Dividend Champions Ranking: Part 1, The Heavyweights

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 |  Includes: BEN, DOV, GWW, HP, PH, PNR, PPG, SHW, SPGI, TROW, VAL, VFC
by: Stan Stafford

Summary

Dividend Champion stocks are similar to Dividend Aristocrats in that they are dividend paying stocks that have increased dividends for at least 25 consecutive years.

Using 10 different metrics, I have ranked the Dividend Champions into different classes with 'Heavyweights' being the most attractive and 'Flyweights' being the least attractive.

The 12 stocks that fit into the Heavyweight class of Dividend Champions include: VFC, HP, GWW, BEN, PPG, DOV, TROW, SHW, VAL, MHFI, PH, and PNR.

Overview

Recently, I have written a series of articles related to what I like to call 'Real Deal' stocks, in which I take a look at between 4 and 8 stocks within a specified industry sector and test them against several criteria to see whether or not they qualify as 'Real Deal' stocks based on metrics such as revenue growth, returns on assets and equity, and long-term price returns. I have also written articles related to the best performing and worst performing Dividend Aristocrats over the past five years.

Using the concepts from those articles, I am using a similar scoring system to rank the Dividend Champion stocks (currently 105 stocks). For those who don't already understand the differences between the Dividend Aristocrats and the Dividend Champions, here is an article from another Seeking Alpha contributor who has done a nice job of explaining those differences.

In ranking the Dividend Champions, the following 10 metrics are used:

  • Number Of Consecutive Years With Dividend Increases
    Score 1 2 3 4 5 6 7 8 9 10
    Value 25-26 27-28 29-30 31-33 34-37 38-40 41-44 45-49 50-55 >55
    Click to enlarge
  • Current Dividend Yield
    Score 1 2 3 4 5 6 7 8 9 10
    Value <1.00% 1.00%-1.99% 2.00%-2.49% 2.50%-2.99% 3.00%-3.49% 3.50%-3.99% 4.00%-4.49% 4.50%-4.99% 5.00%-5.49% >5.49%
    Click to enlarge
  • PE Ratio (trailing twelve months)
    Score 1 2 3 4 5 6 7 8 9 10
    Value N/A >40 35-39.99 30-34.99 26-29.99 22-25.99 19-21.99 15-18.99 10-14.99 <10
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  • Return on Assets (trailing twelve months)
    Score 1 2 3 4 5 6 7 8 9 10
    Value negative <2% 2.00%-4.00% 4.01%-6.00% 6.01%-8.00% 8.01%-10.00% 10.01%-12.00% 12.01%-14.00% 14.00%-16.00% >16.00%
    Click to enlarge
  • Return on Equity (trailing twelve months)
    Score 1 2 3 4 5 6 7 8 9 10
    Value negative <4% 4.01%-7.00% 7.01%-10.00% 10.01%-13.00% 13.01%-16.00% 16.01%-19.00% 19.01%-22.00% 22.01%-25.00% >25.00%
    Click to enlarge
  • Asset Utilization (trailing twelve months)
    Score 1 2 3 4 5 6 7 8 9 10
    Value 0-0.1 0.11-0.20 0.21-0.30 0.31-0.40 0.41-0.50 0.51-0.60 0.61-0.70 0.71-0.80 0.81-0.90 >0.90
    Click to enlarge
  • 3 Year Price Returns
    Score 1 2 3 4 5 6 7 8 9 10
    Value negative 0%-14.99% 15%-29.99% 30%-44.99% 45%-59.99% 60%-69.99% 70%-79.99% 80%-89.99% 90%-99.99% >99.99%
    Click to enlarge
  • Dividend Growth (past five years)
    Score 1 2 3 4 5 6 7 8 9 10
    Value <5% 5%-9.99% 10%-14.99% 15%-19.99% 20%-24.99% 25%-34.99% 35%-44.99% 45%-59.99% 60%-79.99% >79.99%
    Click to enlarge
  • Revenue Growth (past five years)
    Score 1 2 3 4 5 6 7 8 9 10
    Value negative 0%-14.99% 15%-29.99% 30%-44.99% 45%-59.99% 60%-69.99% 70%-79.99% 80%-89.99% 90%-99.99% >99.99%
    Click to enlarge
  • Earnings Growth (past five years)
    Score 1 2 3 4 5 6 7 8 9 10
    Value negative 0%-14.99% 15%-29.99% 30%-44.99% 45%-59.99% 60%-69.99% 70%-79.99% 80%-89.99% 90%-99.99% >99.99%
    Click to enlarge

The next step is to apply a weight to certain metrics I feel more or less important than others. Because I consider myself a dividend growth investor, the metrics with the highest weights are earnings growth (2.0x), dividend growth (1.75x), revenue growth (1.5x), and 3 year price returns (1.25x). The number of consecutive years with dividend increases is weighted at 0.75x and asset utilization is weighted at 0.50x, while all remaining metrics are weighted to their original values.

