Ranking The Dividend Challengers, Part 1

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Includes: BCPC, CE, DOW, EMN, FMC, KWR, LYB, MEOH, POL, SHLM, SMG, WDFC
by: Stan Stafford

Summary

Dividend Challengers are stocks that have 5+ years of increased dividends. It is part of the U.S. Dividend Champions list maintained by Dave Fish.

In this series of articles, I will be ranking the dividend challengers of various industry sectors based on 15 different metrics.

Out of this group of chemical stocks, my top ranked stocks include LyondellBasell, Dow Chemical, FMC, and Eastman Chemical.

Overview

In this series of articles, I will be ranking the Dividend Challengers of various industry sectors based on 15 different metrics. Dividend Challengers are stocks that have 5+ years of consecutive dividend growth. The stocks are part of the U.S. Dividend Champions list that is maintained by Dave Fish.

For part 1 of this series, I will be reviewing the Dividend Challengers that are in the Chemicals industry. These stocks include:

  • FMC (NYSE:FMC)
  • Dow Chemical (NYSE:DOW)
  • Eastman Chemical (NYSE:EMN)
  • A. Schulman (NASDAQ:SHLM)
  • Balchem (NASDAQ:BCPC)
  • Celanese (NYSE:CE)
  • LyondellBasell Industries (NYSE:LYB)
  • Methanex (NASDAQ:MEOH)
  • PolyOne (NYSE:POL)
  • Quaker Chemical (NYSE:KWR)
  • Scotts Miracle-Gro (NYSE:SMG)
  • WD-40 Company (NASDAQ:WDFC)

The stocks will be ranked based on the following 15 metrics:

  • Dividend Yield (trailing twelve months)
  • Dividend Growth (past five years)
  • Payout Ratio (trailing twelve months)
  • Revenue Growth (past five years)
  • Earnings Growth (past five years)
  • Book Value Growth (past five years)
  • PE ratio (trailing twelve months)
  • PEG ratio (trailing twelve months)
  • Price to Free Cash Flow ratio (trailing twelve months)
  • Return on Assets (trailing twelve months)
  • Return on Equity (trailing twelve months)
  • Return on Invested Capital (trailing twelve months)
  • Earnings Yield (trailing twelve months)
  • Debt to Equity ratio (trailing twelve months)
  • Asset Utilization (trailing twelve months)

Dividend Yield

Stock Value Ranking
FMC 1.67% 8
Dow Chemical 3.37% 2
Eastman Chemical 2.31% 6
A. Schulman 3.08% 4
Balchem 0.54% 12
Celanese 1.73% 7
LyondellBasell 3.53% 1
Methanex 3.27% 3
PolyOne 1.39% 11
Quaker Chemical 1.47% 10
Scotts Miracle-Gro 2.58% 5
WD-40 Company 1.54% 9
Click to enlarge

Dividend Growth

Stock Value Ranking
FMC 120.00% 4
Dow Chemical 84.00% 8
Eastman Chemical 95.74% 5
A. Schulman 32.26% 12
Balchem 88.89% 6
Celanese 500.00% 2
LyondellBasell 680.00% 1
Methanex 61.76% 9
PolyOne 200.00% 3
Quaker Chemical 36.17% 11
Scotts Miracle-Gro 88.00% 7
WD-40 Company 55.56% 10
Click to enlarge

Payout Ratio

Stock Value Ranking
FMC 17.67% 2
Dow Chemical 30.77% 5
Eastman Chemical 28.77% 4
A. Schulman 128.6% 12
Balchem 15.49% 1
Celanese 57.24% 10
LyondellBasell 31.50% 6
Methanex 49.74% 9
PolyOne 24.69% 3
Quaker Chemical 32.26% 7
Scotts Miracle-Gro 73.68% 11
WD-40 Company 46.89% 8
Click to enlarge

Revenue Growth

Stock Value Ranking
FMC 2.71% 8
Dow Chemical (15.00%) 11
Eastman Chemical 45.89% 2
A. Schulman 18.40% 5
Balchem 96.33% 1
Celanese (10.70%) 10
LyondellBasell (29.60%) 12
Methanex (2.95%) 9
PolyOne 21.24% 4
Quaker Chemical 21.43% 3
Scotts Miracle-Gro 7.22% 7
WD-40 Company 13.85% 6
Click to enlarge

