Dividend Challengers Smackdown XXXI
In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here) for high-yield and low payout ratio and, last month, using a "7% Solution" for dividend and earnings growth.
(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 take a cue from my recent article about market capitalization (and the ensuing comments). In order to isolate the top candidates in each capitalization class (Large-, Mid-, and Small Cap), I effectively ran a "triple Smackdown." 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 Market Capitalization (column AE) and segregated the Challengers into 48 Large Cap (above $10 billion), 67 Mid Cap ($2-10 billion), and 51 Small Cap (under $2 billion) companies.
Step 2: Sort each group by their 5-year Dividend Growth Rate (column AN), high to low. Dropping the "lesser" half of each group cut the lists to 24 Large Caps, 33 Mid Caps, and 25 Small Caps.
Step 3: Sort each group by their 5-year Estimated Earnings Per Share Growth (column AC), high to low, and eliminate the lower half of each group. That cut the lists to 12 Large Caps, 16 Mid Caps, and 12 Small Caps.
Step 4: Sort each group by Yield (column I), high to low, and eliminate the lower half. This step cut the lists to 6 Large-, 8 Mid-, and 6 Small-Cap companies, which appear below.
(Note that I've sorted each group back into alphabetical order.)
Company | Ticker | No. | 9/28 | Div. | Est 5-yr | MktCap | DGR |
Name | Symbol | Yrs | Price | Yield | Growth | ($Mil) | 5-yr |
Accenture plc | (ACN) | 8 | 70.03 | 2.31 | 10.3 | 48,514 | 26.3 |
Ameriprise Financial Inc. | (AMP) | 8 | 56.69 | 2.47 | 11.5 | 11,946 | 14.6 |
Deere & Company | (DE) | 9 | 82.47 | 2.23 | 9.7 | 32,301 | 14.3 |
Intel Corp. | (INTC) | 9 | 22.66 | 3.97 | 10.7 | 113,343 | 14.4 |
Kroger Company | (KR) | 7 | 23.54 | 2.55 | 9.3 | 12,419 | 17.1 |
Williams Companies | (WMB) | 9 | 34.97 | 3.57 | 12.9 | 21,908 | 17.6 |
Alliance Holdings GP LP | (AHGP) | 7 | 47.95 | 5.82 | 14.0 | 2,870 | 39.5 |
Assurant Inc. | (AIZ) | 9 | 37.30 | 2.25 | 10.3 | 3,024 | 13.0 |
Brinker International | (EAT) | 8 | 35.30 | 2.27 | 12.8 | 2,610 | 15.7 |
Darden Restaurants | (DRI) | 8 | 55.75 | 3.59 | 11.9 | 7,193 | 28.4 |
DCP Midstream Partners | (DPM) | 7 | 46.44 | 5.77 | 14.1 | 2,722 | 15.4 |
Equity LifeStyle Prop. | (ELS) | 8 | 68.12 | 2.57 | 12.0 | 2,815 | 41.6 |
Robert Half International | (RHI) | 9 | 26.63 | 2.25 | 17.4 | 3,776 | 11.8 |
Williams-Sonoma Inc. | (WSM) | 7 | 43.97 | 2.00 | 13.2 | 4,328 | 17.1 |
Bob Evans Farms | (BOBE) | 7 | 39.13 | 2.81 | 8.0 | 1,099 | 11.6 |
Daktronics Inc. | (DAKT) | 8 | 9.51 | 2.42 | 10.0 | 400 | 29.7 |
G&K Services Inc. | (GKSR) | 7 | 31.35 | 2.49 | 10.3 | 593 | 31.4 |
Hanover Insurance Gp | (THG) | 7 | 37.26 | 3.22 | 8.3 | 1,670 | 30.3 |
Ryder System | (R) | 8 | 39.06 | 3.17 | 8.9 | 1,997 | 9.2 |
United Financial Bancorp | (UBNK) | 7 | 14.47 | 2.76 | 15.0 | 225 | 11.2 |
Conclusion
As usual, the results include some familiar and unfamiliar names, plus an excellent degree of diversification. There are several Master Limited Partnerships (MLPs), restaurants, and a mixture of other industries represented. 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.
Disclosure: I am long DE.
