As part of my screening process, I look at the list of dividend champions every month. I have been doing this for a decade.
I believe that investors should focus on tools within their control. These things include their ability to stick to a strategy that will help them reach their goals, and save and invest money regularly. This is the recipe for successful dividend investing in a nutshell – stay the course, keep adding to your dividend machine and reinvest dividends in the accumulation phase.
Over the past two months, prices of many securities have finally started going lower. This is great news for those who are in the accumulation phase. This is because lower prices paid for stocks result in higher dividend yields and higher expected future returns. Therefore, the investors today should be praying for even lower prices. If you are retired, your only concern is the safety of the dividend payments, and enjoying the fruits of your labor.
I applied my entry criteria to the list of dividend champions, and came up with a list of companies worth further research.
My screening criteria include:
1) A company with a minimum 25 year track record of annual dividend increases
2) Forward P/E ratio below 20
3) Forward Dividend payout ratio below 60%
4) Annual dividend growth exceeding inflation over the past 5 and 10 years
5) Dividend growth generated by solid growth in earnings per share
My next step was to briefly review the trends in fundamentals for each of the companies, and taking out those that didn’t seem promising enough.
As a result of this review, I came up with the following list of 39 dividend champions for further research:
| Symbol | Company Name | Forward Annual Div Yield | Dividend Payout Ratio | Last Price | Dividend Per Share | Forward P/E | 10 year dividend growth | 5 year dividend growth | Years Annual Increases |
| (AFL) | AFLAC Inc. | 1.97% | 23% | 44.09 | 0.87 | 11.45 | 8.08% | 5.36% | 36 |
| (WBA) | Walgreens Boots Alliance Inc. | 2.30% | 27% | 67.47 | 1.55 | 11.65 | 16.21% | 9.16% | 42 |
| (TGT) | Target Corp. | 3.47% | 46% | 70.28 | 2.44 | 13.34 | 16.72% | 13.07% | 50 |
| (TMP) | Tompkins Financial Corp. | 2.35% | 33% | 76.65 | 1.8 | 13.96 | 4.91% | 4.51% | 32 |
| (SON) | Sonoco Products Co. | 3.20% | 47% | 47.51 | 1.52 | 14.80 | 4.21% | 5.29% | 35 |
| (TROW) | T. Rowe Price Group | 2.10% | 32% | 108.34 | 2.28 | 15.05 | 12.86% | 10.89% | 32 |
| (KMB) | Kimberly-Clark Corp. | 3.68% | 56% | 105.56 | 3.88 | 15.10 | 6.75% | 6.47% | 46 |
| (FUL) | H.B. Fuller Company | 1.21% | 18% | 48.75 | 0.59 | 15.23 | 8.71% | 12.32% | 48 |
| (SRCE) | 1st Source Corp. | 1.50% | 23% | 50.68 | 0.76 | 15.27 | 4.09% | 4.84% | 31 |
| (BMS) | Bemis Company | 2.77% | 43% | 43.39 | 1.2 | 15.44 | 3.63% | 3.71% | 35 |
| (GPC) | Genuine Parts Co. | 3.05% | 47% | 88.61 | 2.7 | 15.49 | 6.47% | 6.75% | 62 |
| (JNJ) | Johnson & Johnson | 2.61% | 41% | 127.39 | 3.32 | 15.73 | 7.44% | 6.71% | 55 |
| (LEG) | Leggett & Platt Inc. | 3.24% | 51% | 43.78 | 1.42 | 15.86 | 7.18% | 4.38% | 46 |
| (RPM) | RPM International Inc. | 2.55% | 40% | 47.92 | 1.22 | 15.87 | 5.49% | 7.00% | 44 |
