Seeking Alpha
Value, long-term horizon, dividend investing, dividend growth investing
Profile| Send Message|
( followers)  

Dividend Champions Smackdown XXXII

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 ) for a 7% earnings and dividend growth and, last month, by market capitalization and dividend 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 "bask to basics" approach, using the primary measures that investors might use to identify good investment candidates. 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 Price/Earnings (P/E) ratio (column U), low to high. Keep in mind that this figure is for the trailing twelve months, or the most recent four quarterly reports, and may not yet reflect this year's third-quarter reports. Eliminating companies with P/Es above 16 cut the list of candidates to 32 companies.

Step 2: Sort the companies by Yield (column I), high to low, and eliminate those below 2%. This step cut the list to 27 companies.

Step 3: Sort the remaining companies by their 5-year Dividend Growth Rate (column AN), high to low. Dropping those below 6% cut the list to 15 candidates. As a secondary step, I eliminated three companies whose most recent increase (column L) was below 6%.

Step 4: Sort each group by their 5-year Estimated Earnings Per Share Growth (column AC), high to low, and eliminate any company with expected growth below 6%. That cut the list to 11 firms and repeating that process for the expected growth this year and next trimmed the list to six companies, which appear below.

(Note that I've sorted each group back into alphabetical order.)

 

 

Company

Ticker

No.

10/31

Div.

MR%

TTM

TY%

NY%

Est5-yr

DGR

Name

Symbol

Yrs

Price

Yield

Inc.

P/E

Growth

Grwth

Growth

5-yr

Becton Dickinson

(BDX)

40

75.68

2.38

9.76

14.39

8.3

8.2

7.5

13.8

Dover Corp.

(DOV)

57

58.22

2.40

11.11

12.57

22.7

13.2

9.3

10.7

Emerson Electric

(EMR)

55

48.43

3.30

15.94

14.77

25.2

9.0

9.8

9.1

Genuine Parts Co.

(GPC)

56

62.58

3.16

10.00

15.72

19.5

6.9

9.4

6.3

Target Corp.

(TGT)

45

63.75

2.26

20.00

14.59

7.0

11.8

12.6

20.1

Wal-Mart Stores Inc.

(WMT)

38

75.02

2.12

8.90

15.79

8.5

9.5

9.4

16.5

Conclusion

As usual, there are several familiar names, but that is another testament to their high quality in terms of basic measurements of value. 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 Champions Smackdown XXXII