Dividend Growth Investor Newsletter

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Thursday, May 24, 2018

38 Dividend Champions To Consider

In order to succeed in dividend investing, you need to have a long-term focus, follow your strategy by making investments at regular intervals and by diversifying your exposure. I believe that the ability to sit tight for a long period of time is underrated, because short-term noise usually gets in the way by scaring off the inexperienced into mindless trading action.

I also believe that the ability to develop a strategy to achieve your goals, and sticking to it no matter what happens, is very important. The inability to develop a strategy would lead to chasing hot tips, and never really learning what works for you and what doesn’t ( while losing a lot of hard-earned money in the process).

The ability to follow your strategy and making regular investments is very important. By buying stock regularly, you are dollar cost averaging your way into building your dividend machine. You are building your future income stream one investment at a time. The next step is the hard one – holding patiently for the long-term and reinvesting that dividend income during the accumulation phase.

As part of my investing process, I screen the list of dividend champions every month, looking for companies to add to my dividend portfolio. I focus on the following criteria, in order to come up with a list of companies for further consideration:

1) Companies that have raised dividends for at least 25 years in a row ( dividend champions)
2) A Forward P/E below 20
3) Forward dividend payout ratio below 60%
4) Annual dividend growth rate over the past decade exceeding 4%/year
5) A positive trend in earnings per share over the past decade

I came up with a list of the following dividend champions for further research:




Note: Prices as of May 18, 2018

You can open as a separate spreadsheet from this location.

This list is not an automatic buy however. Further analysis is needed by each individual investor, in order to determine for themselves.

Each individual company needs to be evaluated for suitability for your dividend portfolio, by performing a more detailed quantitative and qualitative analysis. The quantitative side could focus on profitability, valuation, and other trends in return on invested capital and debt levels.

The qualitative analysis is a little bit more subjective. It can involve determining if there is a moat, and the likelihood of further increases in earnings over time.

Even if a security meets all the qualitative and quantitative tests, it could still be a pass if the investor already has a sizeable position in the entity. Risk management is as important as identifying the best dividend growth stock for the long term. It is also very important to let compounding do the heavy lifting for you.

The most important trait is to be able to build a diversified portfolio of income producing assets, by regular selection of investments that are expected to be held forever. This frame of mind will be helpful to the investor, as it will help to guide their decision making process towards those investments where they have a high conviction, since they are within their circle of competence. This frame of mind will also allow the investor to let the power of compounding do the heavy lifting for them. I have found that after I have bought a stock, I should let it do its work, and let it compound without doing too much micromanaging.

Relevant Articles:

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How I Use Frugality to Accumulate Wealth
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