3 interesting dividend stocks for a bumpy ride
We can determine whether a stock is undervalued or overvalued by many ways. One quite interesting way is to compare its dividend yield over the past year to its average dividend yield and calculating the percentage above-average yield (PAAY).
If the current dividend yield is higher than the average (high PAAY), it means that title is undervalued when the current yield is below the value (negative PAAY), it means that the title is overvalued.
We took a few undervalued companies (by this point of view), filter some and kept only, the companies that have increased dividends in the last 25 years or more.
The logic behind this is that most shares are traded with a dividend yield that does not change much over time. When it increases, it may be because the stock price drops, or the dividend increases, or a combination of both. When the value drops and the company is doing well, it is a good buying opportunity. When the dividend grows at a stable pace, it is interesting for long-term investors for whom the dividend is a regular return.