Conservative dividend investors want yield, but they also want companies that are growing, stocks that are not highly volatile, and yet have good year ahead price gain expectations.
In a screen today for the Do-It-Yourself investor, we found 71 prospects by cross referencing the list of companies maintained by David Fish that have paid and not decreased dividends for at least 5 years, with a list of companies from Fidelity with revenue growth rates for 5, 3 and 1 year that are at least as high as the S&P 500, and that also have a 5, 3 and 1 year Beta no more than the market median.
Of those 71 prospects, 17 have I/B/E/S average year ahead price targets that are at least 10% or more above their current price. We wouldn't say this is a great looking list, but it may be worth thinking about some of the names. The full list, which is too long to put in this article, has some names that may be more interesting, except for lower analyst price gain expectations.
The full list of 71 companies in the same format as the image below in an Excel spreadsheet is available for download at this link for email opt-in visitors.
We own DLR from this list which we purchased recently (when it was yielding about 7%), believing it is more beat up than it deserves.
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Here is how the filter numbers break down:
- # dividend stocks in David Fish's list (471)
- # stocks with revenue growth at least equal to the S&P 500 (1,694)
- # stocks with Beta no more than the market median (825)
- # stocks that pass both revenue growth and Beta filter (305)
- # stocks that pass revenue growth, Beta and dividend history filter (71)
This table of technical data about the list may be helpful:
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The stocks in the table above are batched into three groups, those where the 10-day and 63-day slope of the 200-day average (trend line) is UP; those where the 10-day slope is DOWN but the 63-day slope of the 200-day average is UP; and those where both the 10-day and 63-day slope of the 200-day average is DOWN. Within each of those three groups the stocks are ranked by the percent that yesterday's price is below the 252-day (1-year) high price.
While charts provide more information than a table of technical data, one's ability to remember all the aspects of all the pictures is limited, thus tabulating key technical factors helps sort out the list for visual inspection.
Here is some valuation, dividend and total return information about those 17 stocks from Morningstar:
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The disappointing situation is that out of thousands of stocks, only 71 are consistent dividend payers, growing revenue at a rate equal to or better than half of S&P stocks and with a Beta equal to or less than the broad market.
It's a very narrow market for dividend investors who demand historical payment consistency and persistence from companies that are above average growers, that are also not volatile relative to the S&P 500.
The downside of all the stock market increases over the past couple of years is that if you did not lock in great yield and dividend growth opportunities along the way, you are working in a much reduced qualifying universe today.
They are still out there, but harder to find and it may be more necessary to buy them when they are in temporary down movements to get the kinds of yields that were readily available a couple of years ago.
Stock Symbols In This Article:
Disclosure: QVM has positions in DLR as of the creation date of this article (December 6, 2013). We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, but are compensated retroactively by Seeking Alpha based on readership of this specific article.
General Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.
Additional disclosure: Disclosure: QVM has positions in DLR as of the creation date of this article (December 6, 2013). We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, but are compensated retroactively by Seeking Alpha based on readership of this specific article.