Dividend Kings Analysis: Valuations Are Down

Mar. 16, 2020 12:30 PM ETCBSH, CL, EMR, FMCB, FRT, GPC, HRL, KO, LOW, MO, NDSN, PH, SCL, SWK, SYY, TGT, AWR, DOV, NWN, PG, MMM, CINF, JNJ, LANC, ABM, CWT, SJW, TR, FUL11 Comments
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Summary

  • A dividend growth analysis of the Dividend Kings is presented.
  • Hormel, Commerce Bancshares, Nordson, Parker-Hannifin, and Stanley, Black & Decker are the top five Dividend Kings in the ranking model.
  • Stepan Company and Target are no longer in the Top 5.
  • A summary analysis of Stanley, Black & Decker is presented.
  • The valuation of the Dividend Kings are down due to market volatility. Some of the Dividend Kings are yielding over 4% now.

Introduction

I published my first article for the new year on the Dividend Kings in January 2020 with an article entitled “Dividend Kings Analysis: Most Are Overvalued.” I skipped February’s article on the Dividend Kings and instead wrote about the Dividend Champions in an article entitled "Dividend Champions Analysis: Canadian National Railways Is The Newest Champion.” What a difference one month makes? The market was trending down in February and of course that has only accelerated in the first half of March. The mean PE [TTM] ratio of the Dividend Kings came down to ~24.4 from ~29.9 in early January. The median PE [TTM] ratio came down to ~22.6 from ~26.8 in early January. This is a large drop. But obviously the recent market action and volatility in the past week resulting from the continued coronavirus scare compounded by the oil price war and travel restrictions tells us that further drops in valuation may occur.

Dividend KingsSource: Dividend Power

In this article I analyze the 29 Dividend Kings, an exclusive group of stocks that have increased their dividend for 50+ consecutive years. The top five stocks in the ranking model have changed due to change in valuations and a slowdown in earnings and dividend growth rates. The top five stocks in the ranking model in order are Hormel Foods Corp (HRL) [DP Score = 9.26], Commerce Bancshares (CBSH) [DP Score = 9.12], Nordson Corp (NDSN) [DP Score = 9.08], Parker-Hannifin Corp (PH) [DP Score = 9.08], and Stanley Black & Decker (SWK) [DP Score = 9.04]. Notably, Stepan Company (SCL) dropped out of the top 5 as did Target Corp (TGT). 3M Company, which was in the top 5 for many months dropped out in January and continues its

This article was written by

Dividend Power profile picture
5.64K Followers
I am a self-taught individual investor and I have been investing in stocks for approximately 20 years. I focus on dividend growth investing with a long-term horizon since I believe in the compounding power of dividend growth investing. I generally look for undervalued large cap stocks with sustainable dividend growth and capital appreciation potential. My second focus is tech and small- or mid-cap stocks with or without dividends for their growth potential. I try to provide a little more in depth analysis weighing the positives and negatives. You can see my performance at my Tip Ranks profile. I am now in the Top 100 out of 13,540 (73rd and in the top 1.0%) financial bloggers (August 2022).You can follow me at my blog Dividend Power. Read my e-book --> 10 Forever Dividend Growth StocksI also now write stock analyses for Sure Dividend as a part-time free lance equity analyst. I provide investment analyses and research for their Sure Analysis Research Database. I also write stock snapshots for Portfolio Insight.

Disclosure: I am/we are long CL, KO, MMM, HRL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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