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I have searched for profitable growth companies that pay rich dividends and that raise their payouts significantly each year. I also looked for companies that have shown a significant book value growth over the past five years and which are in a short-term uptrend, in a mid-term uptrend and in a long-term uptrend. Stocks in an uptrend are performing well and are in a buying mode.

I have elaborated a screening method, which shows stock candidates following these lines. Nonetheless, the screening method should only serve as a basis for further research.

The screen's formula requires all stocks to comply with all following demands:

1. The stock is included in the Russell 3000 index. Russell Investment explanation:

The Russell 3000 Index measures the performance of the largest 3000 U.S. companies representing approximately 98% of the investable U.S. equity market. The Russell 3000 Index is constructed to provide a comprehensive, unbiased, and stable barometer of the broad market and is completely reconstituted annually to ensure new and growing equities are reflected.

2. Earnings growth estimates for the next 5 years (per annum) is greater than 10%.

3. Price to free cash flow is positive.

4. Dividend yield is greater than 2.2%.

5. Annual rate of dividend growth over the past five years is greater than 10%.

6. Book value growth over the past five years is greater than 10%.

7. Total debt to equity is less than 0.35.

8. Stock price is above 20-day simple moving average (short-term uptrend).

9. Stock price is above 50-day simple moving average (mid-term uptrend).

10. Stock price is above 200-day simple moving average (long-term uptrend).

After running this screen on December 17, 2012, before the market open, I obtained as results the 4 following stocks:

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Accenture plc (NYSE:ACN)

Accenture plc provides management consulting, technology, and business process outsourcing services worldwide.

Accenture plc has no debt at all and the forward P/E is at 15.03 and the PEG ratio is at 1.75. The average annual earnings growth for the past 5 years was quite high at 14.34 and the average annual earnings growth estimates for the next 5 years is at 10.43%. The forward annual dividend yield is at 2.31% and the payout ratio is only 34%. The stock price is 2.85% above its 20-day simple moving average, 2.88% above its 50-day simple moving average and 12.65% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Accenture will unveil its fiscal first quarter 2013 financial results on Wednesday, December 19, 2012. The average estimate of analysts (here) is for a profit of $1.04 per share, a rise of 8.3% from the company's actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from $1.01. The reported results will probably affect the short-term stock price.

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Chart: finviz.com

AFLAC Inc. (NYSE:AFL)

Aflac Incorporated, through its subsidiary, American Family Life Assurance Company of Columbus, provides supplemental health and life insurance.

Aflac has a low debt (total debt to equity is only 0.28) and it has a very low trailing P/E of 8.81 and even a lower forward P/E of 7.67, the PEG ratio is also very low at 0.86. The price to free cash flow for the trailing 12 months is extremely low at 1.76 and the average annual earnings growth estimates for the next 5 years is at 10.20%. The forward annual dividend yield is at 2.63% and the payout ratio is only 21.8%. The stock price is 1.52% above its 20-day simple moving average, 5.46% above its 50-day simple moving average and 17.62% above its 200-day simple moving average. On October 23, Aflac reported its 3Q financial results (here), total revenues rose 14.4% to $6.8 billion in the third quarter of 2012, compared with $6.0 billion in the third quarter of 2011. Net earnings were $1.0 billion, or $2.16 per diluted share, compared with $736 million, or $1.57 per share, a year ago, benefiting from realized investment gains and a lower annual effective tax rate. Commenting on the company's third quarter results, Chairman and Chief Executive Officer Daniel P. Amos stated (here):

We remain pleased with Aflac's financial performance for the first nine months of 2012. Aflac Japan had another impressive quarter, continuing tremendous sales momentum, especially through the bank channel. Aflac Japan's third quarter production came in much stronger than we expected and set an all-time record for new annualized premium sales for the fifth quarter in a row.

The cheap valuation, the impressive 3Q financial results, the growing dividends with a low payout ratio and the fact that the stock is in an uptrend; all these factors make the AFL stock quite attractive.

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Chart: finviz.com

Walgreen Co. (NYSE:WAG)

Walgreen Co., together with its subsidiaries, operates a network of drugstores in the United States.

Walgreen has a low debt (total debt to equity is only 0.30) and the forward P/E is very low at 10.13 and the PEG ratio is at 1.20. The price to free cash flow for the trailing 12 months is at 16.57 and The average annual earnings growth estimates for the next 5 years is at 12.68%. The forward annual dividend yield is at 2.99% and the payout ratio is only 39.7%. The stock price is 7.36% above its 20-day simple moving average, 6.19% above its 50-day simple moving average and 10.17% above its 200-day simple moving average, which indicates short-term, mid-term and long-term uptrend. Walgreen will report its latest quarterly financial results on Friday, December 21, 2012. The drugstore chain is expected to post a profit of $0.70 a share (here). The reported results will probably affect the short-term stock price.

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Chart: finviz.com

Xilinx Inc. (NASDAQ:XLNX)

Xilinx, Inc. designs, develops, and markets programmable platforms worldwide.

Xilinx has a low debt (total debt to equity is only 0.33) and the forward P/E is at 17.34 and the PEG ratio is at 1.50. The average annual earnings growth for the past 5 years was quite high at 13.80 and the average annual earnings growth estimates for the next 5 years is at 12.78%. The forward annual dividend yield is at 2.49% and the payout ratio is at 42.7%. The stock price is 3.05% above its 20-day simple moving average, 5.13% above its 50-day simple moving average and 5.66% above its 200-day simple moving average. On October 17, XLNX reported its Q2 Fiscal 2013 financial results (here), which beat expectations on EPS and met expectations on revenues. Xilinx provided business outlook for the December quarter fiscal 2013:

  • Sales are expected to be down 1% to down 5% sequentially.
  • Gross margin is expected to be approximately 66%.
  • Operating expenses are expected to be approximately $224 million, including $3 million of amortization of acquisition-related intangibles.
  • Other income and expense is expected to be an expense of approximately $7 million.
  • Fully diluted share count is expected to be approximately 269 million.
  • Full year fiscal 2013 tax rate is expected to be approximately 15%.

Despite the not so cheap valuation, the positive Q2 Fiscal 2013 financial results, the quite high growth prospects, the growing dividends with a low payout ratio and the fact that the stock is in an uptrend; all these factors make the XLNX stock quite attractive.

 

Source: 4 Dividend Growth Stocks In Uptrend