Thursday, April 28, 2016

13 Dividend Aristocrats for Further Research

Last week I shared with you the list of 2016 Dividend Aristocrats and its performance over the past decade. In addition, I isolated twenty-one companies for further research. In order to come up with the list, I looked for companies where:

1) P/E was below 20

For those of you who have read my stock analyses, you know that these are just the beginning criteria I use to reduce the list of investable opportunities to a more manageable level.

I also looked for:

2) Dividend Payout Ratio below 60%
3) Minimum yield of 2%

If you want to add more quantitative criteria, I would look for companies where the 5 and 10 year dividend growth rate exceeds a certain percentage such as 5% or 6%/year on average. After that, I would look at trends in earnings per share, dividends per share, and dividend payout ratios to further isolate the companies which have managed to prosper. I do this in order to eliminate companies that have managed to grow dividends not because they prospered, but because they are simply paying a higher portion of earnings out to shareholders.

Below, you could find the list of companies for further research. You may also check linked analysis for more details on each company:


COMPANY
Ticker
SECTOR
Years
P/E - ttm
Yield
Payout Ratio
5 year Div Growth
10 Year Div Growth
(AFL)
Financials
33
11.43
2.45
28.00%
6.75
13.64
Dover Corp
(DOV)
Industrials
53
12.08
2.54
30.68%
12.91
11.52
(WBA)
Consumer Staples
40
19.83
1.77
35.10%
17.42
19.50
Abbott Laboratories
(ABT)
Health Care
43
14.83
2.39
35.44%
11.60
10.60
Cardinal Health Inc
(CAH)
Health Care
28
20.49
1.84
37.70%
14.50
27.40
Stanley Black & Decker
(SWK)
Industrials
48
18.8
2.02
37.98%
9.82
6.50
(GWW)
Industrials
44
20.3
2
40.60%
17.15
17.44
(TGT)
Cons Discretionary
44
15.54
2.74
42.58%
20.79
19.62
Illinois Tool Works Inc
(ITW)
Industrials
44
20.44
2.1
42.92%
9.56
13.11
(WMT)
Consumer Staples
39
15.11
2.91
43.97%
10.57
12.89
(TROW)
Financial
29
16.53
2.82
46.61%
14.01
16.29
(EMR)
Industria
53
14.6
3.45
50.37%
6.90
8.35
(JNJ)
Health Care
53
20.11
2.73
54.90%
6.93
8.75

As a future retiree, I am looking for dependable dividend income which can grow above the rate of inflation. I plan on living off dividends in retirement. I am fine if I underperform all benchmarks out there, as long as my organic dividend income grows above the rate of inflation over time.

If an investor had decided to purchase more than one dividend stock at once, they could potentially use a low-cost broker like Motif Investing. Motif Investing would allow an investor to purchase up to 30 individual securities for a low price of $9.95/trade. This keeps costs low for anyone who invests $1,000 - $2,000 per transaction.

Full Disclosure: Long AFL, WBA, ABT, GWW, TGT, ITW, WMT, TROW, EMR, JNJ

Relevant Articles:

Dividend Aristocrats List for 2016
Dividend Aristocrats for Dividend Growth and Total Returns
Margin of Safety in Dividends
How to read my stock analysis reports
The most important metric for dividend investing

3 comments:

  1. Hi, DGI.

    What stock screener do you use for finding your stocks? Do you have any article where you tell us about the tools that you use when researching?

    Thanks.

    ReplyDelete
    Replies
    1. I do everything manually. A lot of nuance could be lost by implementing a mechanical black-box type stock screener.

      In general, I have found that readers could find a lot of questions they may have answered by browsing through the archives:

      http://www.dividendgrowthinvestor.com/2013/03/complete-list-of-articles-on-dividend.html

      Best Regards,

      DGI

      Delete
  2. I like EMR. It almost made my top 10 this month. I think the overall growth bumped it down into the top 20.
    Cheers,
    DFG

    ReplyDelete

Questions or comments? You can reach out to me at my website address name at gmail dot com.

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