Ranking Dividend Aristocrats

Includes: BDX, CLX, KMB, WBA
by: Lowell Herr

Investing in dividend aristocrats is a way to reduce portfolio risk and increase return according Chuck Carnevale's recent article, How Investing In Dividend Champions At Sound Valuation Reduces Risk and Increases Return.

What if one wants to invest in the best of the best by apply momentum analysis as advocated by Alex Bryan in this Seeking Article - Does Momentum Investing Actually Work?

The following data table uses a ranking algorithm that takes three metrics into consideration. A 50% weight is assigned to the price performance over the past three months (91 days) and 30% is apportioned to the price performance over the past six months (182 days). Volatility is the third factor and the remaining 20% weight is allocated to this variable. We are interested in stocks with low volatility.

Ranking Dividend Aristocrats: In addition to the Overall Rank, investors should pay attention to the last two columns, relative and absolute acceleration. The strongest companies are Walgreen Co. (WAG) and Kimberly-Clark Corporation (NYSE:KMB), followed by The Clorox Company (NYSE:CLX) and Becton, Dickinson and Company (NYSE:BDX). iShares 1-3 yr Treasury Bond (NYSEARCA:SHY) is inserted into the list of individual companies to serve as a cutoff marker. In other words, one does not invest in any stock that is under performing SHY.

The Exponential Moving Average (NYSEMKT:EMA) columns include 195-, 49-, and 13-Day EMAs. The X/O column is known as the "Golden Cross" and it measures the direction of the 13-Day EMA with respect to the 49-Day EMA. If the 13-Day EMA is priced above the 49-Day EMA the indicator is positive (+) and negative (-) if the reverse is true. Consider the "Golden Cross" going negative as an advanced warning signal of worse things to come.

This table provides both positive and negative clues as to which dividend aristocrats have the highest probability of doing well over the next several months and which stocks to avoid.

(Click to enlarge)

Disclosure: I am long WAG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.