Best Long Term Stock Ideas

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>>> 8 Great Dividend Stocks You Never Heard Of


http://m.kiplinger.com/slideshow/investing/T018-S003-8-great-dividend-stocks-you-never-heard-of/index.html?page=2



Aqua America


Headquarters: Bryn Mawr, Pa.

Share price: $24.37

Market capitalization: $4.3 billion

Dividend yield: 2.7%

Years of consecutive dividend increases: 23

It may not be surprising to find a utility on a list of dividend payers. But Aqua America (WTR), a holding company for water and wastewater utilities, stands out for its potential to keep raising its payout.

Aqua America already serves nearly 3 million people in eight states, including North Carolina, Ohio and Pennsylvania. But with close to 53,000 water systems in the U.S., expansion opportunities abound. In 2013, Aqua America bought 15 operations, and so far this year it has completed another eight acquisitions.

The purchases are helping pump up earnings, which increased at a strong annualized rate of 15% from 2009 through 2013. In addition, Aqua America plans to spend roughly $1 billion on system upgrades from now through 2016, much of which will be paid for by state-approved surcharges and rate increases. That should bolster earnings, according to a report from Robert W. Baird, a Milwaukee-based investment firm. It will also help fuel dividend growth. Aqua America lifted its payout by 9% earlier this year, and over the past decade, it has boosted the dividend by an average of 8% per year.

The stock has returned just 5.3% so far this year, compared with 9.0% for the S&P 500. Aqua America looks pricey, trading at 20 times forecasted earnings for the next 12 months. But that’s slightly below its average forward price-earnings ratio of 21 for the past five years.


BD (Becton, Dickinson)


Headquarters: Franklin Lakes, N.J.

Share price: $116.97

Market capitalization: $22.4 billion

Dividend yield: 1.9%

Years of consecutive dividend increases: 42

BD (Becton, Dickinson) (BDX) makes syringes, IV catheters and other run-of-the-mill medical supplies that most of us barely notice. But these tools are health care essentials, and the 117-year-old company continues to find sources of growth. The biggest driver: overseas sales. BD now has operations in more than 50 countries, with about 60% of sales coming from abroad. And in the company’s latest quarterly statement, overseas revenues increased 6% (adjusted for currency fluctuations) from the same period a year earlier. U.S. revenues rose only 2.8%.

Based on the strength of BD’s foreign operations, analysts believe earnings will rise 9% in both 2015 and 2016. That should provide ample space to increase the dividend, which currently accounts for only 35% of estimated 2014 earnings. Indeed, over the past five years, BD has ratcheted up its dividend at an average rate of 11% annually. That growth rate may justify a higher P/E than its competitors have. The stock, which has gained 6.9% so far this year, trades at 18 times estimated year-ahead earnings, compared with 17 for the average health care company in the S&P 500.



Dover


Headquarters: Downers Grove, Ill.

Share price: $88.88

Market capitalization: $14.8 billion

Dividend yield: 1.8%

Years of consecutive dividend increases: 59

Dover (DOV) produces industrial components that consumers rarely encounter, such as oil and gas drilling equipment and plastic tube connectors. But the manufacturer, which has consistently hiked its dividend for more than half a century, is worth getting to know. Case in point: Despite the global economy’s uneven growth so far in 2014, Dover’s sales are improving. Orders across the firm’s four main segments—energy, engineered systems, fluids, and refrigeration and food equipment—have been strong, climbing by an average of 8% in the first six months of 2014 from the same period the year before. “Dover’s results stand out,” writes Nicholas Heymann, an analyst at William Blair, a Chicago-based investment bank.

Meanwhile, the company continues to raise its dividend at a healthy clip. Over the past five years, the payout has moved up at an annualized rate of 9%. Dover’s stock trades at 17 times estimated year-ahead earnings, a slight premium to the average industrial-stock P/E of 16. But analysts expect Dover’s earnings to rise 12% next year, compared with 11% for its average competitor. So far this year, the stock has returned 11.9%.



Genuine Parts Company


Headquarters: Atlanta

Share price: $87.85

Market capitalization: $13.4 billion

Dividend yield: 2.6%

Years of consecutive dividend increases: 58

During the recession, Genuine Parts (GPC) survived better than most. That’s because the company’s main business segment is the wholesale distribution of car replacement parts through NAPA auto stores, and during tough economic times consumers often opt to repair old cars rather than buy new ones. So although Genuine Parts’ earnings fell in both 2008 and 2009, they did not collapse. The stock lost only 16.3% in 2008, much better than the S&P 500’s plunge of 37%.

Since then, Genuine Parts’ results have improved steadily. Sales in the first half of 2014 for the entire company, which includes Genuine Parts’ three other business lines—wholesale distribution of electrical materials, industrial replacement parts and office supplies—rose 10% from the same period the year before. The company’s S.P. Richards subsidiary was named as the primary wholesaler for the newly merged Office Depot and OfficeMax stores. And Genuine Parts is expanding overseas as well. Last year, it bought Exego Group (now GPC Asia Pacific), an auto-parts distributor in Australia.

All of that has made it possible for the company to continue to increase its dividend, this year by 7%. The stock trades at 18 times estimated year-ahead earnings, on par with the average for its sector (companies that make non-essential consumer goods).



V.F. Corporation


Headquarters: Greensboro, N.C.

Share price: $63.87

Market capitalization: $27.5 billion

Dividend yield: 1.6%

Years of consecutive dividend increases: 41

You may have never heard of V.F. Corporation (VFC), but you probably wear some of its products. The apparel manufacturer owns more than 30 brands, including The North Face, Timberland and Wrangler. Lately, the company has benefited from rising consumer demand for activewear. In fact, sales of activewear were up 9% across the industry last year, compared with 2% for the total apparel market, according to the NPD Group, which tracks consumer trends. (Raise your hand if you’ve worn yoga pants or a running jacket to the grocery store.)

With its top activewear brands, VF is doing a good job of riding the trend. Revenues in the second quarter were up 8% from the same quarter the year before, and earnings per share were up 16%. VF’s global reach is also an advantage. A little more than one-third of the company’s sales come from overseas. In the latest quarter, international sales grew 14%.

The momentum is likely to continue. Analysts expect VF’s earnings to expand 14% this year and 13% next year. That may enable the company to continue to deliver impressive dividend increases (it boosted the payout by 21% last year). After soaring 68% last year, VF shares are essentially flat so far in 2014. But the breather may be a good thing: The stock trades at 20 times forecasted year-ahead earnings, compared with 18 for the average company that makes non-essential consumer goods.