The fair value P/E range for HD comes in at around 22x to 24x. That sharp decline represents the decline in the prior year. We see a similar trajectory regarding the fair value P/E range that we saw for DPZ - a spike followed by a fairly sharp decline. In this case, it was more similar to the overall market hit as measured by the S&P 500 being down around 19.4%. The hit in 2022 wasn't as hard compared to DPZ. HD similarly benefited from the pandemic as people were stuck inside it was a great time to get projects done that they'd been meaning to do for years. An additional factor is the low dividend payout. 2023 should be a year of stabilized earnings and returning back to growth. I also suspect that, given the estimated EPS, it wouldn't be too large of a leap. I would base this on the trajectory of increases and noting the slowdown of more recent years. With a dividend yield of 1.32%, we see a yield lower than the broader market, so being compensated with higher growth is the payoff. That translates into $1.23 to $1.26 per quarter. My best guess is we get a 12 to 15% increase. This is certainly a consumer discretionary play while it's food and everyone has to eat, it isn't essential food that consumer staples provide.ĭividend estimates show that we could hit a $4.82 annual payout this year, which would mean a $1.20 quarterly dividend or an 8.33% boost. For 2023, most expect a recession, which could hit DPZ on earnings once again to bring down their anticipated growth. With a payout ratio of 34.30%, they have plenty of capacity for another monster boost, but I wouldn't blame them for being more conservative heading into this year. I don't know about you, but I would still find that quite compelling especially given the uncertainty in the future. The pace slowed in the latest year when it announced a 17% increase last year. The 5-year CAGR comes in at a mouthwatering 19.05%. A relatively short period of time compared to some other dividend growth stock choices out there. Ultimately, EPS growth should pick up once again with new store opening and entering new markets.ĭPZ has put up dividend growth for 9 years. It appears that most analysts believe this will be a small blip in the longer-term trajectory. That pandemic-style play was unwinding in 2022, and earnings are taking a hit as stimulus money is drained, and people are no longer stuck indoors. On that basis, it would indicate that there is some meaningful upside.ĭPZ Fair Value Estimate (Portfolio Insight) That large move has pushed the shares to trade well below their historical P/E range of around 25.5x to 28x. In particular, the pandemic helped make a massive leap in the stock price.Ī declining stock price doesn't always automatically make a stock worth investing in. DPZ shares had done exceptionally well over the prior years even despite this big hit. However, just looking at that specific timeframe alone could be missing the bigger picture. So we won't have to wait too long for these anticipated announcements. They also both happen to announce their dividend increases in February usually. These two are also historically exhibiting higher-than-usual dividend growth thanks to their higher-than-usual earnings growth. Today, I wanted to look at two companies whose stock prices were hit pretty hard last year. Of course, this rose in the last year not only from the dividend payout increases but also from the price decline. Overall, the dividend yield for the index was 1.74%. It was the best dividend growth since 2014, which clocked in at 12.72% year-over-year growth. That's despite having the worst performance since 2008. In 2022, the S&P 500 ( SP500) saw dividend payouts increase by 10.8%. So that can be a bonus on top of the passive income growth they provide.ĭividends don't rely on the stock market doing well. Both investor types also benefit from the fact that many dividend growth stocks tend to be more mature, financially stable investments. During accumulation, it is a way to take a more hands-off approach and let investments work for you in the background over many years. This is beneficial not only for retired investors but also for those in the accumulation phase of their life. Although inflation has been coming down now, the benefit of dividend growth doesn't disappear it just becomes even more attractive. Inflation hasn't been a problem in most of the last decade, but 2022 changed that. This can help combat the negative impacts of inflation by helping keep your purchasing power above inflation levels. Reinvesting dividends and investing in dividend-growth stocks are two ways to grow your income over time passively. This article was originally published to members of Cash Builder Opportunities on January 10th, 2023.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |