Dividend Champion Portfolio - July Update

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Includes: ADM, BWL.A, CSVI, CTBI, CVS, ED, EFSI, EMR, EV, HCP, HP, KO, MO, ORI, PG, STR, T, TGT, TROW, UBSI, UHT, UVV, WEYS, WMT, XOM
by: Scott's Investments

The High Yield Dividend Champion Portfolio is a publicly tracked stock portfolio on Scott's Investments. Its goal is to capture quality high yield stocks with a history of raising dividends.

The screening process for this portfolio starts with the "Dividend Champions" as compiled by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.

I made one change to the screen methodology for 2016 in order to further simplify the process. Stocks from the Dividend Champion list were previously ranked on yield, payout ratio, P/E, and 3-year dividend growth rate.

In 2016, stocks are ranked on yield, P/E, and 3-year dividend growth rate, but payout ratio is no longer a factor. The modification has a relatively low impact on screen results.

Stocks will still be sold on the re-balance date (generally around the 5th of the month) when they drop out of the top 15 (to limit turnover), and are replaced with the next-highest rated stock.

The top 25 stocks using the new method are below and displayed in order of their overall ranking (figures are June month-end):

Name Symbol Yield P/E 3-year
Target Corp. TGT 3.44 13.20 17.84
Helmerich & Payne Inc. HP 4.17 68.50 114.15
Emerson Electric EMR 3.64 17.99 5.40
Eagle Financial Services OTCQX:EFSI 3.49 11.57 3.10
Old Republic International ORI 3.89 12.61 1.39
Community Trust Bancorp CTBI 3.58 12.88 2.25
Questar Corp. STR 3.47 22.06 8.10
T. Rowe Price Group TROW 2.96 15.59 15.21
AT&T Inc. T 4.44 19.20 2.22
Eaton Vance Corp. EV 3.00 16.83 9.18
Universal Corp. UVV 3.67 17.82 2.00
Archer Daniels Midland ADM 2.80 16.50 16.96
Altria Group Inc. MO 3.28 24.81 8.36
HCP Inc. HCP 6.50 999.00 4.16
Weyco Group Inc. WEYS 3.02 17.36 6.18
Chevron Corp. CVX 4.08 151.93 6.83
ExxonMobil Corp. XOM 3.20 30.14 9.73
Coca-Cola Company KO 3.09 27.31 8.97
United Bankshares Inc. UBSI 3.52 18.94 1.06
Bowl America Class A BWL.A 4.76 39.72 1.78
Universal Health Realty Income Trust UHT 4.55 31.08 1.47
Consolidated Edison ED 3.33 20.89 2.42
Wal-Mart Stores Inc. WMT 2.74 16.15 7.78
Computer Services Inc. OTCQX:CSVI 2.67 18.12 21.05
Procter & Gamble Co. PG 3.16 28.32 5.99
Click to enlarge

There is turnover in two long-term holdings this month. Chevron, a holding since December 2012, will be sold for a small capital gain of .37%. ExxonMobil, a holding since April 2013, will be sold for a capital gain of 4.55%.

The proceeds will be used to purchase Community Trust Bancorp and T. Rowe Price Group. Questar is in the midst of a pending merger with Dominion Resources (NYSE:D), so I am excluding it from eligibility for purchase.

The current portfolio is below:

Position Average Purchase Price Initial Purchase Date Current Value Percentage Gain/Loss Excluding Dividends
CTBI 33.9 7/5/2016 $21,357.00 0.00%
EMR 49.64 8/4/2015 $21,696.25 2.84%
ORI 16.22 4/4/2014 $21,938.20 18.13%
EV 28.38 2/5/2016 $24,458.00 23.11%
TGT 68.65 6/3/2016 $27,268.34 1.59%
MO 58.14 1/7/2016 $27,844.00 19.73%
TROW 71.35 7/5/2016 $21,405.00 0.00%
HP 82.79467 10/6/2014 $20,097.00 -21.19%
STR 25.03 5/6/2016 $27,100.75 0.72%
T 38.13 3/7/2016 $28,177.50 13.69%
Click to enlarge

Disclosure: None.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.