The best value stocks to buy offer high-growth on the cheap
It’s hard to find a bargain stock with dividends growing
quickly. Often they are overvalued and not worth buying. Another problem is
these kind of stocks can’t sustain the dividend growth. The trick to uncovering
the best stocks to buy now is to search for fast-growing dividend stocks with
low earnings-payout ratios. Even better if they’re cheap.
For example, fast growing tech companies reinvest their
earnings in their business. They can’t afford to pay dividends without
sacrificing growth. Amazon (NASDAQ:AMZN) has never paid out a dividend but is
growing very fast. The stock is not cheap as investors rely on steady growth,
but its investors are willing to forgo dividends.
Among the best stocks to buy now for value and income are
business development companies (BDC). BDCs often raise their dividends at high
rates, borrowing money or continually selling equity to finance dividend
growth. Their payout ratios are high and the companies tend to be highly
leveraged as a result.
Below are five stocks selling below 10x earnings whose
dividends have been rising 15% or more per year. The companies pay out less
than 30% of their earnings in dividends. They reinvest the rest to maintain
consistent growth.
None of these stocks are turnarounds. They have been growing
consistently for the past several years. You can rely on them to continue to
increase their dividends at these rates.
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