2 Highly Liquid Dividend Stocks Undervalued by Target Price

One important consideration when choosing a source of dividend income is the company’s liquidity – if free cash flows unexpectedly dropped one year and were not sufficient to cover a company’s dividend, the company could use their liquidity reserves to continue paying the dividend. Therefore, liquid firms are more likely to have reliable dividends. We screened dividend stocks paying yields above 2% and sustainable payout ratios below 35% for those that have seen significant liquidity growth, seeing the 10-year compound annual growth rate (CAGR) for current assets at least 5% higher than the 10-year CAGR for current liabilities. We then screened for those trading at a deep discount to the mean analyst target price. Although target price is known to suffer from an upward bias, when a stock is trading at a significant discount, it may indicate that it is undervalued. Interactive Chart: Press Play to compare changes in analyst... Read more