With both the Dow and the S&P 500 refusing to stop setting records, it’s nice to find some great dividend growth stocks on sale every now and then.
Two existing positions in my portfolio continued to show price weakness - giving me a great opportunity to add more and lower my cost basis in the process.
On September 9 I added 9 more shares of Kimberley-Clark (KMB) for a total of $1,073.
And on September 11 I bought 15 additional shares of Cardinal Health (CAH) for a total of $1,0475.
I refer back to my recent post on Kimberley-Clark for a more detailed analysis on this dividend growth stock.
In this post I will cover Cardinal Health, why like the stock enough to add more and what both purchases mean for my forward dividend income.
Cardinal Health, Inc. operates as an integrated healthcare services and products company worldwide.
The company’s Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical, over-the-counter healthcare, and consumer products to retailers, hospitals, and other healthcare providers.
The company’s Medical segment manufactures and sources medical, surgical, and laboratory products, including cardiovascular and endovascular products; wound care products; surgical drapes, gowns, and apparel; exam and surgical gloves; fluid suction and collection systems; and incontinence, enteral feeding, urology, operating room supply, electrode and needle, and syringe and sharps disposal product lines.
It also distributes medical, surgical, and laboratory products to hospitals, ambulatory surgery centers, clinical laboratories, and other healthcare providers, as well as to patients in the home; and assembles and sells sterile and non-sterile procedure kits.
The company was founded in 1979 and is headquartered in Dublin, Ohio.
By the way: the location of it’s HQ should not be confused - as I initially did - by Dublin, Ireland where so many US companies have ‘moved’ to.
Cardinal’s current dividend yield is 2.74% – below the average 3.5% yield I strive for in building my portfolio.
The company is featured on David Fish’s list of Dividends Champions, Contenders and Challengers - boasting a 21 year streak of growing dividend pay-outs.
The 5 year dividend growth is a decent 14.25% - with last year’s dividend growth coming in at 3.01%.
CAH’s Earnings per Share (EPS) over the last five years shows an 5.66% increase. Projected EPS growth for next year as compared to the current year is 11.90%.
The trailing 12 months Price/Earnings (P/E) is 16.71, which is well below it’s 5 year average of 26.92. It is also significantly lower than the industry’s 5 year average of 23.57.
EVA Dimensions (an equity research firm) states in their September 15 report that CAH‘s Performance Risk Valuation score is at the 67th percentile of all firms in its industry, which leads to a recommendation to Buy.
It adds that Kimberley-Clark is more attractively priced in relation to its true value than well over half of the stocks in its industry.
Ford Equity Research recommends a ‘hold‘ with a 12 month range of 52-week price range of $64.36 - $83.80.
Jefferson Research concludes that Cardinal is showing strong Earnings Quality, Cash Flow Quality, Operating Efficiency and Balance Sheet Quality, and Valuation suggests a lower amount of price risk. When combined, CAH deserves a ‘buy’ rating.
Given Cardinal’s annual dividend of $1.85 per share this purchase increased my forward annual dividend income by $28.
The additional 9 shares of Kimberley-Clark added $35 to my forward dividend cash flow.