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Monday, January 8, 2018

24 Dividend Stocks For 2018

I believe that the list of Dividend Champions, Contenders and Challengers is the most complete list of US dividend growth stocks available today. As part of my process, I screen the list of dividend champions regularly. I have a custom built portfolio in Yahoo! Finance, which includes all dividend champions. Using information from Yahoo Finance, Company Annual Reports and David Fish’s excellent site, I come up with all the data I need for my screening purposes.

In order to come up with a list of companies for further research, I used the following entry criteria:

1) A ten year minimum for annual dividend increases ( being a champion already helps in pre-qualifying this criteria)
2) Forward P/E ratio below 20
3) Dividend Payout Ratio below 60%
4) Companies that have managed to grow earnings per share over the past decade
5) Companies which have achieved a more than nominal dividend growth over the past decade

I applied those basic criteria on the Dividend Champions list, maintained by David Fish and came up with the following group of companies for further research:

Symbol

Name

Consecutive Years of Annual Dividend Increases

Dividend Yield

Share Price

 Forward P/E

Forward Dividend Payout Ratio

AFL

AFLAC Inc.

35

1.92%

89.73

     13.27

25.44%

BDX

Becton Dickinson & Co.

46

1.31%

222.08

     20.43

26.86%

CBSH

Commerce Bancshares

49

1.52%

56.09

     20.32

30.80%

CBU

Community Bank System

25

2.41%

53.88

     20.80

50.19%

CPKF

Chesapeake Financial Shares

26

1.27%

30

     14.56

18.45%

CSVI

Computer Services Inc.

46

2.44%

47.1

     19.63

47.92%

CTBI

Community Trust Banc.

37

2.70%

47.75

     16.93

45.74%

EV

Eaton Vance Corp.

37

1.97%

58.34

     18.94

37.34%

GD

General Dynamics

26

1.60%

204.7

     20.82

33.37%

JNJ

Johnson & Johnson

55

2.31%

141.71

     19.47

45.05%

LEG

Leggett & Platt Inc.

46

2.92%

47.9

     19.31

56.45%

LOW

Lowe's Companies

55

1.60%

94.74

     20.73

33.26%

MDT

Medtronic plc

40

2.08%

85.54

     17.93

37.32%

PNR

Pentair Ltd.

42

1.90%

72.66

     20.58

39.09%

PPG

PPG Industries Inc.

46

1.39%

118.92

     20.19

28.01%

RPM

RPM International Inc.

44

2.20%

54.5

     18.86

41.52%

SCL

Stepan Company

50

1.03%

79.41

     18.30

18.89%

SRCE

1st Source Corp.

30

1.47%

50.4

     19.53

28.68%

THFF

First Financial Corp.

30

2.20%

45.55

     16.81

36.90%

TMP

Tompkins Financial Corp.

31

2.23%

80.67

     18.17

40.54%

TROW

T. Rowe Price Group

31

2.10%

107.23

     17.90

37.56%

UGI

UGI Corp.

30

2.04%

47.55

     18.79

38.34%

UMBF

UMB Financial Corp.

26

1.42%

71.95

     19.71

27.95%

WBA

Walgreens Boots Alliance Inc.

42

2.08%

72.92

     13.07

27.24%


These are not automatic buy recommendations by any shape or form. The intelligent dividend investor should use that screen only as a first step for their process. It is merely a step to narrow down a large list of companies down to a more manageable level.

The additional review should entail analyzing each company in more detail, and determining if the trends in earnings and dividends will continue into the future.

This evaluation is more art than science, and is highly subjective. Investing is an endeavor where two perfectly logical and rational individuals can have the same data, and still reach starkly different conclusions. After all, there is a buyer and a seller behind every stock transaction - and they both consider themselves smarter than the other party!

This decision is further complicated by existing stock holdings. For example, an investor who finds Walgreens Booth Alliance to be the best value on the list, may still refrain from investing in the company, if they already own too much of it.

I believe that success in dividend investing comes down to regular investing, and having a long-term buy and hold mindset. Most money is made by slowly building a diversified portfolio of quality companies by putting money to work every single month, and then sitting tight and letting the power of compounding do the heavy lifting for you.

What companies are you considering right now? Please feel free to write to me at dividendgrowthinvestor at gmail dot com

Relevant Articles:

Dividend Champions, Contenders & Challengers: The most complete list of US dividend growth stocks available
How to value dividend stocks
How to become a successful dividend investor
What I learned from analyzing my investment record