Earnings Growth

Stock Value Ranking
FMC 127.5% 2
Dow Chemical 194.3% 1
Eastman Chemical 27.51% 8
A. Schulman (58.3%) 12
Balchem 49.60% 6
Celanese (45.3%) 11
LyondellBasell 100.2% 3
Methanex 58.56% 5
PolyOne (33.9%) 10
Quaker Chemical 31.63% 7
Scotts Miracle-Gro (13.5%) 9
WD-40 Company 70.11% 4
Click to enlarge

Book Value Growth

Stock Value Ranking
FMC 50.39% 4
Dow Chemical 16.92% 8
Eastman Chemical 110.7% 1
A. Schulman 6.49% 10
Balchem 99.87% 2
Celanese 77.33% 3
LyondellBasell (38.2%) 12
Methanex 22.42% 6
PolyOne 19.70% 7
Quaker Chemical 46.65% 5
Scotts Miracle-Gro 10.88% 9
WD-40 Company (21.6%) 11
Click to enlarge

PE Ratio

Stock Value Ranking
FMC 10.93x 3
Dow Chemical 8.51x 1
Eastman Chemical 13.14x 4
A. Schulman 46.25x 12
Balchem 33.33x 10
Celanese 36.40x 11
LyondellBasell 9.27x 2
Methanex 17.85x 5
PolyOne 19.58x 6
Quaker Chemical 22.26x 7
Scotts Miracle-Gro 29.53x 8
WD-40 Company 30.47x 9
Click to enlarge

PEG Ratio

Stock Value Ranking
FMC 0.19x 3
Dow Chemical 0.07x 2
Eastman Chemical 0.91x 8
A. Schulman 0.30x 5
Balchem 3.07x 10
Celanese 0.02x 1
LyondellBasell 0.47x 7
Methanex 0.31x 6
PolyOne 0.21x 4
Quaker Chemical 925.16x 12
Scotts Miracle-Gro 6.01x 11
WD-40 Company 2.42x 9
Click to enlarge

Price to Free Cash Flow Ratio

Stock Value Ranking
FMC 396.82x 12
Dow Chemical 17.79x 4
Eastman Chemical 11.60x 2
A. Schulman 16.23x 3
Balchem 32.28x 10
Celanese 30.75 8
LyondellBasell 9.37x 1
Methanex 35.88x 11
PolyOne 20.64x 6
Quaker Chemical 18.13x 5
Scotts Miracle-Gro 21.84x 7
WD-40 Company 31.47x 9
Click to enlarge

Return on Assets

Stock Value Ranking
FMC 8.02% 4
Dow Chemical 11.18% 3
Eastman Chemical 5.35% 9
A. Schulman 1.15% 12
Balchem 6.87% 6
Celanese 3.46% 11
LyondellBasell 18.72% 1
Methanex 4.35% 10
PolyOne 5.44% 8
Quaker Chemical 7.65% 5
Scotts Miracle-Gro 5.65% 7
WD-40 Company 14.18% 2
Click to enlarge

Return on Equity

Stock Value Ranking
FMC 26.83% 5
Dow Chemical 39.22% 2
Eastman Chemical 22.88% 6
A. Schulman 4.17% 12
Balchem 13.81% 9
Celanese 10.94% 11
LyondellBasell 59.53% 1
Methanex 11.49% 10
PolyOne 19.10% 7
Quaker Chemical 14.01% 8
Scotts Miracle-Gro 27.17% 4
WD-40 Company 31.24% 3
Click to enlarge

Return on Invested Capital

Stock Value Ranking
FMC 12.43% 4
Dow Chemical 17.58% 3
Eastman Chemical 7.60% 9
A. Schulman 1.66% 12
Balchem 7.92% 7
Celanese 5.09% 11
LyondellBasell 28.80% 1
Methanex 5.60% 10
PolyOne 7.84% 8
Quaker Chemical 11.29% 5
Scotts Miracle-Gro 8.20% 6
WD-40 Company 21.65% 2
Click to enlarge

