The U.S. stock market keeps hitting all-time highs. With most of the gains in 2019 coming from multiple expansion (meaning investors are willing to pay more, not that the company is growing), stocks are trading at high valuations compared to its historical averages. That makes it harder for dividend investors to get a good dividend yield on their investments. Because as stock prices rise, dividend yields fall. Also it is important to protect your capital by not overpaying for businesses, no matter the quality of the company. Even many slow-growing income stocks from the utilities sector are trading at a P/E multiple north of 20x. However, it is still possible to find value in the market. Just have to turn over a lot more stones to find it. In the table below, I present 4 stocks that I have found through my research that are currently trading at favourable valuations and pay a high dividend that is covered by free cash flow.
You can find my personal investment portfolio here.
| Company | Ticker | Yield | FCF Payout Ratio | Dividend Growth Streak | P/Forward Earnings | |||
| Eastman Chemical | (EMN) | 3.49% | 34% | 10 yrs | 10.2 | |||
| Bank OZK | (OZK) | 3.68% | 24% | 22 yrs | 9.6 | |||
| MSC Industrial | (MSM) | 4.17% | 58% | 16 yrs | 14.8 | |||
| Unum Group | (UNM) | 3.84% | 16% | 11 yrs | 5.3 |
Continue reading the full analysis here.
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