In a previous article, I looked at five stocks in particular that presented more growth, a better valuation, and paid out a better dividend than an investment in the S&P 500. In addition, these particular companies also increased their dividend last week, and while I already looked at five, there are also five more worth noting.
In the last piece, I explained that I am using one of the value-seeking strategies found in my book Taking Charge With Value Investing (McGraw-Hill, 2013), which is to seek value in stocks that trade with valuations that are less than the broader market, but with greater growth. Hence if the S&P 500 is trading at 19.23 times earnings and at 1.52 times sales with (0.51%) growth in Q1, then a company that is cheaper with positive growth might indicate upside relative to the S&P 500.
|Company||Ticker||P/E Ratio||Price/Sales||Last Quarter Growth Rate||Forward Yield|
|Marsh & McLennan Companies, Inc. (NYSE:MMC)||18.36||1.87||2.50%||2.45%|
|ACE Limited (NYSE:ACE) ||11.71||1.74||2.60%||2.20%|
|Northrop Grumman Corporation (NYSE:NOC)||10.43||0.74||(1.50%)||3.09%|
|Macy’s, Inc. (NYSE:M)||14.38||0.66||4.00%||2.11%|
|NiSource Inc. (NYSE:NI)||18.81||1.78||8%||3.48%|
*After dividend hike last week
Marsh & McLennan Companies, Inc. (NYSE:MMC) is a very large $23 billion global professional services firm providing advice and solutions in the areas of risk, strategy and human capital. In the last year it has seen gains of 29.91% and is currently trading at new 52-week highs after increasing its quarterly dividend by 9% last week. While the company does not trade at a large discount to the market (fundamentals/valuation) it does have a significantly greater level of growth (2.50% compared to a loss of 0.51%). Thus I say that it might be a good addition to your portfolio.
ACE Limited (NYSE:ACE) is a large $31 billion global insurance and reinsurance organization, serving the needs of customers in more than 170 countries. Not only is it much cheaper than the S&P 500 with greater growth, but also has a history of increasing its payout to shareholders. In the last five years alone the company has almost doubled its dividend, thus making it a shareholder friendly company with institutional ownership of 93%. In my opinion, these are all reasons to consider adding ACE Limited (NYSE:ACE) to your portfolio.
Northrop Grumman Corporation (NYSE:NOC) is also a very large $20 billion secular company that provides products, services, and integrated solutions in aerospace, electronics, information and services to its global customers. In the last five years it has increased its dividend 50% and is also very aggressive with buying back shares (plans to reduce outstanding shares by 25% by 2015). When you look at its valuation and its dividend it looks like a definite buy, yet its slower than market growth is a bit concerning. In my opinion, this one area of concern is overshadowed by all of its other valuation and dividend related positives.