I applied the following entry criteria on the list of dividend champions:
1) Dividend yield higher than 2%
2) 1,3, 5 and 10 year dividend growth of at least 5%/year
3) Dividend payout ratio of less than 60%
4) Dividends Increasing for at least 25 years in a row ( dividend champions)
I then went ahead, and reviewed the growth in earnings over the past decade. I wanted to eliminate companies which were not able to boost profitability over the past decade. Without growing profits, a company’s ability to boost distributions is severely limited.
Here is the list of 24 dividend champions for further research. Under the column for "company name", I have provided links to the most recent analysis of companies I have analyzed before.
Company Name | Ticker Symbol | Industry | No. 'Yrs | Dividend Payout Ratio | 1-yr DG | 3-yr DG | 5-yr DG | 10-yr DG |
(MMM) | Conglomerate | 58 | 58.50 | 19.9 | 20.2 | 14.3 | 9.3 | |
(AFL | Insurance | 33 | 28.03 | 6.8 | 5.6 | 6.7 | 13.6 | |
(APD | Chemical-Specialty | 33 | 53.55 | 6.0 | 8.6 | 10.8 | 9.9 | |
American States Water | (AWR | Utility-Water | 61 | 55.65 | 5.3 | 11.2 | 10.9 | 6.9 |
(CL | Personal Products | 52 | 55.30 | 5.6 | 7.1 | 8.1 | 10.5 | |
Donaldson Company | (DCI | Industrial Equipment | 29 | 49.28 | 5.5 | 24.2 | 22.0 | 16.9 |
Dover Corp. | (DOV | Machinery | 60 | 44.68 | 5.8 | 13.9 | 12.9 | 11.5 |
(EV | Financial Services | 35 | 48.18 | 11.5 | 9.2 | 9.0 | 11.6 | |
(EMR | Industrial Equipment | 59 | 50.67 | 7.1 | 5.4 | 6.9 | 8.4 | |
(BEN | Financial Services | 36 | 23.00 | 25.0 | 17.8 | 15.4 | 16.2 | |
(GPC | Auto Parts | 60 | 56.80 | 5.2 | 7.7 | 8.2 | 6.9 | |
(ITW | Machinery | 41 | 42.88 | 14.9 | 11.2 | 9.6 | 13.1 | |
(JNJ | Drugs/Consumer Prod. | 53 | 54.74 | 6.9 | 7.1 | 6.9 | 8.8 | |
(KMB | Personal Products | 44 | 60.20 | 6.9 | 7.5 | 7.1 | 7.6 | |
Parker-Hannifin Corp. | (PH | Industrial Equipment | 59 | 41.72 | 21.7 | 15.9 | 18.7 | 16.0 |
Pentair Ltd. | (PNR | Industrial Equipment | 40 | 50.19 | 16.4 | 13.3 | 11.0 | 9.4 |
RPM International Inc. | (RPM | Chemical-Specialty | 42 | 59.14 | 7.7 | 6.6 | 5.0 | 5.6 |
Stanley Black & Decker | (SWK | Tools/Security Products | 48 | 37.04 | 4.9 | 5.9 | 9.8 | 6.5 |
(TROW | Financial Services | 30 | 46.35 | 18.2 | 15.2 | 14.0 | 16.3 | |
(TGT | Retail-Discount | 48 | 42.42 | 13.7 | 17.8 | 20.8 | 19.6 | |
Tompkins Financial Corp. | (TMP | Banking | 29 | 45.48 | 4.9 | 5.2 | 5.0 | 5.8 |
UGI Corp. | (UGI | Utility-Electric/Gas | 28 | 44.17 | 10.1 | 7.9 | 8.2 | 7.4 |
VF Corp. | (VFC | Apparel | 43 | 51.93 | 20.1 | 20.6 | 17.0 | 17.1 |
(GWW | Electronics-Wholesale | 44 | 39.23 | 10.1 | 14.5 | 17.2 | 17.4 |
Just so I can be clear of however, this screening is just the first step in narrowing down the investable universe to a manageable list of stocks for further research. If I were starting out as a dividend growth investor, this is the first step I would be going through.
The next steps would involve familiarizing myself with each of the companies on the list, and evaluating trends in earnings, dividends, revenues. The last step would be to determine whether the current valuation makes sense at the moment, before putting my money to work.
