The two lists that I am concentrating right now is the S&P 500 Dividend Aristocrats and the S&P High Yield Dividend Aristocrats Index. I created custom lists in Yahoo! Finance in order to summarize the two groups of dividend achievers by a variety of criteria such as Symbol, Yield, P/E , Div/Shr, Last Price,EPS (ttm) ,PEG Ratio ,Dividend Payout, 5 and 10 year dividend growth rates. What I did was first exclude any stocks which had a dividend payout ratio of more than 50%. That gives me some reasonable assurance that the company is less likely to cut its dividends. I also look at P/E ratios, since I do not want to overpay for a company. Anything with a P/E of over 20 is out of my watchlist. I also look for the PEG ratio but just to find stocks which might be expensive in terms of their growth prospects. A third thing that I look for is a dividend yield of at least 2%, which is a little bit over than the current yield of 1.89% that SPY is rewarding its shareholders. The last but not least criteria that I screen for is the 5 and 10 year dividend growth ratios. I am looking for an average annual dividend growth of at least 5% over the past 5 and 10 years. The reason why I selected dividend yield in the end is because I want to decrease to a minimum the rush to buy a stock that simply increased its dividend for whatever reason, whose fundamentals cannot support any
significant further increases in the dividend payments
Based off of this screen, my two stock lists to follow are those (as of close of business yesterday): (opens in new window)
ABM BUD CB CINF CLX DOV EMR FDO GCI GWW JNJ MMM MTB ROH RPM SNV VAL VFC WL MHP NUE PEP PG SHW
I would continue screening for potential stocks to add to my buy watchlist on a weekly basis. I might add or remove stocks from my watchlists depending on how undervalued/overvalued I perceive them to be. If I stock in which I have a position drops off my buy watchlist, I would keep holding it, but I won’t be adding to that position until the technicals and the fundamentals match my criteria.
Relevant Articles:
- Dividend Aristocrats List for 2009
- Dividend Aristocrats
- Best Dividends Stocks for the Long Run
- Best High Yield Dividend Stocks for 2009
- Best CD Rates