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Dividend Contenders 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 (which can be found here) 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 Contenders into 48 Large-Cap (above $10 billion), 60 Mid-Cap ($2-10 billion), and 62 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, 30 Mid-Caps, and 31 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, 15 Mid-Caps, and 15 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-, 7 Mid-, and 7 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

Canadian National Rail.

(CNI)

16

88.23

1.70

12.8

38,390

18.0

Cardinal Health Inc.

(CAH)

16

38.97

2.44

10.7

13,270

30.7

Fastenal Company

(FAST)

13

42.99

1.77

17.3

12,731

21.3

Monsanto Company

(MON)

12

91.02

1.65

11.7

48,509

23.3

Norfolk Southern

(NSC)

11

63.63

3.14

13.7

20,331

19.5

Occidental Petroleum

(OXY)

10

86.06

2.51

10.9

69,704

17.1

Airgas Inc.

(ARG)

10

82.30

1.94

12.8

6,333

35.2

C.H. Robinson Worldwide

(CHRW)

15

58.58

2.25

13.6

9,459

17.4

National Instruments

(NATI)

10

25.13

2.23

12.0

3,071

20.1

Ritchie Brothers Auction.

(RBA)

10

19.23

2.55

13.6

2,048

10.8

Tiffany & Company

(TIF)

10

61.88

2.07

12.6

7,836

24.6

Watsco Inc.

(WSO)

11

75.79

3.27

16.9

2,613

18.6

Xilinx Inc.

(XLNX)

10

33.41

2.63

13.7

8,759

16.5

Cracker Barrel OC

(CBRL)

10

67.11

2.98

10.3

1,560

11.4

First of Long Island Corp.

(FLIC)

17

30.81

3.25

10.0

275

14.6

Meredith Corp.

(MDP)

18

35.00

4.37

9.3

1,557

12.4

Owens & Minor Inc.

(OMI)

15

29.88

2.95

8.0

1,897

14.9

Republic Bancorp KY

(RBCAA)

14

21.95

3.01

10.0

460

10.8

South Jersey Industries

(SJI)

13

52.93

3.04

7.0

1,634

10.7

UNS Energy Corp.

(UNS)

13

41.86

4.11

8.0

1,685

14.9

Conclusion

Once again, the results include some familiar names, as well as some that may fly under the radar, suggesting that consistent earnings and dividend growth can also include more than adequate diversification. 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 XXXI