I Just Bought 2 Undervalued Dividend Growth Stocks!

2026 has already been an incredible year for my portfolio, as I think it has been for most investors portfolios. In fact, the past four years have been absolutely incredible. The S&P 500 in 2023 was up almost 25%, then 24%, then over 16%, and in 2026, the S&P 500 is already up 12%. This is the best 4-year run we've had since the 1990s. So hopefully, your portfolio has done very well. And over the last few months, I really haven't added very much capital to my portfolio. Now, this is certainly due to a multitude of reasons, but it is becoming increasingly more difficult to find great opportunities in this market, at least opportunities that fit into the needs of my personal portfolio. However, I just recently added capital to a position in my portfolio, and I plan on adding capital to another position in my portfolio over the next few days. So, in this video, we're going to be going over those two additions to my portfolio and exactly why we're adding them. Now, keep in mind when we look at my portfolio, we're talking about a dividend growth portfolio. A portfolio that increases the amount it pays out in dividends every single month due to three different factors. One, because I typically add new capital, but because two, I reinvest dividends. And then number three, perhaps most importantly, the stocks in my portfolio grow dividends at a substantial rate. So again, every single month, due to those three factors, the amount my portfolio pays out every single month increases. So while the starting yield on my portfolio isn't necessarily a high yield, the goal is not to maximize yield. The goal is to maximize dividend income over the long term, and that can only be done by buying stocks that are growing free cash flow at a substantial rate. So with that being said, let's talk about the first stock that I'm adding to my portfolio. And if you've watched the channel for a while, you know it's a stock I've done very well with and I've held my portfolio for a long time, and that's Broadcom. If you look at this position on my growth chart, I'm currently up around 198% on my average share basis. However, on my original shares, I'm up roughly 600%. So, the temptation is when you look at a stock like Broadcom and you look over the last 5 years, it's up 645%. You essentially think you've already missed out on the opportunity. At least that's what our investor bias leads us to believe. But if we take a closer look under the hood, you're going to see some evidence that the business quality is strong, the growth is remaining strong, and the valuation remains reasonable, all while they continue to grow their dividend payouts. And while talking about those dividend payouts, jump over to our dividend breakdown sheet and let's take a look at Broadcom. Now, you can see all the data will automatically load into my spreadsheet. And that's thanks to the help of the ticker data add-on in Google Sheets. And ticker data just recently saw a major update in a few different ways. For one, ticker data has historically only been in Google Sheets, but it's now available in Excel as well. You can automatically import hundreds of stock financials directly into your spreadsheet. Get over 30 plus years of financial data history. And perhaps even more importantly, you can pull in that data from exchanges all across the world from Argentina, Canada, China, Hong Kong, India, Malaysia, Mexico, Saudi Arabia, Sweden, Taiwan. You name it, we probably have it. And then on top of this, we continue to make ticker data an easier to use experience. For example, right now, if you click on the function generator, you'll have a sidebar pop up here where you can easily generate your own functions, search for different symbols if you can't remember the ticker for a stock you want to look at, or you can simply browse our over 400 attributes you can pull directly into your spreadsheet. So, let's look at an example. Maybe we want to look at Coca-Cola stock. I'll plug in the ticker. You can tell it exactly where to go. Maybe we want to look at a statement of cash flow metric. If we scroll down, maybe we want to look at something kind of like common stock repurchased for the trailing 12 months. I'll just click insert, and you can see that data will automatically load into my spreadsheet. Ticker data is what's allowed me to build these advanced portfolio tracking and stock analysis tool, which is available to premium members of Tickerdata at tickerdata.com. So, the value of ticker data continues to compound. So, if you've ever been interested, now is the time to check it out. You can get a 7-day free trial and 30% off annual plans by using code HEA heat at checkout to celebrate the launch of these new features. Now, when we look at Broadcom, again, this is another example where the starting yield is low, but look at the 10-year dividend kagger. It's 26%. And here's what's really crazy about this. The 10ear free cash flow cagger is 31.62%. Just absolutely mind-blowing growth. That's