Buying a High-Yield Stock

An 8% dividend with room for growth

The Compounding Dividends Portfolio already has 2 great dividend-paying companies.

Today we’ll announce the third.

Our Next Stock

Our next stock is a High-Yield Stock selling at a discount.

It’s currently yielding over 8%.

That brings the average yield of our portfolio to over 4%.

• The company has very established brands - it’s been operating since 1902

• It is in an unpopular industry, and trades outside of the US

• It has a fast-growing segment that may provide tailwinds

• It generates lots of cash

  • Even with the high yield, the payout ratio is below 50%

  • Management has also initiated buybacks

• The company looks attractively valued:

  • It’s trading above its historic dividend yield

  • The Earnings Growth Model says we can expect a 13% return per year

  • The Reverse Dividend Model says it needs to grow the dividend at just over half its 5-year average rate for a 10% return.

Let’s dive into the full Investment Case and prepare our transaction for Monday.