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Earnings season is in full swing and if you're a Dividend Growth investor with money to spend I'm sure you've been busy been making strategic purchases from your watch list. If you read my recent article on my portfolio business plan you know that one of my requirements is to maintain an active watch list and review and modify that list quarterly. My goal is to have a diversified watch list with companies that can serve as replacements for current holdings should it become necessary to replace

Each of the members of my watch list has passed the difficult hurdle of a year-by-year performance assessment and must have had sustained dividend growth going back to 2008. With few exceptions made for stocks that don't go back that long, each must have incurred fewer than four down years over the last 11. Last quarter I focused on higher beta selections, in order to begin becoming more comfortable with the day-to-day patterns and swings associated with such holdings. My goal is to give myself a little more flexibility in this area.

The charts below contain the stocks I watched actively last quarter. Those highlighted in bold are not currently members of the Dividend Champions, Challenges or Contenders. I try to maintain approximately 20-25 stocks in the active list. When you do your due diligence you will find that some of the stocks listed are currently overvalued, clearly the by-product of an overheated market.

Estimated five-year growth is an important measure for those stocks I'm considering for purchase. A safe and growing stream of income from growing dividends remains my central focus. What better way to insure that trend continues than to add companies expected to grow earnings over the next five years?

Let's take a look at my last quarter watch list with current yield and yield in parenthesis as it was three months ago. The first thing that's apparent is the reduction in yield just over the past three months showing how difficult it is for those shopping for classic dividend-growth stocks to buy in the current market without paying too much. Since I favor stocks yielding 3.5% or better at the time of purchase it's becoming harder to maintain a watch list of stocks able to reach that benchmark. With recent gains Watsco - WSO and Met-Pro - MPR now both yield less than 2.5% and have been removed from the watch list. Novartis - NVS, suspended dividend growth and has also been removed from the list. Pennant Park - PNNT has been removed since I recently purchased a small position.

Stock

Ticker

Yield %

5-Year

DGR

%

10 Year

Ave Return

Est. 5Yr.

Growth

Beta

Aflac

AFL

2.76 (2.7)

10.9

10.81

10.2

1.84

BHP Billiton

BBL

4.19 (3,24)

19.0

24.98

4.4

1.54

Brookfield Infrastructure

BIP

4.52 (4.26)

12.3

39.86

6.0

.74

ConAgra Food

CAG

2.77 (3.39)

5.8

8.16

6.8

.70

Compass Minerals

CMP

2.74 (2.65)

9.1

26.51

9.7

.42

Dominion Resources

D

3.68 (4.35)

7.6

10.05

5.6

.47

Duke Energy

DUK

4.11 (4.5)

3.3

7.19

3.6

.34

Emerson Electric

EMR

3.00 (3.1)

8.2

10.79

9.7

1.24

Energy Transfer Equity

ETE

4.31 (5.5)

11.4

22.16

18.3

.80

General Parts

GPC

2.89 (3.11)

6.2

9.85

9.4

.73

Health Care SVS

HCSG

2.89 (2.83)

18.4

29.67

18.0

.61

Met-Pro

MPR

2.17 (2.99)

6.5

10.39

12.0

.95

Norfolk Southern

NSC

2.63 (3.23)

15.1

14.88

12.7

1.06

Novartis

NVS

3.31 (3.89)

17.9

7.95

3.0

.56

Pennant Park

PNNT

9.98 (10.19)

25.3

51.32

8.3

1.67

Republic Services

RSG

2.86 (3.20)

12.8

10.32

7.3

.81

Rayioner

RYN

2.97 (3.2)

11.0

11.43

.95

Seadrill

SDRL

9.76 (8.6)

58.37

1.46

Textainer

TGH

4.53 (5.59)

52.1

28.39

7.7

1.67

Stock

Ticker

Yield %

5-Year

DGR

%

10 Year

Ave Return

5Yr. Est.

Growth

Beta

UNS Energy

UNS

3.48(4.05)

13.2

12.59

8.0

.64

Westpac Banking

WBK

5.3 (6.1)

9.46

23.49

1.46

Western Gas

WES

3.69 (4.2)

15.2 3yr.

46.38

14.0

.39

Watsco

WSO

1.20 (3.31)

13.6

23.02

16.8

.86

I have selected four new stocks for the watch list: Air Products and Chemicals - APD, CMS Energy - CMS, NV Energy - NVE and Raytheon - RTN. Each has no more than two down years over the past 10. None is currently considered overvalued. Each has strong five-year Dividend Growth histories.

I would love to get your comments on my new additions as well as others you believe deserve my consideration.

I present my Quarter Two Watch List.

Stock

Ticker

Yield %

5-Year

DGR

%

10 Year

Ave Return

Est. 5Yr.

Growth

Beta

Air Products & Chemicals

APD

3.27

11.1

9.5

11.1

1.17

Aflac

AFL

2.76

10.9

10.81

10.2

1.84

BHP Billiton

BBL

4.19

19.0

24.98

4.4

1.54

Brookfield Infrastructure

BIP

4.52

12.3

39.86

6.0

.74

CMS Energy

CMS

3.41

36.9

18.35

5.6

.44

ConAgra Food

CAG

2.76

5.8

8.16

6.8

.70

Compass Minerals

CMP

2.74

9.1

26.51

9.7

.42

Dominion Resources

D

3.68

7.6

10.05

5.6

.47

Duke Energy

DUK

4.11

3.3

7.19

3.6

.34

Emerson Electric

EMR

3.00

8.2

10.79

9.7

1.24

Energy Transfer Equity

ETE

4.31

11.4

22.16

18.3

.80

Stock

Ticker

Yield %

5Yr.

DGR

%

10 Year

Ave Return

Est.5Yr.

Growth

Beta

General Parts

GPC

2.89

6.2

9.85

9.4

.73

Health Care SVS

HCSG

2.89

18.4

29.67

18.0

.61

NV Energy

NVE

3.51

32.0

26.36

3.1

.52

Raytheon

RTN

3.58

13.9

9.62

5.7

.75

Republic Services

RSG

2.8

12.8

10.32

7.3

.81

Rayioner

RYN

2.97

11.0

11.43

.95

Seadrill

SDRL

9.7

58.37

1.46

Textainer

TGH

4.53

52.1

28.39

7.7

1.67

UNS Energy

UNS

3.48

13.2

12.59

8.0

.64

Westpac Banking

WBK

5.3

9.46

23.49

1.46

Western Gas

WES

3.9

15.2 3yr.

46.38

14.0

.39

Source: My Q2 Dividend Growth Watch List