After completing the analysis, the values assigned to individual stocks range from 92 to 23.50.

Note: Because of the high number of stocks being evaluated, I relied on data provided by Ycharts rather than calculating my own ratios/values for each metric. Because of this, the stock Computer Services (OTCQX:CSVI) has not been included in the analysis as required data was not available. So, 104 out of the 105 dividend champions will be included in this series of articles.

Because the Dividend Champion list reminds me of boxing, I have decided to use boxing weight classes to separate the attractiveness of these stocks (with 'Heavyweights' being the most attractive stocks and 'Flyweights' being the least attractive). For Part 1, I will be taking a look at the Heavyweight stocks which include:

  • V.F. Corporation (NYSE:VFC) - Total score of 92
  • Helmerich & Payne (NYSE:HP) - Total score of 90
  • W.W. Grainger (NYSE:GWW) - Total score of 89
  • Franklin Resources (NYSE:BEN) - Total score of 87.75
  • PPG Industries (NYSE:PPG) - Total score of 85
  • Dover (NYSE:DOV) - Total score of 84.75
  • T. Rowe Price Group (NASDAQ:TROW) - Total score of 84.75
  • Sherwin Williams (NYSE:SHW) - Total score of 84.25
  • Valspar (NYSE:VAL) - Total score of 84
  • McGraw-Hill (MHFI) - Total score of 82.25
  • Parker Hannifin (NYSE:PH) - Total score of 81.25
  • Pentair (NYSE:PNR) - Total score of 80.75

V.F. Corporation

V.F. Corporation is an American apparel corporation that specializes in the manufacturing of jeanswear, intimate apparel, daypacks, and workwear. The company was founded in 1899 and is headquartered in Greensboro, North Carolina. You can see the numbers from the analysis on V.F. Corporation below:

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 41 7 5.25
Current Dividend Yield 1.80% 2 2
PE Ratio 21.57x 7 7
Return on Assets 12.24% 8 8
Return on Equity 22.32% 9 9
Asset Utilization 1.16x 10 5
3 Year Price Returns 135.10% 10 12.5
Dividend Growth 77.97% 9 15.75
Revenue Growth 58.16% 5 7.5
Earnings Growth 164.10% 10

20

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You can see that V.F. Corporation's main strengths can be seen in its impressive dividend, earnings and price returns growth.

Recent developments concerning V.F. Corporation include:

  • V.F. Corporation announced changes in management that align the company with continued long-term growth.
  • V.F. Corporation completed a dedication of a New Central Distribution Center in China.

Helmerich & Payne

Helmerich & Payne, Inc. is an oil and gas contract drilling company that engages with exploration and production companies throughout the world. The company was founded in 1920 and is headquartered in Tulsa, Oklahoma.

Value Metric Score Weighted Metric Score
Number Of Consecutive years With Dividend Increases 42 7 5.25
Current Dividend Yield 2.36% 3 3
PE Ratio 15.32x 8 8
Return on Assets 12.17% 8 8
Return on Equity 17.47% 7 7
Asset Utilization 0.56x 6 3
3 Year Price Returns 58.43% 5 6.25
Dividend Growth 1150% 10 17.50
Revenue Growth 83.74% 8 12
Earnings Growth 105.70% 10 20
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You can see that Helmerich & Payne's main strengths can be seen in its impressive dividend, revenue, and earnings growth.

Recent developments concerning Helmerich & Payne include:

  • Last month, Helmerich & Payne announced new drilling contracts in Argentina.

W.W. Grainger

W.W. Grainger, Inc. is a leading supplier of maintenance, repair and operating products throughout North America with an expanding presence in Europe, Asia, and Latin America. The company was founded in 1927 and is headquartered in Lake Forest, Illinois.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 42 7 5.25
Current Dividend Yield 1.49% 2 2
PE Ratio 22.44x 6 6
Return on Assets 15.58% 9 9
Return on Equity 25.13% 10 10
Asset Utilization 1.85x 10 5
3 Year Price Returns 74.41% 7 8.75
Dividend Growth 102.20% 10 17.5
Revenue Growth 51.68% 5 7.5
Earnings Growth 98.42% 9 18
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You can see that W.W. Grainger's main strengths can be seen in its strong earnings and dividend growth along with its impressive returns on equity and assets.

Some recent developments concerning W.W. Grainger include:

  • Last month, W.W. Grainger reported February sales were up 3%.

