Seeking Alpha
In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here ) for high yield and low payout ratio and, last month, using a "7% Solution" for dividend and earnings growth.
(Note that I have separated the Champions, Contenders, and Challengers into different articles to fit more closely into the format preferred by Seeking Alpha. Champions are companies ua that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. I use the same Roman numeral for all three articles.)
This ua month, I decided to take a cue from my recent article about market capitalization (which can be found here ) and the ensuing comments. In order to isolate the top candidates in each capitalization class (Large-, Mid-, and Small-Cap), I effectively ran a "triple Smackdown." I screened as follows:
Step ua 1: After eliminating companies that had not increased their dividend in more than a year and those that had agreed to be acquired, I sorted by Market Capitalization (column ua AE) and segregated the Champions into 41 Large-Cap ua (above $10 billion), 34 Mid-Cap ($2-10 billion), and 26 Small-Cap (under $2 billion) companies.
Step 2: Sort each group by their 5-year Dividend Growth Rate (column AN), high to low. Dropping the "lesser" half of each group cut the lists to 21 Large-Caps, 17 Mid-Caps, and 13 Small-Caps.
Step 3: Sort each group by their 5-year Estimated Earnings Per Share Growth (column AC), high to low, and eliminate the lower half of each group. That cut the lists to 11 Large-Caps, 8 Mid-Caps, and 6 Small-Caps.
Symbol
( APD )
( MCD )
( CSL )
( PNR )
( BRC )
( SJW )
As usual, there are some familiar names, but a couple of things stand out. The Large-Caps had the strongest Dividend Growth, whereas the Mid-Caps, except for Leggett & Platt, have Yields below 2%, but the smaller companies generally have stronger 5-Year Earnings Estimates. Note that Pentair is merging with a Swiss company and will become a foreign entity, with various tax ramifications. As always, please ua consider this no more than a starting point for more in-depth research.
As an extra step, I'm including one of Chuck Carnevale's F.A.S.T. Graphs for the company that appears to be the most undervalued, as indicated by its price line being in the green-shaded earnings area, just below.
Disclosure: I am long AFL . I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). ua I have no business ua relationship with any company whose stock is mentioned in this article. (More...) ua
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Dave Fish is Executive Editor for the Moneypaper newsletter and co-manager (since 1999) of the MP 63 Fund (Symbol: DRIPX), a Morningstar 4-Star fund that invests exclusively in companies that offer Direct Investment (or Dividend Reinvestment) Plans. He is also the author of the U.S. Dividend... More
TOP USERS: StockTalkers | Instablogs
In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here ) for high yield and low payout ratio and, last month, using a "7% Solution" for dividend and earnings growth.
(Note that I have separated the Champions, Contenders, and Challengers into different articles to fit more closely into the format preferred by Seeking Alpha. Champions are companies ua that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. I use the same Roman numeral for all three articles.)
This ua month, I decided to take a cue from my recent article about market capitalization (which can be found here ) and the ensuing comments. In order to isolate the top candidates in each capitalization class (Large-, Mid-, and Small-Cap), I effectively ran a "triple Smackdown." I screened as follows:
Step ua 1: After eliminating companies that had not increased their dividend in more than a year and those that had agreed to be acquired, I sorted by Market Capitalization (column ua AE) and segregated the Champions into 41 Large-Cap ua (above $10 billion), 34 Mid-Cap ($2-10 billion), and 26 Small-Cap (under $2 billion) companies.
Step 2: Sort each group by their 5-year Dividend Growth Rate (column AN), high to low. Dropping the "lesser" half of each group cut the lists to 21 Large-Caps, 17 Mid-Caps, and 13 Small-Caps.
Step 3: Sort each group by their 5-year Estimated Earnings Per Share Growth (column AC), high to low, and eliminate the lower half of each group. That cut the lists to 11 Large-Caps, 8 Mid-Caps, and 6 Small-Caps.
Symbol
( APD )
( MCD )
( CSL )
( PNR )
( BRC )
( SJW )
As usual, there are some familiar names, but a couple of things stand out. The Large-Caps had the strongest Dividend Growth, whereas the Mid-Caps, except for Leggett & Platt, have Yields below 2%, but the smaller companies generally have stronger 5-Year Earnings Estimates. Note that Pentair is merging with a Swiss company and will become a foreign entity, with various tax ramifications. As always, please ua consider this no more than a starting point for more in-depth research.
As an extra step, I'm including one of Chuck Carnevale's F.A.S.T. Graphs for the company that appears to be the most undervalued, as indicated by its price line being in the green-shaded earnings area, just below.
Disclosure: I am long AFL . I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). ua I have no business ua relationship with any company whose stock is mentioned in this article. (More...) ua
Get the app »
Dave Fish is Executive Editor for the Moneypaper newsletter and co-manager (since 1999) of the MP 63 Fund (Symbol: DRIPX), a Morningstar 4-Star fund that invests exclusively in companies that offer Direct Investment (or Dividend Reinvestment) Plans. He is also the author of the U.S. Dividend... More
TOP USERS: StockTalkers | Instablogs
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