The broad equity market is tumbling on Fed tapering signals. The dividend stocks in the market are the ones that are being hurt the most. However, there are dividend stocks that offer both the potential for dividend growth and price appreciation that makes them attractive for investors. In this article I will discuss companies that have high growth forecasts, solid dividend yields, significant international market exposure and strong market positions in their respective industries. The companies being discussed are Philip Morris International Inc. (NYSE:PM), Kellogg Company (NYSE:K) and The Procter & Gamble Company (NYSE:PG).
Growth
Developed markets are mature and competitive. Because of this, companies with significant international market exposure have an added advantage of higher growth opportunities. The higher growth potential bodes well for the companies’ bottom lines expansion and stronger balance sheet.
The Procter & Gamble Company (NYSE:PG) generates approximately 60% of its total sales from its international market operations. The company has also been working to improve its operational efficiency and cost structure, something that is likely to boost its earnings. Analysts project that the company might experience an impressive next five years growth rate of 7.6% on average.
With product markets in more than 180 countries, Kellogg Company (NYSE:K) is the leading frozen foods and cereal producer worldwide. The company earns an impressive 35% chunk of its revenues from international markets, resulting in geographical diversification and earnings expansion for the company. Productivity gains and continued revenue and cost synergies related to Pringles are important factors for the earnings potential of the company. For the coming five years, analysts are anticipating Kellogg Company (NYSE:K) to enjoy a high growth rate of 7.8%.
Philip Morris International Inc. (NYSE:PM), the leading tobacco company in the world, holds a dominating market share of 27%-28%. The company’s international market exposure and a strong brand portfolio have resulted in earnings expansion. A share repurchase initiatives have been undertaken to expand its earnings, with the company currently pursuing a share repurchase initiative of $18 billion. Analysts’ earnings growth expectations for Philip Morris International Inc. (NYSE:PM) are at 11% per year for the next five years.
The following table shows the analysts earnings consensus for the above mentioned three companies from 2013 up till 2016.
| 2013 | 2014 | 2015 | 2016 | |
|---|---|---|---|---|
| Procter & Gamble | $4.04 | $4.33 | $4.68 | $5.18 |
| Kellogg | $3.86 | $4.16 | $4.48 | $4.93 |
| Philip Morris | $5.59 | $6.22 | $6.91 | – |
Source: Nasdaq.com
Dividends
The three companies mentioned above also offer solid dividend yields in addition to their impressive growth potential. The dividends offered by the companies are backed by strong cash flows. The following tables display the dividend yields, payout ratios and dividend coverage for each of the three companies.
