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In a post recently I referenced a recent article by Geoff Considine in which he discussed the merits of low volatility dividend growth stocks. To summarize his argument, the rational for seeking low volatility dividends stocks is that:

Volatility is considerably persistent through time, and the implied volatility from options prices is a key signal for determining the probability of corporate distress.The higher the implied volatility, the higher the probability of distress. Along the same lines, the lower the volatility of a stock, the more sustainable should be its dividend.

In his article Considine focused on Dividend Aristocrats. Using StockScreen123, I decided to expand the available universe of stocks to screen for all non-OTC stocks trading above $3. In addition, I set the following requirements:

  • minimum yield of 2%,
  • a payout ratio less than 50%,
  • a projected Price/Earnings ratio less than 17,
  • a low standard deviation of the percentage moves of the closing prices over the past 100 days, and
  • a 1,3, and 5 year dividend growth rate of at least 5% each.

To be clear, this parameters are strictly my own. I added the low payout ratio and low projected PE ratio in order to increase the chances that each stock's dividend can be sustained. A history of dividend growth was added to include stocks with a recent commitment to raising dividends. Stocks were then ranked based on their 1 year sharpe ratio, or the annualized return of a stock divided by its annualized standard deviation of the weekly returns.

All of these metrics and ratios capture just one small piece of data and even when combined together may omit important factors when considering a stock for purchase. However, I think they give a good starting list for further research and I will continue to perform new screens for low volatility dividend growth stocks.

Ticker Name Trading Course Last Yield MktCap Sector
HRL Hormel Foods Corporation Trading Course 50.4 2.02 6717.46 Consumer/Non-Cyclical
UGI UGI Corporation Trading Course 32.44 3.1 3563.64 Utilities
MKC McCormick & Company, Incorpor Trading Course 45.94 2.44 6102.08 Consumer/Non-Cyclical
AXS Axis Capital Holdings Limited Trading Course 35.23 2.59 4389.53 Financial
NHC National HealthCare Corporati Trading Course 46.65 2.4 634.4 Healthcare
ACE ACE Limited Trading Course 60.87 2.17 20651.88 Financial
SXL Sunoco Logistics Partners L.P Trading Course 86.7 5.41 2860.19 Energy
WEC Wisconsin Energy Corporation Trading Course 59.1 2.7 6926.14 Utilities
MCD McDonald's Corporation Trading Course 72.67 3.32 77758.89 Services
CB The Chubb Corporation Trading Course 57.46 2.54 17740.97 Financial
NJR New Jersey Resources Corporat Trading Course 43.25 3.31 1796.01 Utilities
PG The Procter & Gamble Company Trading Course 65.48 2.97 184349.7 Consumer/Non-Cyclical
PEP PepsiCo, Inc. Trading Course 66.91 2.88 105756.4 Consumer/Non-Cyclical
CVX Chevron Corporation Trading Course 92.18 3.12 186049 Energy
NTT Nippon Telegraph & Telephone Trading Course 22.45 3.08 59342.64 Services
D Dominion Resources, Inc. Trading Course 42.61 4.33 24532.26 Utilities
CPB Campbell Soup Company Trading Course 34.92 3.32 11640.68 Consumer/Non-Cyclical
UNS UniSource Energy Corp. Trading Course 36.15 4.31 1317.74 Utilities
XOM Exxon Mobil Corporation Trading Course 76.71 2.3 386159 Energy
TAP Molson Coors Brewing Company Trading Course 47.93 2.34 8892.42 Consumer/Non-Cyclical
APD Air Products & Chemicals, Inc Trading Course 88.86 2.21 19011.23 Basic Materials
GIS General Mills, Inc. Trading Course 36.33 3.06 23308.86 Consumer/Non-Cyclical
SJM The J.M. Smucker Company Trading Course 64.05 2.49 7641 Consumer/Non-Cyclical
NEE NextEra Energy, Inc. Trading Course 53.76 3.73 22439.88 Utilities
WMT Wal-Mart Stores, Inc. Trading Course 54.79 2.21 195375.41 Services
AZN AstraZeneca plc (ADR) Trading Course 47.6 6.3 67307.76 Healthcare
LMT Lockheed Martin Corporation Trading Course 73.84 4.04 26735.93 Capital Goods
JNJ Johnson & Johnson Trading Course 62.91 3.46 171640.91 Healthcare
CL Colgate-Palmolive Company Trading Course 78.31 2.7 37847.21 Consumer/Non-Cyclical
K Kellogg Company Trading Course 51.5 3.17 18819.41 Consumer/Non-Cyclical
MDT Medtronic, Inc. Trading Course 37.27 2.45 39396.57 Healthcare

Disclosure: No positions

Source: 31 Low Volatility, Dividend Growth Stocks