sustainable dividend growth because free cash flow has grown sustainably. So, obviously I love Broadcom from a dividend perspective. It looks like a good fit at first glance for a dividend growth portfolio. But of course, the concern would be valuation. This is a stock that's climbed 650% in the last 5 years. However, in the last month, we've seen a bit of a pullback from Broadcom. It's dropped by around 14%. So, we're talking about billions of dollars in market cap that have been eroded. Now, what's really interesting about this is they recently released their latest quarter's earnings reports where they did actually beat on top and bottom lines, but over the next quarter, they slightly, very slightly reduced their guidance just over the next quarter. And that's essentially what led to this one-mon selloff. But here's what's so ironic about this sell-off. In the earnings call, Hawk 10, the president and CEO, went on to talk about all the great developments happening internally with the company. But perhaps here's what's most interesting. He stated that as a result of all these great developments internally with the business, he expects them to exceed their target of $30 in earnings per share in fiscal 2028. So we now have a reference point. Their target is $30 of earnings per share in fiscal 2028. And he currently expects them to exceed that level of earnings per share. Now, this is critical information because we can build a financial model off of this to see how much a stock should actually be worth around 2028. What our forward-looking returns would actually look like at that level. So, if we jump over to our sensitivity model and look at Broadcom. Now, again, the key number they're giving us is in 2028. This is what we're modeling out all the way up to 2028 and trying to project what forward-looking returns could potentially look like. So, what does it actually take to get to $30 of earnings per share in 2028? Let's take a couple of things into consideration. The average analyst is projecting an EPS CAGER of about 31.76% through the year 2030. So very aggressive high levels of earnings growth and earnings growth in 2026 and 2027, even 2028 is just absolutely mind-blowing. However, you'll notice after that it is projected that earnings growth starts to slowly slow down. Now it's still very high earnings growth projected, make no doubt about it, just relative to the prior years. So, we need to take that into consideration when projecting a future PE multiple. Now, to start, what does it take to get to $30 of EPS by 2028? Well, if we project 20% earnings growth, we're definitely not there. If we project 30%, we're still not there. If we project 40%, we're still not there. At 50%, we're still not there. At 60%, we start to get very close. So, that's the earnings growth rate over the next few years compounded that management is targeting. And remember, they stated they actually expect to exceed this. Now, the reality is I do think the stock in the future will trade at a lower PE multiple as earnings growth slows down. That's only natural. It makes complete sense. So, what type of PE multiple has a stock been trading at? Well, if you're looking at the trailing 12-month PE multiple at first glance, it looks scary. It's sitting all the way up to 47. But remember, that's trailing 12 months. On a forward-looking basis, it's all the way down to just 21.3. Just a 21.3 PE multiple. And here's what's even more interesting about this. If we actually remove the trailing 12-month PE multiple and look at this valuation multiple for Broadcom over the last 3 years, it's trading at one of its lowest valuations all the way since around 2023, early 2024. I'm not seeing anyone in financial media talk about this right now. So despite the fact earnings growth is projected to just be astronomical over the next 3 years, it's trading at a very reasonable valuation multiple. So, even if this trailing 12-month PE multiple climbs back substantially all the way back to around 25 versus the current TTM of around 45.7, you can still see a compounded return by 2028 would be 26.3%, a 100% return. And keep in mind that also doesn't include the small dividend payouts you'll be receiving along the way. Even if we reduce this trailing 12-month PE multiple all the way down to 20, forward-looking returns still look extremely attractive. That would give them a share price of $594 a share. So, I think Broadcom is trading at a very reasonable valuation relative to the speed at which it's going to grow earnings over the next three years, and it's the reason I'm adding more capital of Broadcom to my personal portfolio. As that earnings grows, as the free cash flow continues to grow, we'll see the dividend grow at a high rate, double-digit rate along with it. However, what we do need to keep in mind is we'll continue to see extreme volatility from this type of position. That's something I'll touch on again in just a moment. But, let's talk about the second stock I'm adding to my portfolio. And the second stock is going