The U.S. stock market, using SPDR S&P 500 ETF Trust (NYSE:SPY) as a proxy, has bounced about 8% from a low in December. The ETF has some strong resistance at the US$270 range. It needs to break that range and make a new high to indicate that the correction that started in October won’t continue.
Despite the market rebounding, there are still some good-value quality U.S. dividend growth stocks for long-term investing. Here are two out of seven top U.S. dividend ideas I wrote about here in December. They’re still great buys today.
Wells Fargo (NYSE:WFC) is undervalued and offers a yield of about 3.6%. The analyst consensus thinks Wells Fargo will increase its earnings per share (“EPS”) by 11-12.7% per year over the next 3-5 years. In the FAST Graphs below, I use a more conservative price-to-earnings (“P/E”) multiple and growth rate of 11 and 9%, respectively. The estimated annualized returns would be about 13.3-14.5% over the 3-5 years.
Normally, Wells Fargo can trade at a P/E of 13, which would imply annualized returns of 16.6-20.4%!
WFC: What Analysts Think
Morningstar thinks wide-moat WFC is undervalued. It gives WFC a fair value estimate of $67 and a super undervalued price of <$46.90.
Value Line‘s Nov 9, report gave WFC a high safety rating of 2 out of 5 (1 is safest) and a company financial strength of A. At the time, WFC traded at about $52.70 and Value Line had a 3-5 year target of $70-95 on the stock for estimated annualized total returns of 10-18%.
Thomson Reuters has a 12-month mean target of $61.30 on the stock, which represents nearly 34% near-term upside potential.
Technically, WFC has some support at the US$44. Now is a good time to buy shares for long-term accounts. It has near-term upside potential to US$58, but it needs to break above the resistance at $50-55.
Last week’s candle was relatively positive compared to the market’s.
Although Comcast (NASDAQ:CMCSA) only offers a dividend yield of 2.1%, it offers faster dividend growth. The analyst consensus thinks Comcast will increase its EPS by 11.1-18.4% per year over the next 3-5 years. CMCSA’s long-term EPS growth (orange line) looks absolutely beautiful. Oh, they come with double-digit dividend growth every year since 2009! The payout ratio of about 29% of earnings is very sustainable.
Under normal market conditions, CMCSA should be able to trade at about $42 in a year for nearly 18% upside potential from about $35.60 per share.
CMCSA: What Analysts Think
Morningstar thinks wide-moat CMCSA is undervalued. It gives CMCSA a fair value estimate of $42 and a super undervalued price of <$29.40.
Value Line‘s Dec 14, report gave CMCSA a high safety rating of 2 out of 5 (1 is safest) and a company financial strength of A. At the time, CMCSA traded at about $37.70 and Value Line had a 3-5 year target of $60-80 on the stock for estimated annualized total returns of 14-22%.
Reuters has a 12-month mean target of $44.30 on the stock, which represents nearly 29% near-term upside potential.
Neutral candle last week. CMCSA has some support at $31-33 level.
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Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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