I added a new position to my portfolio W W Grainger Inc (GWW).
6 Shares @ $176.30 on 6-15-2017
This will increase my forward 12-months dividend income by $30.72 to a total of $3,764.02
I updated my Portfolio Page to reflect the change.
As I discussed in my Stock Consideration post a few week ago, I find GWW to be a great buy at these level.
Here are some numbers to prove why I think it is a great buy right now.
Current PE: 17.86 5-year average PE: 21.5
Forward PE: 16.6
2016 EPS: $9.87
2017 Estimate EPS: $10.65
2018 Estimate EPS: $13.15
Dividend Payout: 49.6%
Dividend Yield: 2.93% 5-year average: 1.76%
As you see above, the current PE level is much lower than the 5-year average. Even the forward PE level is lower than the current. Also, looking at the current dividend yield which is over 100 points higher compared to the 5-year average. Theses two matrices show that GWW is undervalued.
With the payout being at a respectable level, it means that there is plenty of money for sustainable high single digit dividend growth rate.
Here we have different Fair Value estimates.
S&P Capital IQ Fair Value: $173.30
Yahoo Price Target: $187.45
My DDM Analysis: $187.64
As you see above, GWW is very much undervalued right now.
Thanks for reading, and don’t forget to follow me:
Do you like GWW at these prices? What have you been buying?
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Hi Felix, thanks for sharing your buy! I get your remark “high single digit dividend growth rate” based on the numbers, but the average DGR is 1.76% in the past 5 years. How do you reckon GWW will start increasing the growth?
Hi Mr. Robot.
Thanks for commenting. that’s a great question.
This link: http://dailytradealert.com/dividend-champions-contenders-and-challengers/ and the Dividend Champions excel file shows that GWW has a 13.9% 5-year DGR. Also, S&P Capital IQ states that they will have a 3-tr.Proj. EPS CAGR of 8%. This is why I think there DGR will be in the high single-digit DGR.
This is an amazing additiona. You forgot to mention the fact that GWW has been paying out increased dividends for over 40 years. This is definitely a company on my watch list also.
Oh yes, you are right!! a lot of companies can’t say that! Thanks for commenting!
As Mr. Warren Buffet said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.