to be ASML. Now again, this is a stock I already own in my portfolio and it's been the biggest winner in my portfolio actually over the next year. I added to it heavily last year. I talked about it a lot last year and the position did exceedingly well. I'm up 164 close to 165% on this position. So again, it's been the biggest winner in my personal portfolio. And the temptation once again is to look at a stock that over the last year is up 121% and automatically assume that we've already missed the opportunity. But again, take a close look at what's going on with the PE multiple. How is the price moving relative to what's going on with the company's earnings growth and future earnings growth projections. Now, again, if we look at the trailing 12-month PE multiple, it's all the way up to 55. So that looks like a very expensive stock, at least at first glance. But we have to take into account what future earnings growth actually looks like. So look at this. Look at the PE multiple over the last 3 years. This is another example of a stock that, yes, trades out of premium, but because they're growing earnings so fast, the PE multiple is actually somewhat reasonable. It's sitting at about 31.18. 31.18 times earnings. Now, let's talk about the valuation for a second because this is where things actually get even more interesting. If we jump over to our sensitivity analysis and look at ASML, the data we'll load in thanks to ticker data. And here's what's interesting. The projected EPS Kagger, at least through just the year 2030 for ASML, is slightly lower than that of Broadcom. However, what we just saw is the fact that the stock is trading at a premium relative to Broadcom on a Ford PE multiple basis. ASML sitting above 31. Meanwhile, Broadcom is sitting a little bit above 21. So, ASML, at least on a PE multiple basis, is a bit more expensive than Broadcom, despite the fact they're not growing earnings at as high of a rate. Now, that's rare because a PE multiple is primarily determined by how fast a stock is projected to grow earnings in the future. However, there's a second variable that's highly factored into the PE multiple, and that's the predictability of future cash flows. In other words, how wide is the company's moat protecting the sustainability of future cash flow growth? And this is where ASML absolutely excels. Now, I made a video in depth on ASML just the other day, and I take a deep dive into this very subject. But to summarize, ASML is the sole manufacturer of EUV lithography technology. They are at the very top of the AI semiconductor value chain. All capex spending eventually flows back into ASML. They have no competitors. And I continue to see people say, "Oh, well, China is coming in close to ASML." That's just simply not the case. Every time a headline like that comes out, it's quickly disproven. And we even have an article from Bloomberg just the other day where an ASML supplier stated that China is 15 years behind the top chipmaking tools, meaning ASML. So, as all these big tech stocks continue to increase their capex spending, that capital flows back into ASML. However, there's another element to ASML's business that a lot of people completely overlook, and that's the installed base management. This is an important aspect of the business. Why is that the case? Well, anytime ASML is shipping out these EUV lithography machines, these are machines that have to be maintained. They have to be upgraded over time. So all of a sudden what happens is they've developed this installed base management segment of their business which means as they continue to have more EUV lithography machines this portion of the business continues to grow higher. Now why is this so attractive? Well it's because it's essentially subscription sticky segment of the business. Anytime the core business grows the install base management portion of the business continues to grow and that provides extremely predictable cash flows. This is why I feel quite confident in the future cash flows of this business. So again, this is an example where due to rapid earnings growth, the company can see a pretty substantial drop in the PE multiple and still be trading at a very fair valuation. If they get even close to what analysts are guiding towards through the year 2030 when it comes to their EPS and we see a serious pullback in the PE multiple, forward-looking returns 2030, 2031 still look quite attractive. And yes, this is a dividend growth stock. But to be honest, if the PE multiple pulled back that much, I would actually be adding even more shares. So those are the two stocks I plan on adding more capital to in my personal portfolio. The reality is that for both of these stocks, there's not really a bubble, at least when it comes to the price they're trading at. However, what a lot of people also miss, the real bubble, at least when it comes to the AI race, would not be in the price. It would be in a drop in the potential earnings growth. I've seen some people point this out, but it's still commonly