This High-Quality, Cheap Stock Is Rated A “Buy” And Looks 10% Undervalued

There is a subset of stocks that I think treats money particularly well.

Those are high-quality dividend growth stocks. It takes a special kind of stock to reliably pay out dividends for decades. That’s because it takes a special kind of business to produce the necessary profit for decades. High-quality dividend growth stocks take it to the next level, as they’ve been paying increasing dividends for decades.

Investing in high-quality dividend growth stocks for myself allowed me to retire in my early 30s. And I lay out in my Early Retirement Blueprint exactly accomplish that. Suffice it to say, a lot of saving and investing was involved. By putting my hard-earned savings to work with high-quality dividend growth stocks, I built my FIRE Fund.

That’s my real-money dividend growth stock portfolio, which produces, the five-figure dividend income I live off of. But I didn’t just invest in any dividend growth stocks. I invested in the highest-quality dividend growth stocks at the best possible valuations.

Price is what you pay. But it’s value that you get for your money. An undervalued dividend growth stock should provide a higher yield, greater long-term total return potential, and reduced risk.

This is relative to what the same stock might otherwise provide if it were fairly valued or overvalued. Price and yield are inversely correlated. All else equal, a lower price will result in a higher yield. That higher yield correlates to greater long-term total return potential. This is because total return is simply the total income earned from an investment – capital gain plus investment income – over a period of time.

Prospective investment income is boosted by the higher yield.

But capital gain is also given a possible boost via the “upside” between a lower price paid and a higher estimated intrinsic value. And that’s on top of whatever capital gain would ordinarily come about as a quality company naturally becomes worth more over time.

1 2 3
View single page >> |

Disclaimer: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.