8 Dividend Stocks Passing Vigorous Fundamental, Yield And ESG Criteria

Dec. 26, 2019 3:00 AM ETCFG, ESGV, FHN, HBAN, JUST, KEY, MET, RF, T, VFMF, VFVA, VYM, VZ17 Comments
Richard Shaw profile picture
Richard Shaw
52.05K Followers

Summary

  • Cross reference multi-factor fund holdings with value factor fund holdings for balanced attributes with a value tilt.
  • Also cross reference with a high-yield dividend fund for value and yield tilt.
  • Further cross reference with two forms of ESG assessment to potentially reduce some non-market downside risks.
  • Limit to those with a favorable technical condition.
  • Require minimum 3% yield and at least 5 years of dividend increases.

We relied upon the extensive research of institutional ETF sponsors and the rules-based strategies they follow to identify individual stocks demonstrating multi-dimensional strength.

Eight stocks pass these filter criteria:

  • Held by Vanguard multi-factor fund (VFMF) which selects stocks for value, quality and momentum within the Russell 3000.
  • Held by Vanguard value factor fund (VFVA) which selects stocks within Russell 3000 for value - giving the filter a value bias.
  • Held by Vanguard high dividend yield fund (VYM) which tracks the FTSE High Dividend Yield Index.
  • Paid and increased dividend each year for at least 5 years.
  • Held by Vanguard ESG fund (ESGV) which is based on the Sustainalytics service which uses “traditional” ESG criteria.
  • Held by Goldman Sachs fund (JUST) which tracks non-traditional ESG-types of criteria based on surveys of what the general population wants to see in a business.
  • Were seen technically as of 12/24/19 by BarChart.com as clear Buy ratings.
  • Have a 12-month trailing distribution yield of at least 3% according to BarChart.

For reference, here is the 1-year performance of the ETFs we used as data sources, compared to the performance of SPY (S&P 500).

These are the 8 stocks:

  • AT&T (T) 5.22% yield
  • Verizon (VZ) 4.01% yield
  • Huntington Bancshares (HBAN) 3.97% yield
  • KeyCorp (KEY) 3.65% yield
  • Regions Financial Corp. (RF) 3.61% yield
  • Citizens Financial Group (CFG) 3.56% yield
  • MetLife (MET) 3.45%
  • First Horizon National Corp. (FHN) 3.38% yield

All but Verizon outperformed the Vanguard Multi-Factor fund over 1 year. First Horizon nearly matched SPY's performance. All the other stocks outperformed SPY.

Five-year monthly, dividend-adjusted price charts for the 8 stocks show the stock in black, the performance relative to the S&P 500 in red, and the Dollar amount of dividends paid in the lower panel in green.

(click images to enlarge)

Here is how Morningstar describes them quantitatively:

Market-Cap / Yield / Growth

Forward Valuation

Valuation Multiples vs. Historical Averages from AAII

Operational Data from AAII

Insider and Institutional Purchases from AAII

These are the analyst views as presented by MarketScreener:

As a yield-seeking investor, with an expectation that the value factor will do OK over the long term, I may acquire some of these stocks in small size for the tactical sleeve of my portfolio.

I principally invest in funds for diversification, but sometimes tactically invest in a limited number of individual stocks in small size.

We all need a claim on the upside, but also need a solid element of protection. Above-average yield from value stocks with a modicum of momentum may provide some of that claim and some of that protection.

Disclosure: QVM has no positions in any of the securities identified in this article as of the publication date. We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, and are not compensated by Seeking Alpha in any way relating to this article.

General Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.

This article was written by

Richard Shaw profile picture
52.05K Followers
Richard is the managing principal of QVM Group LLC, a fee-based investment advisor based in Connecticut, with clients across the country. . QVM manages portfolios uniquely designed for each client on a flat fee basis through the client’s own accounts at Schwab; and provides investment coaching to "do-it-yourself" investors. The investment approach is based on value, asset allocation, expense control, risk management, customizing portfolios to each client's specific circumstances, and regular communication about strategy and absolute and benchmark performance.   Richard's extensive experience includes having served as a Board Director of Phoenix Investment Counsel, a U.S. pension and mutual funds manager, now Virtus Investment Partners (New York Stock Exchange: VRTS http://www.virtus.com); as Managing Director of Phoenix American Investment in London; and as a Board Director Aberdeen Asset Management PLC in Aberdeen Scotland (http://www.aberdeen-asset.com  then listed London Stock Exchange, now a subsidiary of Phoenix Group inthe U.K.).  He has been a Trustee of a $500 million pension fund, and was a charter investor and member of the Board of Directors of several internet companies, including Lending Tree (NASDAQ: TREE http://www.lendingtree.com) prior to its IPO.   He is a 1970 graduate of Dartmouth College.   QVM Group LLC is a Registered Investment Advisor.   Visit the QVM Group website (http://www.qvmgroup.com) or its blog (http://www.qvminvest.com).

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