The value of any investment is the sum of its future cash flows discounted to present value.
The key criteria in valuing an investment are:
Value investing is a rich and robust investment style that focuses on the first criteria for estimating the worth of an investment.
Value investing looks it price-to-earnings, price-to-book value, dividend yield, price-to-free-cash-flow, enterprise value to EBITDA, and a number of other ratios. The goal is to find businesses trading at a discount to either their assets or cash flows. Basically, buying cash flows for cheap.
Growth investors look for businesses with rapidly rising revenue or earnings numbers. Social media and biotech companies are viewed as the best bets to deliver rapid growth in today's environment. Growth investors look at the second criteria for valuing an investment.
The first two criteria for an investment are very well covered. This makes sense, because they are very important. They are also much easier to measure and quantify than the last 2 criteria.
It is easy to say that a stock has a price-to-earnings multiple of 10, or that it is growing at 15% a year. It is more difficult to determine – with any sort of precision – how far into the future the company will thrive, and how risky a business is.
This article looks at 3 dividend growth stocks that stand out for their low risk and expected longevity. These 3 stocks operate in slow changing industries. They have long histories of growth and will likely be around for a very long time.
#1 – Coca-Cola
Coca-Cola (KO) is has paid increasing dividends for 52 consecutive years, making the company a Dividend King.
When investors think of Coca-Cola, they think of the companies iconic Coca-Cola soda. Coca-Cola is not a soda company. It is a global non-alcoholic beverage business. The distinction is critical and is the reason Coca-Cola will be much larger 20 years from now than it is today.