Franklin Resources

Franklin Resources is a global investment management organization that serves customers throughout more than 150 various countries worldwide. The company was founded in 1947 and is headquartered in San Mateo, California.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 34 5 3.75
Current Dividend Yield 0.92% 1 1
PE Ratio 14.71x 9 9
Return on Assets 14.77% 9 9
Return on Equity 22.96% 9 9
Asset Utilization 0.54x 6 3
3 Year Price Returns 24.74% 3 3.75
Dividend Growth 71.43% 9 15.75
Revenue Growth 90.39% 9 13.50
Earnings Growth 161.20% 10 20
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You can see that Franklin Resources' strengths can be seen in a multitude of areas, obtaining a 9 or 10 non-weighted score in six of the ten included metrics.

Some recent developments concerning Franklin Resources include:

  • Franklin Resources announces month-end assets under management.

PPG Industries

PPG Industries supplies paints, coatings, optical products, specialty materials, chemicals, glass and fiber glass throughout various countries globally. The company was founded in 1883 and is currently headquartered in Pittsburgh, Pennsylvania.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 42 7 5.25
Current Dividend Yield 1.30% 2 2
PE Ratio 8.53x 10 10
Return on Assets 20.24% 10 10
Return on Equity 67.21% 10 10
Asset Utilization 0.95x 10 5
3 Year Price Returns 97.83% 9 11.25
Dividend Growth 15.09% 4 7
Revenue Growth 23.44% 3 4.5
Earnings Growth 1000% 10 20
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PPG Industries' solid financial foundation can be seen easily as it achieved a non-weighted score of 10 in earnings growth, asset utilization, return on assets, return on equity, and PE Ratio.

Some recent developments concerning PPG include:

  • PPG recently introduced new Duranar coating.
  • PPG recently received DOE funding as part of new pigment technology project.
  • PPG's PAINTMANAGER now has internet connectivity capability.

Dover

Dover Corporation is a diversified global industrial manufacturer that operates in the following segments: Energy, Communication Technologies, Engineered Systems and Printing & Identification. The company was founded in 1947 and is headquartered in Downers Grove, Illinois.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 59 10 7.5
Current Dividend Yield 1.86% 2 2
PE Ratio 13.94x 9 9
Return on Assets 9.55% 6 6
Return on Equity 19.81% 8 8
Asset Utilization 0.83x 9 4.5
3 Year Price Returns 49.59% 5 6.25
Dividend Growth 50% 8 14
Revenue Growth 51.15% 5 7.5
Earnings Growth 206.80% 10 20
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Dover's strengths can be seen in its impressive earnings growth as well as its solid dividend history (impressive growth and 59 consecutive years of increases).

T. Rowe Price Group

T. Rowe Price is an investment firm that offers mutual funds, subadvisory services, and separate account management for individuals, institutions, and retirement plans to its customers around the world. The company was founded in 1937 and is headquartered in Baltimore, Maryland.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 27 2 1.5
Current Dividend Yield 2.28% 3 3
PE Ratio 19.96x 7 7
Return on Assets 22.04% 10 10
Return on Equity 24.23% 9 9
Asset Utilization 0.73x 8 4
3 Year Price Returns 14.78% 2 2.5
Dividend Growth 76.00% 9 15.75
Revenue Growth 86.58% 8 12
Earnings Growth 137.90% 10 20
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T. Rowe Price has an impressive history of dividend, revenue, and earnings growth as well as solid returns on both assets and equity.

Sherwin Williams

Sherwin Williams manufactures, distributes, and markets paints, coatings and related products to professional, industrial, commercial, and retail customers throughout various countries, with a primary concentration in the North and South America continents. The company was founded in 1866 and is headquartered in Cleveland, Ohio.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 36 5 3.75
Current Dividend Yield 1.17% 2 2
PE Ratio 25.87x 6 6
Return on Assets 11.72% 7 7
Return on Equity 42.91% 10 10
Asset Utilization 1.59x 10 5
3 Year Price Returns 122.70% 10 12.5
Dividend Growth 54.93% 8 14
Revenue Growth 43.57% 4 6
Earnings Growth 95.00% 9 18
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In addition to its strong earnings growth, Sherwin Williams has very impressive returns on equity and assets, and significant long-term price increases in its stock.

Some recent developments concerning Sherwin Williams include:

  • Sherwin Williams recently ended Comex Mexico deal

Valspar

Valspar Corporation is a specialty chemicals company that manufactures and distributes coatings, paints, and related products throughout the United States, China, and Europe. The company was founded in 1806 and is headquartered in Minneapolis, Minnesota.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 36 6 4.5
Current Dividend Yield 1.47% 2 2
PE Ratio 21.99x 7 7
Return on Assets 7.48% 5 5
Return on Equity 25.40% 10 10
Asset Utilization 1.09x 10 5
3 Year Price Returns 76.96% 7 8.75
Dividend Growth 73.33% 9 15.75
Revenue Growth 42.54% 4 6
Earnings Growth 119.30% 10 20
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Valspar has shown strong management effectiveness through its impressive returns, asset utilization, and earnings growth.

