Grossly Over-Valued Dividend Stocks

The label “dangerous overvaluation” refers to Dividend Aristocrats whose prices have risen far enough above rational earnings justified valuations that short to intermediate-term price movements could result in temporary losses of 20% or greater. However, because of the quality of these names and their long-term consistent records of earnings and dividend growth, each of these eight names are still expected to generate positive long-term total returns in spite of today’s overvaluation.

Therefore, the real message here is that we believe investors would be best advised to wait patiently for what we believe will be inevitable corrections, representing better entry points. In concert, this would also imply that current owners might want to consider either lightening up on these positions or even outright sales of the total position. Moreover, the reader should recognize that this is primarily a valuation recommendation, because most of the companies on this list are superb businesses with great long-term operating records. In other words, we like the stocks, but not their current prices.

Source: Value Walk

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