Dividend Champions Smackdown XXVI

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 |  Includes: ADM, AFL, BDX, CVX, DOV, MDT, TGT, WBA, WMT
by: David Fish

Dividend Champions Smackdown XXVI

In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here) starting with companies that were down in price and, last month, with a new column listing Beta.

(Note that I have separated the Champions, Contenders, and Challengers into different articles to fit more closely into the format preferred by Seeking Alpha. Champions are companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. I use the same Roman numeral for all three articles.)

This month, I decided to start with the stocks' most recent (percentage) dividend increase (column L), since many companies seem to have "loosened the purse-strings" as we continue to recover from the "great recession" and I wanted to highlight those that have been the most generous in that regard. So I screened as follows:

Step 1: After eliminating companies that had not increased their dividend in more than a year and those that had agreed to be acquired, I sorted by Most Recent Increase (column L), high to low. Eliminating companies that had percentages below 7% cut the list to 43 companies.

Step 2: Sort the candidates by their Yield (column I), high to low. Dropping those with yields below 2% cut the list to 27 companies.

Step 3: Sort the companies by their 5-year Dividend Growth Rate (column AN), in order to ensure that the remaining candidates had consistent histories of dividend increases. I eliminated any company with a DGR of less than 8%. Meeting this threshold were 21 companies.

Step 4: Sort the companies by their Price/Earnings ratio (column U), in order to avoid stocks that may be overvalued. Dropping those with P/Es over 15 cut the list to nine companies, which appear below.

(Note that I've sorted the table back into alphabetical order.)

Company

Ticker

No.

4/30

Div

LY%

TTM

DGR

Name

Symbol

Yrs

Price

Yield

Inc.

P/E

5-yr

AFLAC Inc.

(NYSE:AFL)

29

45.04

2.93

10.00

8.95

17.5

Archer Daniels Midland

(NYSE:ADM)

36

30.83

2.27

9.38

13.70

10.4

Becton Dickinson & Co.

(NYSE:BDX)

40

78.45

2.29

9.76

14.34

13.8

Chevron Corp.

(NYSE:CVX)

25

106.56

3.38

11.11

7.93

9.0

Dover Corp.

(NYSE:DOV)

56

62.66

2.01

14.55

13.65

10.7

Medtronic Inc.

(NYSE:MDT)

34

38.20

2.54

7.78

12.36

17.8

Target Corp.

(NYSE:TGT)

44

57.94

2.07

20.00

13.51

20.1

Walgreen Company

(WAG)

36

35.06

2.57

28.57

11.97

22.9

Wal-Mart Stores Inc.

(NYSE:WMT)

38

58.91

2.70

8.90

12.98

16.5

Click to enlarge

Conclusion

It's no surprise that the result includes many familiar names, or that few of them are yielding more than 3%, but their strong dividend growth histories suggest that long-term investors can still enjoy a strong cumulative dividend stream and persistent price appreciation. As always, please consider this no more than a starting point for more in-depth research.

As an extra step, I'm including one of Chuck Carnevale's F.A.S.T. Graphs for the company that appears to be the most undervalued, as indicated by its price line being in the green-shaded earnings area, just below.

(Click chart to enlarge

Click to enlarge

Disclosure: I am long AFL, BDX, DOV.