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Two Wide Moat Dividend Stocks To Consider On Dips

I like to invest in quality companies, with an established track record of dividend increases. I want to acquire these quality companies at an attractive entry price, and then see earnings per share, dividends per share and intrinsic values grow over time.

The beauty of quality companies is that you need to get one decision right – that is the ability to identify their business model, and then buy those companies in the first place without overpaying for them.

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I do not want to worry about buying at a low price, and then selling at a high price. I want to make one decision, and then let these quality companies do the heavy lifting for me. My favorite holding period is forever. While some may fail, I know that by building a diversified portfolio of dividend growth stocks, I will do just fine over time.

Speaking of quality companies, there are two that are beginning to look attractively valued.

S&P Global Inc (NYSE:SPGI) provides independent ratings, benchmarks, analytics, and data to the capital and commodity markets worldwide. The company operates through S&P Global Ratings, S&P Global Market Intelligence, S&P Dow Jones Indices, and S&P Global Platts divisions.

The company is a member of the dividend champions index, and has managed to increase dividends for 43 years in a row. Over the past decade, S&P Global Inc (NYSE:SPGI) has managed to boost dividends at a rate of 7.20%/year. Earnings per share grew from $2.40 in 2006 to $4.21 in 2015. The company is expected to earn $5.27/share in 2016 and $5.83/share in 2017. I find the stock attractive on dips below $105 – $106/share.

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Moody’s Corporation (NYSE:MCO) provides credit ratings; and credit, capital markets, and economic related research, data, and analytical tools worldwide. It operates through two segments, Moody’s Investors Service and Moody’s Analytics.

The company is a member of the dividend contenders index, and has managed to increase dividends for 8 years in a row. Over the past decade, Moody’s Corporation (NYSE:MCO)’s has managed to boost dividends at a rate of 21%/year. Earnings per share grew from $2.58 in 2006 to $4.63 in 2015. The company is expected to earn $4.71/share in 2016 and $5.11/share in 2017. I find the stock attractive on dips below $94/share.

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Both companies are market leaders in the market for credit ratings. Anyone who wants to sell debt may have to pay for a credit evaluation from one of those two industry leaders (with Fitch being third largest). Moody’s and Standard & Poors are essentially a duopoly, which charges a toll for anyone who wants to access credit markets. So both companies have a strong competitive position.

I also like that S&P Global has a strong line-up of widely followed indices, which can generate a lot of fees in the future, especially as everyone around is becoming an index investor.

Full Disclosure: Long MCO