Dividend Growth Stocks

Dividend growth investing is a very popular approach which can fit within the ModernGraham methods.  This article will look at companies reviewed by ModernGraham which have grown their dividends annually for at least the last 20 years.

For all 835 companies covered by ModernGraham, I track the number of years a company has grown its dividend, and provide that information in my individual company valuations.

Out of the 835 companies, only 67 have grown dividends annually for at least the last 20 years.  Here is an overview of those companies:

Silicon Valley
StartupStockPhotos / Pixabay

The Elite

The following companies have been rated as undervalued and suitable for either the Defensive Investor or the Enterprising Investor:

AFLAC Incorporated (AFL)

AFLAC Incorporated qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.72 in 2012 to an estimated $6.22 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into AFLAC Incorporated revealed the company was trading below its Graham Number of $87.98. The company pays a dividend of $1.64 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.22, which was below the industry average of 18.78, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

Cintas Corporation (CTAS)

Cintas Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.07 in 2013 to an estimated $4.36 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.06% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.  (See the full valuation)

CTAS charts July 2016

T. Rowe Price Group Inc (TROW)

T. Rowe Price Group Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.75 in 2012 to an estimated $4.22 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.89% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into T. Rowe Price Group Inc revealed the company was trading above its Graham Number of $41.69. The company pays a dividend of $2.12 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.27, which was below the industry average of 19.87, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.07.  (See the full valuation)

TROW charts August 2016

United Technologies Corporation (UTX)

United Technologies Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.17 in 2012 to an estimated $7.65 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.29% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.  (See the full valuation)

UTX Charts May 2016

The Good

The following companies have been rated as fairly valued and suitable for either the Defensive Investor or the Enterprising Investor:

A. O. Smith Corp (AOS)

A. O. Smith Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.9 in 2012 to an estimated $2.82 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 4.47% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.  (See the full valuation)

AOS charts June 2016

Cincinnati Financial Corporation (CINF)

Cincinnati Financial Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.12 in 2012 to an estimated $3.21 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 6.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.  (See the full valuation)

CINF charts May 2016

Carlisle Companies, Inc. (CSL)

Carlisle Companies, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.24 in 2013 to an estimated $4.64 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 7.07% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Carlisle Companies, Inc. revealed the company was trading above its Graham Number of $70.65. The company pays a dividend of $1.3 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 22.65, which was below the industry average of 27.42, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.21.  (See the full valuation)

W W Grainger Inc (GWW)

W W Grainger Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $8.13 in 2012 to an estimated $11.16 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 6.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into W W Grainger Inc revealed the company was trading above its Graham Number of $92.08. The company pays a dividend of $4.78 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 21.21, which was below the industry average of 22.25, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.81.  (See the full valuation)

Hormel Foods Corp (HRL)

Hormel Foods Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.89 in 2013 to an estimated $1.46 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 7.65% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Hormel Foods Corp revealed the company was trading above its Graham Number of $17.73. The company pays a dividend of $0.61 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 23.8, which was below the industry average of 24.74, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.61.  (See the full valuation)

Leggett & Platt, Inc. (LEG)

Leggett & Platt, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.21 in 2012 to an estimated $1.93 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 9.31% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Leggett & Platt, Inc. revealed the company was trading above its Graham Number of $21.85. The company pays a dividend of $1.3 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 27.11, which was below the industry average of 27.31, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.2.  (See the full valuation)

LEG charts August 2016

People’s United Financial, Inc. (PBCT)

People’s United Financial, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.51 in 2012 to an estimated $0.83 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 7.13% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.  (See the full valuation)

PBCT charts June 2016

Ross Stores, Inc. (ROST)

Ross Stores, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.36 in 2013 to an estimated $2.35 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 7.44% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.  (See the full valuation)

ROST charts June 2016

VF Corp (VFC)

VF Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.83 in 2012 to an estimated $2.72 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 7.2% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.  (See the full valuation)

VFC charts August 2016

The Full List

 

To view the MG Value and PEmg information,  you must be logged in as a premium member.  Clicking on the company name will take you to the company’s latest valuation.

