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Companies that have been paying dividends for 50 years are impressive. But companies which have been growing their dividends for half a century or more are even more extraordinary. In fact, there are only 15 of them out of the 107 companies on David Fish's CCC list.

As a dividend growth investor, I either want a position in a stock with higher yield and usually lower dividend growth or lower initial yield but higher dividend growth. So, I took out companies which have yields below or close to the lows of 3%, and a 5-year dividend growth rate of less than 6%. That leaves us with the following list:

Company*Industry*# Years of Dividend Growth*Price1Yield15 Year DGR*
Diebold (NYSE:DBD)Business Equipment59$30.803.70%5.4%
Dover (NYSE:DOV)Machinery57$63.732.20%10.7%
Northwest Natural Gas (NYSE:NWN)Utility - Gas57$43.444.19%4.7%
Emerson Electric (NYSE:EMR)Industrial Equipment56$50.853.23%9.1%
Parker-Hannifin (NYSE:PH)Industrial Equipment56$83.811.96%17%
Procter & Gamble (NYSE:PG)Consumer Products56$70.293.20%11.2%
Vectren (NYSE:VVC)Utility - Electric/Gas53$29.494.82%2.4%
Cincinnati Financial (NASDAQ:CINF)Insurance52$40.504.02%4.1%
Coca-Cola (NYSE:KO)Beverages - Non-alcoholic50$37.712.70%8.7%
Johnson & Johnson (NYSE:JNJ)Drugs / Consumer Product50$70.453.46%9.1%
Lowe's Companies (NYSE:LOW)Retail - Home Improvement50$35.111.82%25.6%
* data from David Fish's CCC list
1 - as of Dec 7, 2012

We're left with 11 dividend growers of half a century. It has been an amazing accomplishment for these companies, and a lucrative one for investors who bought and held these companies in the early days. However, new investors into the scene can also benefit from holding these companies for years to come. But first it's essential to ensure that the companies we're considering in our portfolio aren't overvalued. Otherwise, we'd be paying too much!


I'd like to compare the current P/E and the 5 Year Normal P/E of these companies to quickly determine their valuation as another screening criterion.

1) Diebold - Yield: 3.7%, 5 Yr Dividend Growth Rate: 5.4%

  • P/E: 13.4
  • 5 Year Normal P/E: 12.8
  • Valuation: Overvalued

2) Dover - Yield: 2.2%, 5 Yr DGR: 10.7%

  • P/E: 13.8
  • 5 Yr Normal P/E: 14.2
  • Valuation: Undervalued

Dover 15 Year FAST Graph
F.A.S.T. Graphs (DOV 15 Year Graph)

Dover's price line (black) is below the earnings line (orange), so it is undervalued. Further, its earnings is in a rising trend.

3) Northwest Natural Gas - Yield: 4.19%, 5 Yr DGR: 4.7%

  • P/E: 17.9
  • 5 Yr Normal P/E: 17.4
  • Valuation: Slightly Overvalued

4) Emerson Electric - Yield: 3.23%, 5 Yr DGR: 9.1%

  • P/E: 14.3
  • 5 Yr Normal P/E: 14.1
  • Valuation: Slightly Overvalued

5) Parker-Hannifin - Yield: 1.96%, 5 Yr DGR: 17%

  • P/E: 11.8
  • 5 Yr Normal P/E: 12.9
  • Valuation: Undervalued

PH 15 Year FAST GraphF.A.S.T. Graphs (PH 15 Year Graph)

Parker-Hannifin's price line (black) is below the earnings line (orange), so it is undervalued. It actually looks to be quite undervalued for the 15 year time frame.

6) Procter & Gamble - Yield: 3.2%, 5 Yr DGR: 11.2%

  • P/E: 17.6
  • 5 Yr Normal P/E: 15.7
  • Valuation: Overvalued

7) Vectren - Yield: 4.82%, 5 Yr DGR: 2.4%

  • P/E: 16.7
  • 5 Yr Normal P/E: 15.4
  • Valuation: Overvalued

8) Cincinnati Financial - Yield: 4.02%, 5 Yr DGR: 4.1%

  • P/E: 25.9
  • 5 Yr Normal P/E: 16
  • Valuation: Highly Overvalued

9) Coca-Cola - Yield: 2.7%, 5 Yr DGR: 8.7%

  • P/E: 18.9
  • 5 Yr Normal P/E Ratio: 18.5
  • Valuation: Slightly Overvalued

10) Johnson & Johnson - Yield: 3.46%, 5 Yr DGR: 9.1%

  • P/E: 13.8
  • 5 Yr Normal P/E Ratio: 13.3
  • Valuation: Slightly Overvalued

11) Lowe's Companies - Yield: 1.82%, 5 Yr DGR: 25.6%

  • P/E: 20.9
  • 5 Yr Normal P/E Ratio: 16.6
  • Valuation: Highly Overvalued

What to Do Next?

From the above list, we find Dover and Parker-Hannifin to be undervalued. So, I certainly encourage a dividend growth investor looking to add a new position to their portfolio to do further research on those companies. Those who already own a company can consider adding to their position.

On another note, Northwest Natural Gas, Emerson Electric, Coca-Cola, and Johnson & Johnson are only slightly overvalued. So if, in the near future, there's a dip in these companies, they're certainly worth looking into for initiating or adding to a position.

If you're a holder of Cincinnati Financial or Lowe's Companies, I would suggest you take another look at them to determine if they still fit your criteria of stocks to hold because they look highly overvalued over a 5-year time frame.

Resource: P/E and 5 Year Normal P/E came from F.A.S.T. Graphs.

Note: There are different models to determine the valuation of a company. F.A.S.T Graphs is one way of doing so. Furthermore, I'm only comparing the companies' current P/E to their 5 Year Normal P/E. For example, a company could be slightly overvalued now, and at fair value or even undervalued compared to the 15 Year Normal P/E.

Source: Dividend Growers Of Half A Century