As you keep learning from online trading, you will need to identify quality stocks selling for attractively low prices. Buying high quality dividend stocks when they’re selling for low prices is one of those success tactics in stock trading. Then, selling them when the price rises provides great profits. And we have none other than Warren Buffett himself affirming that. The Berkshire Hathaway CEO has been known to perfect this strategy which is probably one of the reasons he is called “the Sage of Omaha”.
Right now there are a few dividend-paying businesses - industry leaders who have been unfairly treated by the market, resulting in their stocks trading low. Two of these would belong to the Dividend Aristocrats, companies whose dividends have been increasing consecutively for the past 25 years.
Walmart Stores, the world’s biggest retailer, is one of these companies. It manages to churn out an annual revenue of around $480 billion though it has experienced struggles recently. Fiscal 2016 witnessed the company’s sales and earnings decline while its public image took a beating because of less user-friendly stores and its poor treatment of employees. The adverse foreign exchange rates contributed to an 8% year-over-year diluted earnings per share drop in fiscal 2016.
It still has potential for growth though, primarily through small-format stores, which is what customers have been asking for quite some time, and e-commerce. This was reflected in the last quarter, when there was an 8% increase in sale for Walmart’s Neighborhood Markets small-store. The company also reported a 12% rise in e-commerce sales in the last fiscal.
Walmart has raised dividend for 43 consecutive years. The company is also ideal for bear markets since it is recession resistant. Shares of the company now offer close to 3% yield on the basis of its existing share price, which is much above the 2% S&P 500 average yield of dividend. And the company’s shares trade at a quite favorable price-to-earnings ratio of 15, significantly lesser than the 23.7 S&P 500 P/E.
Archer Daniels Midland
Archer Daniels Midland is another high quality dividend stock that has been negatively affected by other factors. In this case, it is the slump in the prices of agricultural commodities. The stock currently trades significantly below the S&P 500’s P/E, a price-to-earnings multiple which is below 13. The dollar getting stronger coupled with the increasing global supply has also contributed to the company’s stock trading less, since they have reduced its exports and margins. Its earnings per share has fallen 49% in 2016 Q1, though its corn-processing business has brought about an increase in the operating profit by 1.5%.
Recently, Archer Daniels Midland declared its quarterly dividend payment for the 338th consecutive time. This has been a record of uninterrupted dividends extending for 84 years. The company even raised its dividend last year by 7%. The past five years have also seen a 13% rise in its dividend compounded annually.
Experience, resources, and a sharp eye for the market and the factors surrounding it are essential for successful online trading. Identifying such high quality dividend stocks is vital. Get in touch with TradeZero at 954-944-3885 or email us at [email protected] to take the right steps to become a successful stock trader through online trading.
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