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Dividend Contenders Smackdown XXX

In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here: http://dripinvesting.org/Tools/Tools.asp ) starting with stocks' Premium (+) or Discount (-) to the Graham Number and, last month, with a combination of high yield and low payout ratio.

(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 screen the stocks according to what might be called "the 7% Solution." I used that minimum on several key metrics in order to highlight stocks with the most consistent dividend growth. 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 Percentage Increase (column L), high to low. Eliminating companies that had increased less than 7% cut the list to 88 companies.

Step 2: Sort the candidates by their 5-year Dividend Growth Rate (column AN), high to low. Dropping those that had rates below 7% cut the list to 81 companies. I also used the same technique on the 3-year DGR, cutting the list to 72 companies, and on the 1-year DGR, reducing the field to 69 companies.

Step 3: Sort the remaining candidates by their 5-year Estimated Earnings Per Share Growth (column AC), high to low, to ensure the candidates had strong enough earnings projections to be able to continue increasing their dividends by at least 7% per year. That cut the list to 55 companies. I applied the same test to the "This Year" and "Next Year" estimated earnings per share growth (columns AA and AB), further reducing the list of candidates to 36 companies.

Step 4: Eliminate any company whose Dividend Yield (column I) was less than 2%. This step cut the list to 12 companies, which appear below.

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

 

 

Company

Ticker

No.

8/31

Div.

MR%

TY%

NY%

Est5-yr

DGR

DGR

DGR

Name

Symbol

Yrs

Price

Yield

Inc.

Growth

Growth

Growth

1-yr

3-yr

5-yr

Analog Devices Inc.

(NASDAQ:ADI)

10

39.74

3.02

20.00

20.1

19.3

10.5

12.8

7.5

10.1

C.H. Robinson W'wide

(NASDAQ:CHRW)

15

56.61

2.33

13.79

12.4

12.5

13.6

11.5

9.6

17.4

Cardinal Health Inc.

(NYSE:CAH)

16

39.55

2.40

10.47

12.0

9.8

10.5

10.8

30.0

30.7

Enbridge Inc.

(NYSE:ENB)

17

39.42

2.51

20.15

12.7

15.3

9.7

20.1

16.6

14.1

Occidental Petroleum

(NYSE:OXY)

10

85.01

2.54

17.39

45.4

8.7

10.9

19.7

13.3

17.1

ONEOK Inc.

(NYSE:OKE)

10

44.53

2.96

8.20

8.0

20.1

9.6

18.7

11.5

12.1

Praxair Inc.

(NYSE:PX)

19

105.50

2.09

10.00

42.1

13.1

10.6

11.1

10.1

14.9

South Jersey Industries

(NYSE:SJI)

13

50.62

3.18

10.27

33.1

9.5

7.0

10.5

11.5

10.7

Syngenta AG

(NYSE:SYT)

11

67.60

2.58

11.48

15.5

9.3

7.5

38.8

17.7

24.8

Tiffany & Company

(NYSE:TIF)

10

61.95

2.07

10.34

18.6

14.6

12.4

24.1

19.1

24.6

United Technologies

(NYSE:UTX)

19

79.85

2.68

11.46

15.9

19.4

11.2

9.7

11.5

12.7

Watsco Inc.

(NYSE:WSO)

11

75.46

3.29

8.77

10.5

20.7

16.9

9.3

8.4

18.6

Conclusion

As usual, the results include some familiar names, as well as a few that generally fly under the radar, suggesting that long-term investors can benefit from owning companies that have consistent earnings and dividend growth. 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.

Source: Dividend Contenders Smackdown XXX