hi I'm Jimmy in this video we're looking at a handful of blue chip dividend
stocks that I've been researching that could do well over the next few years
I've been trying to find dividend stocks that could do well if we happen to see
another crash in the economy or another crash in the stock market maybe the
coronavirus comes back and things end up getting worse
and we see another pullback so I'm looking for dividend stocks that could
do well through all of that now I'm going to run through these companies
fairly quickly so if you think we should do a deeper dive on any one company or
perhaps the company that we don't include in this list please let me know
in the comments below the other thing that I'm trying to do with my research
for these dividend stocks is I'm trying to do a preliminary valuation of each
company using a discounted free cash flow valuation method the valuation that
I came up with a sort of a pre valuation and this is something I try to do when I
want to narrow down the list of stocks that could be good starts to research
with a more thorough research process okay so let's jump into the first
dividend stock the first one that I think looks good is the united Parcel
Service ticker symbol UPS UPS has a dividend yield of about 3.8 percent and
for those who are not too familiar with what UPS does well they deliver packages
and documents throughout the world although according to their 2019 annual
report 79 percent of that revenue was generated in the United States now
according to my initial discounted cash flow valuation method well I used
analyst estimates and I came up with a fair value for UPS a stock of about a
hundred and seventeen dollars per share when we switch over to the UPS stock
chart what we can see that using our DCF calculation that would put the fair
value right about there now one of the things that I like about UPS is that I
believe that once the economy gets back on track when it gets once it gets back
to normal it's possible that their profit margins begin to improve one of
the reasons that they've seen a hit for their in their profit margins
during the coronavirus shutdown is that business-to-consumer shipments tend to
be less profitable and those have been what is dominating shipping these days
and since there's been very little concern
consumer shipping well it makes sense that their profit margins would have
been hurt so I think that that has the potential to come back the other way
once the economy does so now given where the stock is today our question
personally for each of our own portfolios should be do we think this is
a large enough margin of safety because ideally we want to buy it below the fair
value so assuming we take that is a potential fair value is there enough of
a gap is that enough of a margin of safety for us to jump in and buy today
okay next up we have the Kraft Heinz Company ticker symbol khc Kraft Heinz
says the dividend yield up a bit short of 5% now according to my DCF
calculation the fair value for Kraft Heinz the stock came in at about a fair
value of about 29 dollars per share so when we switch over to their stock chart
over the past year but we can see that there we have their fair value right
about here so yes the price seems at least a couple dollars too high right
now but this could be a great opportunity for the long run especially
if we get a pullback below our calculation of fair value now I'm sure
that many of us know that Warren Buffett owns a big stake in this company I think
he owns about 20 percent so we gotta like the fact that we're following him
now last year Kraft actually had a rough year in fact if we switch over to a
two-year chart well here we can see they had a big drop right in this area and a
lot of things happened in that time period the CEO stepped down they cut
their dividend and by the way the dividend yield right now is based on the
new dividend nothing old of the dividend look they had cut their dividend from
about 62 cents per share to 40 cents per share on quarterly basis and clearly all
of the combination of this stuff has led to a lower stock price which could be a
good opportunity for us personally I think that this company has looks very
good in the long run I'm talking five years plus I think they're a great
company and I think that they have a lot of very reliable businesses or reliable
brands that could do well in the long run especially once again if the stark
blows our character if the stock falls below our calculation of fair value of
about $29 per share sorry about that again I got excited about stocks and
fumble over my words okay Before we jump into the next company
should also point out that to come up with the fair value calculation for all
the companies I'm using discounted free cash flow and if you're curious I'm
using required rate of return of seven and a half percent and a perpetual
growth rate of two and a half percent that's been consistently what I've been
using lately but just in case you're trying to duplicate the calculation
that's what I that's what I used now if you'd like to be able to do this
calculation on your own you're not sure how actually did a video on how to do a
DCF calculation and I'll leave a link to that in the description below
okay now let's jump over to our next dividend stock next up we have Intel
ticker symbol int C Intel has a dividend yield of about 2.2 percent and according
to my calculation of fair value I came up with a fair value for the stock of
about $74 per share now when we switch over to Intel stock chart one year star
chart what we can see that that would put their fair value right about here
now I'm a big fan of Intel's business I think they have a lot of staying power
and I expect that over the long run they should do quite well now recently I've
been more looking for blue chip stocks or blue chip companies to invest in
companies like Intel and that's the reason why I'm looking at a company like
Intel and not a company like AMD or Nvidia which are both good high quality
companies but they're more growth companies Plus AMD doesn't pay a
dividend just yet and NVIDIA has a fairly small dividend so overall I'm a
fan of where Intel is trading at right now and looks like it's got some good
value characteristics given how much the stock has already recovered from the
lows earlier this year okay so those are my top three favorite
dividend stocks blue chip dividend stocks that I think could do well in the
next couple years now I have a few other potential ones that I haven't gotten
through the valuation portion of my research just yet that's why I'm
separating the two groups so first are some obvious companies good quality
dividend stocks companies like AT&T and Verizon they both pay good dividends and
I've researched them a few times in the past and they tend to look pretty good
then we have Pfizer and Merck I think both of those look pretty good and
finally I'm looking closer at Home Depot and Lowe's these are all high-quality
blue chip in stocks now before we can confidently
say that I like this stock at this price I like to do a bit more research on each
of the companies before I feel confident saying where I would where I think it
could be a good buy and I also want to go through the rest of my research
process on the original three companies that I mentioned to see if there are any
major weaknesses that I haven't come across yet so if you happen to know of
any huge flaws in any of these companies please let me know your opinion below in
the comments for any potential hiccups anything that could slow down these
companies for performing well now if we're curious about a more in-depth
research process that I use to make to better understand stocks and value
stocks perhaps the video I did on the 8 steps to research of stock could be a
good next video for you to watch I've got a link right here and I got a link
in the description below and I want to thank you so much for sticking with me
all the way to the end of the video I really appreciate it thanks and I'll see
in the next video