1) P/E was below 20
For those of you who have read my stock analyses, you know that these are just the beginning criteria I use to reduce the list of investable opportunities to a more manageable level.
I also looked for:
2) Dividend Payout Ratio below 60%
3) Minimum yield of 2%
If you want to add more quantitative criteria, I would look for companies where the 5 and 10 year dividend growth rate exceeds a certain percentage such as 5% or 6%/year on average. After that, I would look at trends in earnings per share, dividends per share, and dividend payout ratios to further isolate the companies which have managed to prosper. I do this in order to eliminate companies that have managed to grow dividends not because they prospered, but because they are simply paying a higher portion of earnings out to shareholders.
Below, you could find the list of companies for further research. You may also check linked analysis for more details on each company:
COMPANY | Ticker | SECTOR | Years | P/E - ttm | Yield | Payout Ratio | 5 year Div Growth | 10 Year Div Growth |
(AFL) | Financials | 33 | 11.43 | 2.45 | 28.00% | 6.75 | 13.64 | |
Dover Corp | (DOV) | Industrials | 53 | 12.08 | 2.54 | 30.68% | 12.91 | 11.52 |
(WBA) | Consumer Staples | 40 | 19.83 | 1.77 | 35.10% | 17.42 | 19.50 | |
Abbott Laboratories | (ABT) | Health Care | 43 | 14.83 | 2.39 | 35.44% | 11.60 | 10.60 |
Cardinal Health Inc | (CAH) | Health Care | 28 | 20.49 | 1.84 | 37.70% | 14.50 | 27.40 |
Stanley Black & Decker | (SWK) | Industrials | 48 | 18.8 | 2.02 | 37.98% | 9.82 | 6.50 |
(GWW) | Industrials | 44 | 20.3 | 2 | 40.60% | 17.15 | 17.44 | |
(TGT) | Cons Discretionary | 44 | 15.54 | 2.74 | 42.58% | 20.79 | 19.62 | |
Illinois Tool Works Inc | (ITW) | Industrials | 44 | 20.44 | 2.1 | 42.92% | 9.56 | 13.11 |
(WMT) | Consumer Staples | 39 | 15.11 | 2.91 | 43.97% | 10.57 | 12.89 | |
(TROW) | Financial | 29 | 16.53 | 2.82 | 46.61% | 14.01 | 16.29 | |
(EMR) | Industria | 53 | 14.6 | 3.45 | 50.37% | 6.90 | 8.35 | |
(JNJ) | Health Care | 53 | 20.11 | 2.73 | 54.90% | 6.93 | 8.75 |
As a future retiree, I am looking for dependable dividend income which can grow above the rate of inflation. I plan on living off dividends in retirement. I am fine if I underperform all benchmarks out there, as long as my organic dividend income grows above the rate of inflation over time.
If an investor had decided to purchase more than one dividend stock at once, they could potentially use a low-cost broker like Motif Investing. Motif Investing would allow an investor to purchase up to 30 individual securities for a low price of $9.95/trade. This keeps costs low for anyone who invests $1,000 - $2,000 per transaction.
Full Disclosure: Long AFL, WBA, ABT, GWW, TGT, ITW, WMT, TROW, EMR, JNJ
Relevant Articles:
- Dividend Aristocrats List for 2016
- Dividend Aristocrats for Dividend Growth and Total Returns
- Margin of Safety in Dividends
- How to read my stock analysis reports
- The most important metric for dividend investing
