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| Dividend Champions: Price-to-Earnings |
2020 is on our doorstep; a new year with new
opportunities. It’s time to consider how
to put money to work going forward. Thus far we’ve explored possibilities by segmenting the Top 10 Dividend
Champions according to the following value investing characteristics:
These factors fall within the framework of Benjamin Graham’s Value Investing philosophy, the tenets of which are outlined in his
book Security
Analysis and made famous by his student, Warren Buffett.
In line with Ben's Value Investing philosophy I’ve pulled the Top
10 Dividend Champions by lowest Price-to-Earnings (P/E) ratio as of December 2,
2019. These ratios are based on the
trailing twelve months (TTM) earnings for the firms shown.
|
Dividend
Champion
|
P/E (TTM)
|
|
NACCO Industries
|
7.45
|
|
Nucor Corp.
|
9.59
|
|
Old Republic International
|
10.07
|
|
Franklin Resources
|
11.70
|
|
Enterprise Bancorp Inc.
|
11.77
|
|
Tanger Factory Outlet Centers
|
12.08
|
|
First Financial Corp.
|
12.12
|
|
Community Trust Banc.
|
12.41
|
|
Albemarle Corp.
|
12.60
|
|
National Fuel Gas
|
12.83
|
As a Dividend Farmer
I prefer metrics involving facts versus guesses. Investors using forward projections or
earnings forecasts are comparing a given price (fact) with forecasts (guesses)
about future performance. Comparing factual performance (TTM) to actual price strikes me as a better
approach because it reduces
risk inherent in guessing.
From a value standpoint, paying for a dollar of earnings
with a minimum number of dollars makes sense.
Other variables being equal, the time to recover the investment (payback
period) is shorter with a low P/E.
Paying a smaller multiple of earnings for the privilege of ownership is
desirable as long as other value factors are also appropriate.
With this said, the usual caveat is in place. Don’t pour money into an investment because
it appeared in a Top 10 list. Conduct
your due diligence. Keep
learning. Make yourself a
better, more knowledgeable investor.
Success is likely to follow.
Thoughts presented are those
of the author, who is not a financial professional. Perspectives are not
investment advice, but offered for the purpose of discussion and information.
For specific investment advice or assistance, please contact a registered
investment advisor, licensed broker, or other financial professional.
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