth rate for this company is 3.01%.

My calculated fair value is $35 a share and thus the company is currently trading below my fair value. The company has a very aggressive expenditure plan which can provide a solid base for 8% compound annual growth rate. Circa 65% of power generation is realized via a low cost power plants, which provides an edge for PPL for an eventual increase in power prices. The expenditure plan ($17.4 billion) may however provide a significant pressure to future dividends (also refer to company’s negative cash flow).

A negative free cash flow in many cases is not bad in itself. It could be a sign that a company is making large investments and if these investments earn a high return, the strategy has the potential to pay off in the long run.

Conclusion

I own PPL in my ROTH IRA account and I have owned for several years enjoying sustainable dividends and I plan to own this company for a long term run. If you want to add this company to your portfolio, I would apply a contingency order strategy to enter into a position. The stock has been falling for 7 consecutive days and today it broke below 50 day MA. This may be the end of the correction in this stock, as well as we still may see a further downside pressure. The next support for this stock is at $30 a share and $28 a share and we may see the stock re-testing one of these levels prior to reversing the trend.

 





3 responses to “Dividend paying stocks attractive to buy today”

  1. PPL Corporation is one of my favorite dividend paying stocks. It operates in four segments. It has a market capitalization of 18.52 Billion and dividend yield is 4.70%.

    • Martin says:

      I like the stock too and today’s trading session is an excellent opportunity to add more shares of this stock to my portfolio. But I am not adding yet, it still may fall further down.

      Richard, thanks for stopping by to my blog. I like your website very much so it is an honor to have you commenting on my blog!

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