One year ago, it would have been difficult to find stocks at a value. After the market decline, there are more investment opportunities. Specifically, there are two high growth dividend stocks I want to bring to your attention: ITC Holdings Corp. (NYSE:ITC) and Amgen, Inc. (NASDAQ:AMGN). Both have increased dividends for at least 5 years in a row.
A High Growth Utility
In its first decade of operations, ITC Holdings has successfully acquired, integrated and improved the reliability of the transmission businesses.
Transmission investment needs are projected to require $120-160B of investment per decade through to 2030, and ITC Holdings is filling a part of that need. It is focused on improving reliability, reducing cost of power, and meeting new system needs.
ITC Holdings’ 5-year plan until 2018 forecasts operating earnings per share to grow at a compound annual growth rate (CAGR) of 11-13%, cash from operations to grow at a CAGR of roughly 10%, and dividends to grow at a CAGR of 10-15%. In August, the utility raised its quarterly dividend by 15.4%. That marks its 11th year of dividend increases. In the previous two years, it increased dividends by 12-15%, marking itself as a high growth dividend stock.
With a price of around $32.50 per share, ITC Holdings is trading at a price-to-earnings ratio (P/E) of 16, and yields 2.3%. It normally traded at a P/E of 21, so it wouldn’t be farfetched for it to trade at a P/E of 18, implying it should trade around $37.50. So, for a quality utility with a S&P credit rating of A- that’s discounted by 13%, ITC Holdings is priced at a value today.