► Subscribe for new videos every day!: http://bit.ly/dai_youtube ► Prefer to Read?: https://dividendsandincome.com/2021/06/11/high-quality-dividend-growth-stock-for-june-2021-gilead-sciences-gild/ ► Dave Van Knapp's Top 30 Dividend Growth Stocks for 2021: https://DaveVanKnapp.com/ ► Dave Van Knapp's Dividend Growth Portfolio: https://dailytradealert.com/dave-van-knapps-dividend-growth-portfolio/ To identify high-quality dividend-growth stocks for this series, I use my Quality Snapshot (QS) grading system. The system employs quality ratings from five sources that I have come to trust and respect. Safety and Financial Strength grades from Value Line S&P’s Credit rating Morningstar’s Moat rating Simply Safe Dividends’ Dividend Safety grade After assigning points for each factor, the Quality Snapshot score for a company is the total of its points. The highest possible score is 25 (5 points x 5 factors). Gilead Sciences (GILD) was founded in 1987, is headquartered in Foster City, CA, and went public in 1992. It had a period of breakneck growth in the early 2000’s, which led to five stock splits between 2001 and 2012. It paid its first dividend in 2015 and has raised its payout each year since then. Gilead’s deep antiviral knowledge helped it rapidly advance and deliver Veklury (Remdesivir), the first treatment for COVID-19 approved by the FDA, which has been administered to about half the Covid-19 patients in US hospitals. In 2020, Gilead significantly enhanced it oncology portfolio. It entered into 11 acquisitions and partnerships in oncology, adding to both its commercial portfolio and developmental pipeline. The company has set a strategic ambition of delivering 10+ transformative medicines to oncology patients by 2030. Here is how Gilead Sciences stacks up on the Quality Snapshot system described at the beginning of this article. Gilead gets green ratings on three of the five factors and yellow ratings on the other two. It totals 19 points out of 25, which is above average. Morningstar’s Wide moat (its highest ranking) is based on Gilead’s patent protections, leading market share, and outstanding profitability in HIV treatments, along with continued dominance in the hepatitis C market. I conclude that Gilead is 11% undervalued. From there, it is easy to calculate a fair price; just divide the current price by the valuation ratio. Gilead’s recent price is about $67. So we get $67 / 0.89 = $75 for Gilead’s fair price. All valuations are estimates about the future. Therefore, it is logical to think in ranges rather than precise values. I regard any price within +/- 10% of my calculated fair price to be “fair.” If I apply that 10% cushion to Gilead, that puts the top of its buying range at $83. Obviously, with Gilead currently trading so far below its fair price, there is no need to even think about its maximum buy price. A good time to buy Gilead is right now, at a 17% discount. Gilead is a high-quality company trading at a significant discount. The discount leads to its current yield being quite a bit higher than usual, at 4.2%. Its dividend is considered safe, based on Gilead’s high profit margins, excellent cashflow generation, and relatively low payout ratio. The tradeoff for Gilead’s high yield is uncertainty around its earnings continuity. Its business has been disrupted somewhat, in both good and bad ways, by Covid-19. The pandemic has aided Gilead by greatly increasing demand for Remdesivir, which is used to treat Covid patients. On the downside, the pandemic has interrupted many doctor-patient relationships, which in turn has reduced demand for some of its other products. Additional uncertainty comes from patent cliffs, which is offset to a certain extent by the potential of drugs in the company’s pipeline, particularly Trodelvy, which is off to a strong start and has blockbuster potential as it gains approvals for new uses. CFRA polls analysts on their recommendations about stocks. 31 analysts are covering Gilead, and the average of their recommendations lies between Buy and Hold. FOLLOW US: ► Website: http://www.dividendsandincome.com/ ► YouTube: http://bit.ly/dai_youtube ► Patreon: http://bit.ly/dai_patreon #DaveVanKnapp #DividendGrowthPortfolio #DividendGrowthInvesting LEGAL DISCLAIMER: Please consult with a licensed investment professional before investing any of your money. Never invest in a security or idea featured on this channel unless you can afford to lose your entire investment. If your money is not FDIC insured, it may decline in value. Dave is not a licensed financial advisor, tax professional, or stockbroker and he does not purport to be. Links above may include affiliate commissions paid to the owners of Dividends and Income and help support this channel.