McGraw-Hill

The McGraw-Hill Companies, Inc. is a business services company that provides financial, education, publishing, broadcasting, and business services to a wide array of customers. The company was founded in 1888 and is headquartered in New York, New York.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 41 7 5.25
Current Dividend Yield 1.67% 2 2
PE Ratio 14.72x 9 9
Return on Assets 21.92% 10 10
Return on Equity 129.90% 10 10
Asset Utilization 0.78x 8 4
3 Year Price Returns 84.09% 8 10
Dividend Growth 33.33% 6 10.50
Revenue Growth -18.10% 1 1.5
Earnings Growth 114.10% 10 20
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MHFI has impressive returns and earnings growth as well as an attractive PE Ratio.

Parker Hannifin

Parker Hannifin is a global leader in motion and control technologies. The company was founded in 1918 and is headquartered in Cleveland, Ohio.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 58 10 7.5
Current Dividend Yield 1.61% 2 2
PE Ratio 17.65x 8 8
Return on Assets 8.23% 6 6
Return on Equity 17.77% 7 7
Asset Utilization 1.05x 10 5
3 Year Price Returns 25.09% 3 3.75
Dividend Growth 92.00% 10 17.50
Revenue Growth 26.26% 3 4.5
Earnings Growth 101.90% 10 20
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Parker Hannifin Corporation's strengths can be seen in its impressive dividend and earnings growth as well as strong asset utilization and 58 years of increasing dividends.

Pentair

Pentair, Inc. provides products and systems that are used worldwide in the movement, treatment, storage and enjoyment of water. The company was founded in 1966 and is headquartered in Golden Valley, Minnesota.

Value Metric Score Weighted Metric Score
Number Of Consecutive Years With Dividend Increases 37 5 3.75
Current Dividend Yield 1.30% 2 2
PE Ratio 29.24x 5 5
Return on Assets 4.57% 4 4
Return on Equity 8.78% 4 4
Asset Utilization 0.64x 7 3.5
3 Year Price Returns 99.40% 9 11.25
Dividend Growth 38.89% 7 12.25
Revenue Growth 177.80% 10 15
Earnings Growth 124.40% 10 20
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Pentair's strengths can be seen in its impressive revenue and earnings growth along with its substantial long-term price returns.

Some recent developments concerning Pentair include:

  • Recently, Pentair announced recent innovations in aquaponics.
  • Last month, Pentair launched Hypro Express Boom to help minimize labor costs.

Final Analysis

Since Part 1 of this article relates to the 'Heavyweight' Dividend Champion stocks, there are no stocks in this article that I don't think are worth consideration as long-term buys for investors. But there are stocks that I personally prefer over the others. These stocks include: BEN, PPG, DOV, and TROW.

The four stocks mentioned above each reported impressive revenue and earnings growth in their latest earnings report while maintaining low PE ratios, which makes them especially attractive at the moment.

Revenue (quarterly yoy growth) Earnings (quarterly yoy growth) PE Ratio
BEN 10.92% 18.52% 14.73x
PPG 14.15 22.58% 8.57x
DOV 9.70% 26.89% 14.14x
TROW 18.10% 20.34% 20.47x
Click to enlarge

While none of the twelve stocks in this article should be avoided, a few stocks that I personally would hold off on buying at the moment include: GWW, VAL, and MHFI.

W.W. Grainger is historically more attractive when its PE ratio falls under 20x (currently it sits at 22.46x). Also, when looking at quarterly revenue and earnings, the company has seen declines over the past year of 0.18% and 26.4%. Based on those numbers, I feel the stock is currently overvalued.

Valspar is in the same boat as W.W. Grainger. It has seen negative quarterly revenue and earnings changes of 7.28% and 27.60% over the past year. With a nearly identical PE ratio of 22.07x, I feel that Valspar may have a difficult time of returning substantial price returns in the near future.

McGraw-Hill Financial is not overpriced but it has seen recent flatlines/declines in its revenue and earnings.

Conclusion

These articles, just like any other investment screen, ranking, or rating system, should be the first step in a long line of analysis to determine whether or not a stock is a right choice for you. Another step for individual investors might be to use the metrics I have included, but change the weight of them based on important factors to see how that affects overall scores. For example, value investors may want to weigh PE ratio higher, while lowering the weight of dividend growth.

I do feel that each of the 12 stocks listed in this article are worth consideration as long-term buys, but as always, I suggest individual investors perform their own research before making any investment decisions.

Part 2 of this article will feature the 'Light Heavyweight' Dividend Champion stocks (8 stocks that have weighted scores between 75 and 79.99).

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.