In my monthly series of 10 Dividend Growth Stocks, I rank a selection of dividend growth [DG] stocks in Dividend Radar and present the 10 top-ranked stocks for consideration. Dividend Radar a weekly automatically generated spreadsheet listing stocks with dividend increase streaks of five years or more.
This month I decided to rank DG stocks with high 5-year dividend growth rates and 1-year trailing total returns. Both these metrics are available in the Dividend Radar spreadsheet on a trailing twelve-month basis.
I use DVK Quality Snapshots to assess the quality of DG stocks and break ties in quality scores by considering additional metrics.
Screening and Ranking
The latest Dividend Radar list (dated July 24, 2020) contains 766 stocks.
I decided to screen for DG stocks with dividend growth rates [DGRs] of at least 10%. Additionally, I only wanted to consider stocks that have performed well in the past twelve months, despite the challenges presented by the COVID-19 pandemic. So I screened for DG socks with 1-year trailing total returns [TTRs] of at least 16%
No fewer than 58 stocks pass these two screens.
Ranking by Quality
I use the scoring system of DVK Quality Snapshots to obtain quality scores, and consider the following factors to break ties in order to rank the stocks:
- SSD Dividend Safety Scores
- S&P Credit Ratings
- Dividend Yield
Each stock's Rank is shown in the tables that follow.
Fair Value Estimates
To estimate fair value, I reference fair value estimates and price targets from several sources, including Finbox and Morningstar. I also estimate fair value using the five-year average dividend yield of each stock using data from Simply Safe Dividends.
With several estimates and targets available, I ignore the outliers (the lowest and highest values) and use the average of the median and mean of the remaining values