| (UMBF) | UMB Financial Corp. | 1.43% | 23% | 72.83 | 1.04 | 16.18 | 6.37% | 4.46% | 26 |
| (SCL) | Stepan Company | 1.01% | 16% | 83.42 | 0.84 | 16.26 | 7.37% | 7.69% | 50 |
| (LOW) | Lowe's Companies | 1.70% | 28% | 89.3 | 1.52 | 16.27 | 19.31% | 20.43% | 55 |
| (ABM) | ABM Industries Inc. | 2.07% | 34% | 33.3 | 0.69 | 16.49 | 3.54% | 3.23% | 51 |
| (MDT) | Medtronic plc | 2.31% | 38% | 78.46 | 1.81 | 16.55 | 14.24% | 12.00% | 40 |
| (UGI) | UGI Corp. | 2.29% | 38% | 43.24 | 0.99 | 16.57 | 7.31% | 6.65% | 30 |
| (EV) | Eaton Vance Corp. | 2.12% | 35% | 55.71 | 1.18 | 16.73 | 8.47% | 8.07% | 37 |
| (DOV) | Dover Corp. | 1.82% | 31% | 99.81 | 1.82 | 17.00 | 10.96% | 10.38% | 62 |
| (PPG) | PPG Industries Inc. | 1.52% | 26% | 111.93 | 1.7 | 17.06 | 5.24% | 7.76% | 46 |
| (PNR) | Pentair Ltd. | 2.00% | 34% | 69.17 | 1.38 | 17.25 | 8.69% | 9.42% | 42 |
| (PH) | Parker-Hannifin Corp. | 1.51% | 27% | 174.62 | 2.64 | 17.53 | 13.21% | 10.26% | 61 |
| (CBSH) | Commerce Bancshares | 1.44% | 25% | 59.79 | 0.86 | 17.64 | 4.41% | 5.30% | 50 |
| (WMT) | Wal-Mart Inc. | 2.32% | 41% | 87.5 | 2.03 | 17.75 | 9.39% | 5.44% | 45 |
| (CSL) | Carlisle Companies | 1.37% | 24% | 105.21 | 1.44 | 17.89 | 9.90% | 13.63% | 41 |
| (CBU) | Community Bank System | 2.41% | 43% | 53.87 | 1.3 | 18.02 | 4.84% | 4.17% | 26 |
| (FELE) | Franklin Electric Co. | 1.03% | 19% | 40.6 | 0.42 | 18.21 | 6.04% | 8.19% | 25 |
| (HRL) | Hormel Foods Corp. | 2.10% | 38% | 33.41 | 0.7 | 18.26 | 16.32% | 17.78% | 52 |
| (SWK) | Stanley Black & Decker | 1.55% | 29% | 156.48 | 2.42 | 18.56 | 7.09% | 6.10% | 50 |
| (PEP) | PepsiCo Inc. | 2.97% | 56% | 106.81 | 3.17 | 18.71 | 8.90% | 8.52% | 46 |
| (MSA) | MSA Safety Inc. | 1.68% | 33% | 82.22 | 1.38 | 19.53 | 5.09% | 4.64% | 46 |
| (BDX) | Becton Dickinson & Co. | 1.37% | 27% | 215.25 | 2.94 | 19.68 | 11.61% | 9.77% | 46 |
| (CLX) | Clorox Company | 2.64% | 53% | 124.22 | 3.28 | 20.00 | 7.99% | 5.75% | 41 |
| (GD) | General Dynamics | 1.47% | 29% | 223.47 | 3.28 | 20.02 | 11.54% | 10.40% | 26 |
| (GWW) | W.W. Grainger Inc. | 1.83% | 37% | 276.63 | 5.06 | 20.09 | 14.21% | 10.58% | 46 |
| (SYY) | Sysco Corp. | 2.25% | 46% | 59.96 | 1.35 | 20.33 | 5.68% | 4.10% | 48 |
Data as of March 26, 2018
This is a solid list of dividend champions, which are prescreened for valuation, dividend safety and dividend growth sustainability. This list should be a solid ground for further research.
This statement should not be a surprise for regular readers, who understand the need to research the investments for suitability, before deciding if they should add them to their portfolios. It is important to understand what you are buying, and to determine for yourself whether the business can continue growing its earnings and dividends in the future.
Relevant Articles:
- Rising Earnings – The Source of Future Dividend Growth
- How to determine if your dividends are safe
- How to read my stock analysis reports
- Dividend Champions - The Best List for Dividend Investors
Article by Dividend Growth Investor
