The 20 Safest Dividend Growth Stocks Are Not Too Expensive

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Oct 27, 2012
Dividend growth is an investment strategy that works if you have enough time. At the market are 187 stocks with a consecutive dividend growth of more than five years. I made a list of the 20 dividend growth stocks with the lowest beta ratio, with a total value of less than 0.4. Especially in times of crises like the European debt crisis and the slowing China GDP growth, a safe haven strategy should be a wise decision. The low beta ratio shows that the stock is only low correlated with the market. If it goes down 10 percent, the 0.4 beta stock follows the market only by 4 percent.


Below, the 20 results consist of two with high-yields and five with a buy or better recommendation.


Here are my favorite stocks:


Kimberly Clark (KMB, Financial) has a market capitalization of $32.46 billion. The company employs 57,000 people, generates revenue of $20.8 billion and has a net income of $1.5 billion. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.5 billion. The EBITDA margin is 16.95 percent (the operating margin is 11.71 percent and the net profit margin is 7.31 percent).


Financial Analysis: The total debt represents 34.48 percent of the company's assets and the total debt in relation to the equity amounts to 127.24 percent. Due to the financial situation, a return on equity of 28.50 percent was realized. Twelve trailing months earnings per share reached a value of $4.75. Last fiscal year, the company paid $2.8 in the form of dividends to shareholders. The company raised dividends over a period of 40 consecutive years.


Market Valuation: Here are the price ratios of the company: The P/E ratio is 17.44, the P/S ratio is 1.57 and the P/B ratio is 6.24. The dividend yield is 3.57 percent. The beta ratio is 0.31.


Abbott Laboratories (ABT, Financial) has a market capitalization of $102.76 billion. The company employs 91,000 people, generates revenue of $38.8 billion and has a net income of $4.7 billion. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $8.8 billion. The EBITDA margin is 22.64 percent (the operating margin is 14.81 percent and the net profit margin is 12.17 percent).


Financial Analysis: The total debt represents 25.57 percent of the company's assets and the total debt in relation to the equity amounts to 63.07 percent. Due to the financial situation, a return on equity of 20.07 percent was realized. Twelve trailing months earnings per share reached a value of $4.11. Last fiscal year, the company paid $1.92 in the form of dividends to shareholders. The company raised dividends over a period of 40 consecutive years.


Market Valuation: Here are the price ratios of the company: The P/E ratio is 15.92, the P/S ratio is 2.66 and the P/B ratio is 4.23. The dividend yield is 3.1 percent. The beta ratio is 0.31.


Church & Dwight (CHD) has a market capitalization of $6.97 billion. The company employs 3,500 people, generates revenue of $2.7 billion and has a net income of $309 million. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $568 million. The EBITDA margin is 20.65 percent (the operating margin is 17.92 percent and the net profit margin is 11.26 percent).


Financial Analysis: The total debt represents 8.09 percent of the company's assets and the total debt in relation to the equity amounts to 12.36 percent. Due to the financial situation, a return on equity of 15.83 percent was realized. Twelve trailing months earnings per share reached a value of $2.20. Last fiscal year, the company paid $0.68 in the form of dividends to shareholders. The company raised dividends over a period of 16 consecutive years.


Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.76, the P/S is ratio 2.58 and the P/B ratio is 3.55. The dividend yield is 1.88 percent. The beta ratio is 0.33.


Family Dollar Stores (FDO, Financial) has a market capitalization of $7.57 billion. The company employs 33,000 people, and generates revenue of $9.3 billion and has a net income of $422 million. The firm's earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $893 million. The EBITDA margin is 9.57 percent (the operating margin is 7.37 percent and the net profit margin 4.53 percent).


Financial Analysis: The total debt represents 16.23 percent of the company's assets and the total debt in relation to the equity amounts to 42.19 percent. Due to the financial situation, a return on equity of 35.41 percent was realized. Twelve trailing months earnings per share reached a value of $3.58. Last fiscal year, the company paid $0.60 in the form of dividends to shareholders. The company raised dividends over a period of 36 consecutive years.


Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.33, the P/S ratio is 0.82 and the P/B ratio 5.87. The dividend yield is 1.27 percent. The beta ratio is 0.24.


Take a closer look at the full table of the safest dividend growth stocks. The average P/E ratio amounts to 23.49 and the forward P/E ratio is 16.97. The dividend yield has a value of 3.46 percent. The P/B ratio is 2.61 and the P/S ratio is 1.90. The operating margin amounts to 16.92 percent. The average stock has a debt to equity ratio of 0.87.



**I am long KMB. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.I have no positions in the rest of the stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.


Related stock ticker symbols:


NJR, WTR, ED, FDO, NWN, SO, PNY, MGEE, ABT, SJI, BPL, CWT, KMB, PBCT, CHD, BCR, SAFM, AWR, VVC, UGI


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