16 High-Dividend Growth Stocks Deeply Undervalued by Target Price

A high dividend growth rate can be a great sign for a company--dividend increases tend to signal that management is optimistic on future prospects. There are, however, a few caveats to consider. High dividend yields (the dividend divided by share price) and high payout ratios (the dividend as a share of earnings) are less sustainable over time. If you want to rely on your stock’s dividend, look for dividend yields below 7% and payout ratios below 35%. Here we ran a screen with these ideas in mind. We searched for stocks with at least 15% growth in dividend per share, comparing the trailing-twelve-month figure to the current year estimate. We then controlled for dividend yields between 2 and 7%, and payout ratios under 35%. Among these stocks, we found 16 that are also deeply undervalued by mean analyst target price (used as a proxy for fair value). We admit that... Read more