{"id":10820,"date":"2022-09-08T19:39:47","date_gmt":"2022-09-09T00:39:47","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=10820"},"modified":"2022-09-08T19:39:48","modified_gmt":"2022-09-09T00:39:48","slug":"morningstar-cites-three-attractive-dividend-stocks","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=10820","title":{"rendered":"Morningstar Cites Three Attractive Dividend Stocks"},"content":{"rendered":"\n

Now may be a good time to look at dividend stocks, given that inflation is raging and the stock market is stumbling.<\/em><\/strong><\/p>\n\n\n\n

With\u00a0inflation<\/a>\u00a0roaring and the stock market slumping, now may be a good time to consider\u00a0dividend<\/a>\u00a0stocks.<\/p>\n\n\n\n

Strong dividend stocks provide a reliable stream of income along with the potential for capital gains<\/a>. Morningstar listed three<\/a> popular dividend stocks, all of which earned one of its moat designations.<\/p>\n\n\n\n

That means the companies have a competitive advantage in the area of high customer switching costs, economies of scale, intangible assets such as brands or patents and\/or the network effect.<\/p>\n\n\n\n

All the data below are as of Sept. 1.<\/p>\n\n\n\n

Edison International <\/strong> (EIX<\/a><\/strong>) , a fully regulated California utility: Wide moat<\/p>\n\n\n\n

\u201cCurrently yielding around 4%, Edison provides one of the better yields in the utilities sector,\u201d David Harrell, an editorial director with Morningstar Investment Management, wrote in a commentary accompanying the list.<\/p>\n\n\n\n

\u201cDividend growth has been solid, at 6.3% annualized over the past five years, despite financial pressure from wildfires.\u201d<\/p>\n\n\n\n

Going forward, \u201cdividend growth is likely to be more modest, due to the issuance of new equity that will dilute earnings-per-share growth,\u201d Harrell said.<\/p>\n\n\n\n

\u201cBut management is supportive of continued dividend increases. During an earnings call<\/a> earlier this year, [Chief Financial Officer Maria Rigatti] noted she was proud of an 18-year history of consecutive annual increases and that she looked forward to building on that history.\u201d<\/p>\n\n\n\n

Genuine Parts\u00a0<\/strong>\u00a0(GPC<\/a><\/strong>)\u00a0, an auto-parts distributor: Narrow moat<\/p>\n\n\n\n

\u201cThis company’s commitment to annual dividend hikes is beyond question, as this year’s raise was the 66th consecutive annual increase,\u201d Harrell said. \u201cThe company even provided a modest raise in 2021 despite a loss in the previous fiscal year.\u201d<\/p>\n\n\n\n

Management shoots for a dividend payout ratio<\/a> of 50% to 55% of prior-year earnings, so future increases should be close to trailing earnings growth.<\/p>\n\n\n\n

\u201cBut Genuine Parts also provides a good example of how consistent dividend growth doesn’t necessarily lead to high yields,\u201d Harrell said. <\/p>\n\n\n\n

That\u2019s because \u201cthe rate of dividend increases doesn’t keep pace with appreciation of the share price.\u201d<\/p>\n\n\n\n

The stock’s current yield is 2.3%, down from 2.6% just two months ago.<\/p>\n\n\n\n

Philip Morris International <\/strong> (PM<\/a><\/strong>) , which sells tobacco products outside the U.S.: Wide moat<\/p>\n\n\n\n

The company is trying to buy Swedish Match  (SWMAY<\/a><\/strong>) , the Stockholm producer of nicotine and tobacco products. Morningstar analysts say the acquisition could benefit Philip Morris by giving it access to the U.S. market.<\/p>\n\n\n\n

\u201cAn increase in cash flow would be welcome news for future dividend increases, as the firm’s payout ratio has remained above 90% in recent years,\u201d Harrell said. \u201cAnd it will likely hit that level again this year, based on consensus earnings estimates.\u201d<\/p>\n\n\n\n

The payout ratio is dividends per share divided by net earnings per share.<\/p>\n\n\n\n

Meanwhile, \u201cwith all of its revenue generated outside of the U.S., Philip Morris is facing a currency headwind due to the strong U.S. dollar,\u201d Harrell said. The company currently yields around 5%.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Now may be a good time to look at dividend stocks, given that inflation is raging and the stock market<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[254,3421,3422],"tags":[3431,888,3425],"_links":{"self":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/10820"}],"collection":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10820"}],"version-history":[{"count":1,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/10820\/revisions"}],"predecessor-version":[{"id":10821,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/10820\/revisions\/10821"}],"wp:attachment":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10820"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10820"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10820"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}