Full Disclosure: Long MMM, AFL, APD, CL, EV, EMR, GPC, JNJ, KMB, TROW, TGT, VFC, GWW, ITW
Relevant Articles:
- How to retire in 10 years with dividend stocks
- How to become a successful dividend investor
- How to read my stock analysis reports
- How to value dividend stocks
- Buying Quality Companies at a Reasonable Price is Very Important
Hey DGI,
ReplyDeleteNice list! I'm fairly new to the community and I have a small portfolio, but I already own 4 of these companies! (AFL, JNJ, TROW & TGT)
Thanks for sharing.
Best wishes, DfS
Great work, thanks for sharing. I am missing an additional column with current dividend yield... is it asking for too much? Thanks again anyway!
ReplyDeleteI am not very patient... there they go sorted by dividend yield:
ReplyDeleteCompany Name Ticker Symbol Div yield
Emerson Electric (EMR) 4.13
Eaton Vance Corp. (EV) 3.7
Tompkins Financial Corp. (TMP) 3.14
Target Corp. (TGT) 3.09
T. Rowe Price Group (TROW) 2.93
Dover Corp. (DOV) 2.87
Johnson & Johnson (JNJ) 2.87
Genuine Parts Co. (GPC) 2.85
AFLAC Inc. (AFL) 2.83
Pentair Ltd. (PNR) 2.8
RPM International Inc. (RPM) 2.8
Kimberly-Clark Corp. (KMB) 2.74
3M Company (MMM) 2.72
UGI Corp. (UGI) 2.68
Parker-Hannifin Corp. (PH) 2.59
Air Products & Chem. (APD) 2.56
Illinois Tool Works (ITW) 2.44
Donaldson Company (DCI) 2.41
W.W. Grainger Inc. (GWW) 2.38
VF Corp. (VFC) 2.36
Stanley Black & Decker (SWK) 2.33
Colgate-Palmolive Co. (CL) 2.25
Franklin Resources (BEN) 2.08
American States Water (AWR) 1.97
Thanks for this!
DeleteMuch appreciated.
DeleteI really like these lists and appreciate the work you put in them. Time for me now to update my watch lists and look for buying opportunities.
ReplyDeleteThanks!
SAK
Sad day - I only own one of the stocks on your list. Looks like I need to return to the drawing board ;)!
ReplyDelete-Dividend Reaper
Great list, will have to take a closer look at these companies.
ReplyDeleteNice list, thanks for compiling! I own several of the stocks on the list: MMM, AFL, JNJ, KMB, TROW, and TGT.
ReplyDeleteCheers
FerdiS, DivGro
MMM is an awesome company to go with for the extremely long run. I intend to pick this one up soon!
ReplyDeleteThanks for this list! I'm a long time reader, first time commenter. Always enjoy reading your material. I own a number of the companies on this list. Keep up the great work! :)
ReplyDeleteI went through a similar process to start picking stocks for DGI. David Fish's spreadsheet is a gold mine! I am both happy and sad that many of the stocks in the list are doing really well (depending on whether I was observant enough to buy them in the August dip or not when I started my dividend growth journey :)
ReplyDeleteI went through the trouble of creating VBA macros to do the multiple filters before finding out about Excel's copy/paste for only visible rows (while manual, much easier. Google for excel copy/paste "Visible Cells Only" to see how)
Thanks for all the help you've given me along the way!
hi DGI,
ReplyDeleteI've analysed some of mentioned companies on my blog. If I were you I would probably start with analyzing BEN - valuation is not demanding (especially after adjusting for cash) - I think on some global short term weakness I will buy some shares...
I like and hold Aflac (AFL) in my tIRA. It has done well in both distributions and capital growth. Insurance is just a great business when the underwriting is strong and AFL has a dominant position in Japan.
ReplyDeleteI have a small spanish dividend growth investment portfolio. I am looking to diversy with international stocks. Which 3 - 5 stocks should you recommend for a long term dividend investment strategy?
ReplyDeleteThanks in advance
I also own quite a few of these, EMR for many years in fact. I am starting to buy more and more dividend champs that will provide income in my early retirement. Thanks for all your posts and research.
ReplyDelete