Many investors are asking whether dividend stocks are in a bubble. John Fattibene, financial planning director at Harvest Financial Partners and co-manager of the Domestic Dividend investment model at Covestor says he believes that several traditionally defensive stock groups that pay dividends, including utilities, look closer to fully valued than undervalued right now. He told The Wall Street Transcript in an interview that this is one reason that more investors may be turning away from the utility stocks.
Yet the stock market is still providing opportunities to find quality dividend-paying stocks in atypical sectors, including technology, he says.
“I would say technology continues to have a lot of appeal,” Fattibene says, pictured at right, along with partner Jim Wright. “We talk about how many of the companies in that sector have fantastic balance sheets to the point that some people argue that they have too much cash. So we still see that.”
Cisco systems is an example. It is a top five holding in the Domestic Dividend model. He likes that the stock has $6 of cash on the balance sheet, trades for about 9 times forward earnings, and has potential upside based on his valuation target. Yet it also recently boosted its dividend and has a 2.9% dividend yield.
You can check out The Wall Street Transcript for the full interview, which also includes his thesis on Expeditors International (EXPD).
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