Seeking Alpha

Dividend Champion Portfolio - September Update

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Includes: ADM, BWL.A, CSVI, CTBI, CVX, ED, EFSI, EMR, HCP, HP, KO, MDU, MO, NNN, ORI, STR, T, TGT, TROW, UVV, VVC, WEYS, WGL, WMT, XOM
by: Scott's Investments

The High Yield Dividend Champion Portfolio is a publicly tracked stock portfolio on Scott's Investments. Its goal is to capture quality high yield stocks with a history of raising dividends.

The screening process for this portfolio starts with the "Dividend Champions" as compiled by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.

I made one change to the screening methodology for 2016 in order to further simplify the process. Stocks from the Dividend Champion list were previously ranked on yield, payout ratio, P/E, and 3-year dividend growth rate.

In 2016, stocks are ranked on yield, P/E, and 3-year dividend growth rate but payout ratio is no longer a factor. The modification has a relatively low impact on screen results.

Stocks will still be sold on the re-balance date (generally around the 5th of the month) when they drop out of the top 15 (to limit turnover) and are replaced with the next highest rated stock.

The Top 25 stocks using the new method are below and displayed in order of their overall ranking (figures are from the end of August):

Name Symbol Yield P/E 3-yr
Target Corp. (NYSE:TGT) 3.42 13.63 17.84
AT&T Inc. (NYSE:T) 4.70 17.62 2.22
Helmerich & Payne Inc. (NYSE:HP) 4.63 999.00 114.15
Altria Group, Inc. (NYSE:MO) 3.69 22.95 8.36
Emerson Electric (NYSE:EMR) 3.61 18.95 5.40
T. Rowe Price Group (NASDAQ:TROW) 3.11 16.80 15.21
Old Republic International (NYSE:ORI) 3.90 12.57 1.39
Questar Corp. (NYSE:STR) 3.52 22.53 8.10
Eagle Financial Services (OTCQX:EFSI) 3.37 10.75 3.10
Weyco Group, Inc. (NASDAQ:WEYS) 3.29 17.01 6.18
Computer Services Inc. (OTCQX:CSVI) 3.01 18.54 21.05
Community Trust Banc. (NASDAQ:CTBI) 3.47 13.96 2.25
Consolidated Edison (NYSE:ED) 3.56 19.39 2.42
HCP, Inc. (NYSE:HCP) 5.85 999.00 4.16
Universal Corp. (NYSE:UVV) 3.52 18.46 2.00
Chevron Corp. (NYSE:CVX) 4.26 999.00 6.83
Exxon Mobil Corp. (NYSE:XOM) 3.44 34.58 9.73
Coca-Cola Company (NYSE:KO) 3.22 24.96 8.97
MDU Resources (NYSE:MDU) 3.18 15.31 2.90
WGL Holdings, Inc. (NYSE:WGL) 3.10 17.70 4.80
Archer Daniels Midland (NYSE:ADM) 2.74 17.72 16.96
Bowl America Class A (NYSEMKT:BWL.A) 4.72 40.06 1.78
Wal-Mart Stores Inc. (NYSE:WMT) 2.80 15.36 7.78
National Retail Properties (NYSE:NNN) 3.63 42.82 3.11
Vectren Corp. (NYSE:VVC) 3.27 21.83 3.11

There is no turnover in positions for this month. The current portfolio is below. A note on CSVI, which was purchased last month. It is a small cap ($521M market cap) and thinly traded stock (average 3-month volume of 3040 shares per day):

Position Shares Average Purchase Price Initial Purchase Date Percentage Gain/Loss Excluding Dividends
CTBI 630 33.9 7/5/2016 9.85%
EMR 425 49.64 8/4/2015 6.41%
ORI 1145 16.22 4/4/2014 17.32%
CSVI 634 39.2 8/5/2016 -5.10%
TGT 391 68.65 6/3/2016 1.18%
MO 400 58.14 1/7/2016 14.21%
TROW 300 71.35 7/5/2016 -3.52%
HP 341 80.9 10/6/2014 -22.27%
STR 1075 25.03 5/6/2016 -0.04%
T 650 38.13 3/7/2016 8.03%

The current equity curve for the portfolio is below (through 9/8/16):

Disclosure: None.