IPG - Dividend Growth
Interpublic Group of Companies (IPG) is a value-investor candidate for total return. IPG is a BBB rated company that has paid a growing dividend for the past 11 years, even through the pandemic years. It is currently trading at an attractive valuation, and despite a widely expected recession or economic slow down in the back half of 2023, IPG is still confident of producing 2%-4% of revenue growth. Combine that with a 6%-7% dividend growth rate, even if IPG trades at the current valuation it is reasonable to expect a total 8%-11% return by the end of 2023. And if IPG were to trade up to its normal P/E of between 13-14, it could potentially return 11.95 % (including dividends) in a year.

Value investors will consider buying stocks that are selling at below or at least at fair value. Value investing is an investment strategy that involves picking stocks that appear to be trading for less than their intrinsic or book value. The dark side of value investing is that when markets are good value stocks are those that are temporarily out of favor. The trick is to exploit the market when it is mis-appraising the true worth of a good business. The key is to focus on fundamentals which tends to be enduring while simultaneously ignoring stock prices which tends to be irrational over the short run.

Of course, there are other important factors to consider such as the strength of the business, growth prospects, moat, etc., but ultimately it is the price (value) that one purchases an asset and that determines if an investment will be a great one or a dud. A fantastic company bought at an insanely rich price will require years of waiting before price appreciation happens, and nobody knows what may happen (competition catches up, moat gets eroded) during the long wait. In contrast, a fantastic company bought at an insanely low valuation will reward investors lavishly over the long run.
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