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In this article, I give the results of a screen aimed at identifying companies that have shown strong growth in Cash From Operations over the last 7 years. When studying a potential long-term investment, I like to see consistent growth in Cash From Operations as this gives one glimpse into the performance of the core business without some of the noise that can be worked into earnings.

Before describing the screen, I want to be explicit about how I view screens and their purpose. I use screens as starting points for research ideas, and the results of this screen do not constitute a recommendation to invest. Typically, when constructing a screen, I try to focus on different metrics than other commonly available metrics like P/E or P/B, as I'm looking for different ways to slice up the investment universe than are often used.

Screen Criteria

In this screen, I use the following criteria:

1) A company must have grown its dividend each year for the past 7 years.

2) Over the past 4 years, the compound average growth rate (OTCPK:CAGR) of the dividend per share must be at least 8%.

3) Over the past 7 years, the CAGR of Cash From Operations must be at least 8%.

4) The Payout Ratio at the most recent reporting must be lower than the Payout Ratio 1 year previously.

5) The forward dividend yield, as estimated by a Bloomberg terminal, must be at least 2%.

Fourteen companies passed this screen: Aflac Inc (NYSE:AFL), Avista Corporation (NYSE:AVA), Equity Lifestyle Properties, Inc. (NYSE:ELS), Genesis Energy LP (NYSE:GEL), Hanover Insurance Group, Inc. (NYSE:THG), Healthcare Services Group (NASDAQ:HCSG), Medtronic, Inc. (NYSE:MDT), Northeast Utilities (NYSE:NU), Omega Healthcare Investors, Inc. (NYSE:OHI), Reynolds American Inc (NYSE:RAI), Southside Bancshares Inc (NASDAQ:SBSI), Stanley Black & Decker Inc (NYSE:SWK), Sunoco Logistics Partners (NYSE:SXL), and T. Rowe Price Group (NASDAQ:TROW). Of these, I removed ELS and OHI from further consideration as they are REITs, and investors in that arena are likely to be interested in other fundamentals. I also removed GEL and SXL on the grounds that they are MLPs, which could call for a different set of considerations as well. This leaves 10 companies.

Aflac Inc

Aflac sells supplemental life and health insurance in the United States and Japan. Approximately 80% of its earnings are generated from Japan where it has a very strong position. Its current dividend yield is approximately 2.27%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

AFL EPS Diluted TTM Chart

AFL EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Avista Corporation

Avista is an energy company engaged in the production, transmission and distribution of energy. It operates primarily in eastern Washington, northern Idaho, and eastern Oregon. Its dividend yield is approximately 4.28%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

AVA EPS Diluted TTM Chart

AVA EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Hanover Insurance Group, Inc.

Hanover Insurance Group, Inc. is a holding company for three insurers: The Hanover Insurance Company, based in Massachusetts; Citizens Insurance Company of America, based in Michigan; and Chaucer Holdings PLC, based in London. Its dividend yield is approximately 2.38%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

THG EPS Diluted TTM Chart

THG EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

[Note: The data from YCharts regarding the dividend looks a bit odd; I'm not sure what is going on there. The data used to compute the yearly percent increase is from Morningstar.]

Healthcare Services Group

Healthcare Services Group provides management, administrative and operating services to the housekeeping, laundry and linen, and general facility maintenance departments of the healthcare industry businesses in the United States. Its dividend yield is approximately 2.7%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

HCSG EPS Diluted TTM Chart

HCSG EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Medtronic, Inc.

Medtronic, Inc. is a large medical device company with a focus on chronic diseases. Its dividend yield is approximately 2.03%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

MDT EPS Diluted TTM Chart

MDT EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Northeast Utilities

Northeast Utilities operates New England's largest utility with service to over 3.5 million customers in Connecticut, Massachusetts, and New Hampshire. Its dividend yield is approximately 3.37%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

NU EPS Diluted TTM Chart

NU EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Reynolds American Inc

Reynolds American Inc manufactures cigarettes and other tobacco products in the United States. Its dividend yield is approximately 4.95%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

RAI EPS Diluted TTM Chart

RAI EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Southside Bancshares Inc

Southside Bancshares operates a regional bank in east Texas. Its dividend yield is approximately 3.1%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

SBSI EPS Diluted TTM Chart

SBSI EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Stanley Black & Decker Inc

Stanley Black & Decker provides power and hand tools as well as mechanical access solutions, electronic security and monitoring systems, and other products for industrial applications. Its dividend yield is approximately 2.33%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

SWK EPS Diluted TTM Chart

SWK EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

T. Rowe Price Group

T. Rowe Price provides investment advisory services to individual and institutional investors. It offers its own sponsored mutual funds in addition to other investment options. Its dividend yield is approximately 2.02%.

Its earnings per share, cash from operations, dividends per share, and payout ratio over time are:

TROW EPS Diluted TTM Chart

TROW EPS Diluted TTM data by YCharts

The percent by which the dividend has increased over the last seven years is:

Screen was performed on a Bloomberg terminal. Data used to compute yearly percentage increase in the dividend is from Morningstar. Current dividend yield is from Morningstar.

Source: 10 Dividend Growers With Strong Cash From Operations Growth