I write extensively on the U.S. Dividend Champion list maintained and updated by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.
My initial Dividend Champion articles and monthly High Yield Dividend Champion Portfolio focused on just the Dividend Champions. However, DRIP Investing also maintains a Dividend Contenders list which is comprised of stocks with a history of raising dividends for the past 10-24 years.
Combining June's Dividend Champions and Dividend Contenders into one list gives us a strong starting point of 248 stocks with long histories of raising dividends. Historical tests have also shown that stocks with higher yields and lower payout ratios have tended to outperform other stocks.
With this information in tow, I ranked the yields and payout ratios of the 248 stocks with histories of 10+ years of dividend increases. The yield and payout ratio ranks were added to create an average overall rank for each stock.
We are left with a list of dividend growth stocks for further research. The top 10 stocks based on yield and payout rank are listed below. In addition, stocks were required to have projected forward earnings, which potentially eliminates stocks with dividend growth at immediate risk.
This list is valuable to investors seeking companies with a commitment to paying dividends, high yield, and dividend sustainability/margin of safety. Universal (UVV) would have been on the list at position 4 with its healthy 5.14% yield and low payout ratio of 32%. However, UVV has no projected forward earnings and earnings growth is projected to decline next year; therefore, it was eliminated from the list. It currently trades at a price to book ratio of .73 and the stock currently has a relatively high short float of 13.86%.
Note: Data Source DRIP Investing, MSN, and Finviz. Always conduct your own research as statistical anomalies can exist, especially in instances of short-term earnings fluctuations skewing payout ratio.
|Company||Symbol||Yield||Yield Rank||Payout Ratio||Payout Rank||Yield / Payout Rank||Forward P/E|
|Republic Bancorp KY||RBCAA||3.23%||98||13%||13||2||4.71|
|Chesapeake Financial Shares||CPKF.PK||3.93%||60||26%||59||3||6.22|
|Sunoco Logistics Partners LP||SXL||5.70%||18||49%||144||7||15.06|
|Teche Holding Co.||TSH||4.15%||51||42%||120||10||9.01|
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.