misunderstood. However, my portfolio is structured for an event like that for a few different reasons. One, the underlying holdings in my portfolio continue to grow dividends regardless of market condition. This would mean the amount I'm receiving in dividend income continues to grow every single month. And in some cases, it's even a good thing because then I can reinvest dividends at lower prices, buying me more shares, which actually even increases my dividend income at an even faster rate. But not just in that way is my portfolio protected. It's protected by the fact that the anchor of my portfolio is SCHD. Makes up about 40% of my entire portfolio. Now, when people hear that statement, they automatically assume that the reason SCD is a good anchor, a good diversifier from these AI semiconductor names growing earnings at such a fast rate is because SCHD doesn't have a lot of tech exposure. And yes, that's partly true. But there's something about SCHD that I would say probably 90% of investors miss. And it's perhaps one of the most critical aspects to understand if you're interested in SCD specifically to diversify you from your growth year positions. And that's how the stock gets a valuation reset every single year. Now, what does valuation reset actually mean? Well, to start, let's acknowledge just a couple of facts. We pointed out earlier in the video how the S&P 500 has been on an incredible run over the last four years. And fortunately for us, a lot of that growth has been driven by earnings. However, the S&P 500 PE multiple, and by the way, this is data pulled directly from Schwab's website, the PE multiple is sitting at essentially an all-time high, the highest since the dot bubble. Now, SCD is sitting somewhere in its typical range, about a 25% discount to the S&P 500 when looking at the PE multiple. Now again just like Broadcom like ASML the temptation is to look at SCD and see the fact on a total return basis the stock is up close to 27 28% in the last year in year to date again up around 27 to 28%. Then you automatically assume it's no longer a good opportunity. The stock has gotten too expensive. But that's simply not the case. Why? Well take a look at this article I wrote for Seeking Alpha at the beginning of 2026. One of the things I point out in this article is SEDD's methodology. Now, this is critical to understand. Why? Because it basically tells us every single year the fund resets the stocks that are actually held in the portfolio. And what you'll notice after having some initial screens, the stocks are ranked by indicated annual dividend yield and only the top 50% are eligible for selection. So, think about what that means. If you're selecting the stocks every single year after your initial screens that have the highest yields, that means more than likely over the past year, one, you probably grew dividends, but two, your share price also declined, typically due to a decline in the PE multiple. So, if we're selecting the stocks with the highest yield, we're automatically getting a valuation reset every single year. The PE multiple is essentially dropping every single year. This is why the PE multiple for SHD typically stays in a very similar range. Meanwhile, the S&P 500 PE multiple has continued to climb higher. And just take a look at the difference on a price to cash flow basis, a 43% discount for SCD on a price to book basis, a 31% discount. However, when we look at return on equity, essentially a profitability measure, SCHD is only trading at about a 8% discount relative to the S&P 500. only an 8% discount is not very much when you consider the fact it's trading at a significant discount on these different valuation metrics. So what am I trying to say? Well, what I'm trying to say is SCD is a great diversifier, not just because it doesn't have as much exposure to tech, but because it gets a valuation reset every single year automatically built into the portfolio. This makes it an incredible hedge for people like me who do have quite a bit of exposure to the AI race, to the semiconductor race, which obviously has been a major beneficiary for my personal portfolio. But having this type of position in SCD also helps me sleep very well at night. And obviously, historically speaking, it's seen incredible total returns and phenomenal dividend growth metrics. So there you go. There's a quick update on my personal portfolio, where I'm adding capital, why I'm so happy with my SCHD position still. And again, if you want to get access to any of the spreadsheets you see in these videos and also get access to the ticker data add-on on Google Sheets with all the new features such as the function generator as well as tickerdata in Excel, then you can head over to tickerdata.com at the link in the description. Be sure to use code heat so you can get access to the 7-day free trial and the 30% off discount to celebrate the launch of the new features. So, with all that being said, thank you guys so much for watching and please don't forget to like and subscribe to the