For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Div. Yield
ADM Archer Daniels Midland Company E 1/3/2017 $44.95 2.63%
ADP Automatic Data Processing E 11/20/2016 $103.12 2.06%
AFL AFLAC Incorporated D 12/19/2016 $71.41 2.30%
ALB Albemarle Corporation E 3/18/2017 $104.25 1.17%
AOS A. O. Smith Corp E 6/11/2016 $50.96 1.59%
APD Air Products & Chemicals, Inc. S 1/27/2017 $136.45 2.48%
BCR C R Bard Inc E 3/21/2017 $249.54 0.40%
BDX Becton Dickinson and Co S 1/8/2017 $181.32 1.46%
BEN Franklin Resources, Inc. D 2/24/2017 $41.35 1.79%
BF.B Brown-Forman Corporation S 2/2/2017 $47.28 1.44%
BMS Bemis Company, Inc. E 7/1/2016 $48.71 2.32%
CAH Cardinal Health Inc S 7/3/2016 $81.45 1.90%
CFR Cullen/Frost Bankers, Inc. E 12/8/2016 $85.15 2.51%
CHRW C.H. Robinson Worldwide, Inc. S 8/29/2016 $78.36 2.13%
CINF Cincinnati Financial Corporation E 5/21/2016 $72.78 2.56%
CL Colgate-Palmolive Company S 1/27/2016 $73.70 2.06%
CLX Clorox Co S 1/28/2017 $137.51 2.26%
CSL Carlisle Companies, Inc. E 2/27/2017 $106.60 1.22%
CTAS Cintas Corporation E 7/21/2016 $123.78 0.85%
CVX Chevron Corporation S 3/15/2017 $108.04 3.97%
DOV Dover Corp D 7/8/2016 $78.29 2.12%
ECL Ecolab Inc. S 6/26/2016 $124.20 1.10%
ED Consolidated Edison, Inc. S 2/26/2017 $77.34 3.47%
EMR Emerson Electric Co. S 2/12/2016 $58.96 3.21%
EPD Enterprise Products Partners L.P. S 8/27/2016 $27.21 5.70%
ESS Essex Property Trust Inc S 3/14/2017 $233.60 2.74%
EXPD Expeditors International of Washington E 6/25/2016 $55.58 1.30%
GPC Genuine Parts Company E 7/8/2016 $93.30 2.68%
GWW W W Grainger Inc E 1/12/2017 $240.06 1.99%
HP Helmerich & Payne, Inc. S 6/23/2016 $66.95 4.11%
HRL Hormel Foods Corp E 3/9/2017 $34.48 1.77%
IBM International Business Machines Corp. S 3/13/2017 $173.88 3.16%
ITW Illinois Tool Works Inc. D 7/6/2016 $133.48 1.60%
JKHY Jack Henry & Associates, Inc. S 1/30/2017 $93.89 1.16%
JNJ Johnson & Johnson E 1/16/2017 $127.25 2.44%
KMB Kimberly Clark Corp S 6/24/2016 $133.68 2.66%
KO The Coca-Cola Co S 7/28/2016 $42.50 3.15%
LECO Lincoln Electric Holdings, Inc. E 3/8/2017 $85.89 1.53%
LEG Leggett & Platt, Inc. E 8/25/2016 $50.00 2.60%
LLTC Linear Technology Corporation E 7/12/2016 $65.00 1.88%
LOW Lowe’s Companies, Inc. S 1/8/2016 $81.92 1.31%
MCD McDonald’s Corporation S 11/20/2016 $128.52 2.77%
MDT Medtronic plc. Ordinary Shares D 7/12/2016 $81.12 1.87%
MKC McCormick & Company, Incorporated S 1/3/2017 $101.67 1.66%
MMM 3M Co E 12/13/2016 $192.13 2.27%
NEE NextEra Energy Inc S 12/21/2016 $131.85 2.56%
NNN National Retail Properties, Inc. S 12/4/2016 $44.30 3.97%
PBCT People’s United Financial, Inc. D 6/20/2016 $17.83 3.76%
PEP PepsiCo, Inc. S 7/13/2016 $111.77 2.56%
PG Procter & Gamble Co S 7/8/2016 $91.19 2.91%
PH Parker-Hannifin Corp D 7/15/2016 $156.90 1.61%
PPG PPG Industries, Inc. S 1/16/2017 $104.48 1.45%
PX Praxair, Inc. E 6/13/2016 $116.95 2.48%
ROST Ross Stores, Inc. E 6/21/2016 $65.77 0.71%
SHW Sherwin-Williams Co S 7/12/2016 $307.95 0.93%
SKT Tanger Factory Outlet Centers Inc. S 1/16/2017 $32.36 3.77%
SON Sonoco Products Co E 2/6/2017 $53.32 2.70%
SPGI S&P Global Inc S 2/8/2017 $128.20 1.10%
SWK Stanley Black & Decker, Inc. S 1/28/2016 $129.57 1.67%
SYY SYSCO Corporation S 1/25/2017 $51.80 2.39%
TGT Target Corporation S 3/7/2017 $53.39 4.35%
TROW T. Rowe Price Group Inc D 8/25/2016 $68.60 3.09%
TSE:CNR Canadian National Railway Company S 1/30/2017 $95.30 1.57%
UTX United Technologies Corporation D 5/18/2016 $112.16 2.28%
VFC VF Corp E 8/1/2016 $53.05 2.70%
WBA Walgreens Boots Alliance Inc S 7/6/2016 $83.21 1.71%
WMT Wal-Mart Stores Inc S 5/20/2016 $69.90 2.80%

Disclaimer: 

The author held a long position in Dover Corporation and People’s United Financial Inc but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours. See my current holdings here.  This article is not investment advice and all readers are encouraged to speak to a registered investment adviser prior to making any investing decisions.  Please also read our full disclaimer.  This article first appeared on ModernGraham.