By: Dividend Sensei
The stock market has nearly doubled since March 2020 lows. Many of the highest quality blue chips are now becoming dangerously overvalued.
As long as you pay fair value or better for the world’s best companies, you have the luxury of ignoring, or not, valuation bubbles.
Caterpillar is an example of a very richly-priced blue-chip, with zero upside potential through 2023, basically matching that of the S&P 500.
Finding a SWAN quality hyper-growth dividend aristocrat trading at good valuations isn’t always possible. But by combining 2 blue chips, you can create a synthetic company whose fundamentals can meet almost any need or goal.
Combining two blue-chips, in particular, creates a company with a 3.4% very safe yield, 21.5% consensus growth, and that’s 22.5% undervalued. Analysts expect it to deliver almost 25% CAGR long-term total returns, about 3X that of the S&P 500.
Given the growth profiles of both companies, as well as the fact that they’ve historically delivered 31% CAGR total returns, 4X more than the S&P 500, this powerhouse combo of quality, yield, growth, and value could be just what you need to achieve a rich retirement.