Earnings Yield

Stock Value Ranking
FMC 9.15% 3
Dow Chemical 11.75% 1
Eastman Chemical 7.61% 4
A. Schulman 2.16% 12
Balchem 3.00% 10
Celanese 2.75% 11
LyondellBasell 10.78% 2
Methanex 5.60% 5
PolyOne 5.11% 6
Quaker Chemical 4.49% 7
Scotts Miracle-Gro 3.39% 8
WD-40 Company 3.28% 9
Click to enlarge

Debt to Equity Ratio

Stock Value Ranking
FMC 1.15x 6
Dow Chemical 0.68x 4
Eastman Chemical 1.79x 10
A. Schulman 1.83x 11
Balchem 0.66x 3
Celanese 1.25x 8
LyondellBasell 1.23x 7
Methanex 0.89x 5
PolyOne 1.63x 9
Quaker Chemical 0.22x 2
Scotts Miracle-Gro 1.87x 12
WD-40 Company 0.00x 1
Click to enlarge

Asset Utilization

Stock Value Ranking
FMC 0.54x 11
Dow Chemical 0.71x 7
Eastman Chemical 0.61x 10
A. Schulman 1.23x 3
Balchem 0.64x 9
Celanese 0.65x 8
LyondellBasell 1.37x 1
Methanex 0.48x 12
PolyOne 1.27x 2
Quaker Chemical 1.10x 5
Scotts Miracle-Gro 1.12x 4
WD-40 Company 1.09x 6
Click to enlarge

Final Rankings

For each metric, the best performing stock has a ranking of 1 and the worst performing stock has a ranking of 12. Similar to golf, the stock with the lowest overall score is the best performer based on these metrics. The overall rankings are:

The Heavyweights

  • LyondellBasell - Total Score of 58
  • Dow Chemical - Total Score of 62
  • FMC - Total Score of 79
  • Eastman Chemical - Total Score of 88

The Middleweights

  • PolyOne - Total Score of 92
  • WD-40 Company - Total Score of 98
  • Quaker Chemical - Total Score of 99
  • Balchem - Total Score of 102

The Lightweights

  • Methanex - Total Score of 115
  • Scotts Miracle-Gro - Total Score of 115
  • Celanese - Total Score of 123
  • A. Schulman - Total Score of 137

Conclusion

Out of this group of stocks, I feel that each of the heavyweight stocks (LyondellBasell, Dow Chemical, FMC, and Eastman Chemical) all our strong investment opportunities for long term dividend investors.

LyondellBasell currently offers the highest dividend yield and dividend growth out of these stocks. Even though the company's revenue and earnings growth have not been great in the current difficult market environment, the company maintains a healthy balance sheet and provides strong returns on assets, equity, and invested capital.

The other three heavyweight stocks all have solid earnings yields, offer solid returns, and are priced attractively.

I believe the middleweight stocks listed (PolyOne, WD-40, Quaker Chemical, and Balchem) also are strong companies that are solid investment opportunities for certain investors. While I do not believe they offer as much value at the moment as the heavyweight stocks, I do think they have the potential to generate strong returns, but some investors may want to stay away for specific reasons. For example, Balchem has a low dividend yield under 1% which may keep some dividend investors away. However, other investors who like the company's decent dividend growth and impressive revenue, earnings, and book value growth may be interested. Other investors may want to wait for a dip in price to find a more attractive entry point for stocks such as WD-40 and Quaker Chemical.

I would avoid the lightweight stocks (Methanex, Scotts Miracle-Gro, Celanese, and A. Schulman) for now. While these companies do possess some strong qualities, I don't believe that any of them will outperform the heavyweight stocks mentioned earlier. Whether it is poor revenue/earnings growth, poor returns, or poor valuations, these stocks possess enough negative traits that I believe will limit future success of these stocks. And they do not have strong enough combinations of dividend yields and growth to make up for some of the financial qualities they currently lack.

As always, I suggest individual investors perform their own research before making any investment decisions.

Disclosure: I/we 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.