Twenty Dividend Champions For Further Research

I have built my portfolio of dividend growth stocks over the past 8 – 9 years, by following a disciplined approach to investing. Having an objective approach has helped me immensely in staying the course, and not panicking and selling out when things looked difficult. As a general rule, dividend growth investors buy stocks to hold for years. Success is the result of an enterprise that is purchased at an attractive valuation, which then manages to grow earnings and dividends over time. This allows the investor to compound wealth and income, and ignore short term price fluctuations. The only exception to avoiding the moody Mr Market is when it offers quality companies at a discount. Getting paid to hold on to stocks has been helpful. Seeing the companies I own thrive, and boosting their dividends is helpful as well.

My process included a few simple steps, such as:

1) Saving as much as possible ( in fact I am close to saving my entire after-tax paycheck this year)

2) Focusing only on companies with a track record of annual dividend increases ( dividend aristocrats, dividend champions, dividend achievers)

3) Narrowing my list further by focusing on companies with:
   a) P/E below 20
   b) Dividend Payout Ratios below 60% ( though different for REITs and MLPs)
   c) Minimum dividend yields (since relaxed to above 1%)

4) Then reviewing trends in fundamentals for each candidate
   a) Earnings per share that grow over the past decade
   b) Dividend Payout Ratios that do not exceed 60%
   c) Dividends Per Share that grow above 3%/year
   d) Returns on Equity

5) After that, the goal was to buy and hold, without doing much. Trading too often usually leads to costly mistakes for the investor. Plus, it increases your investment costs as well.

I ran those criteria against the list of dividend champions on Friday, November 11. I eliminated companies that had not shown growth in earnings per share over the past decade, since those are unlikely to continue their streak of dividend increases over the next decade.

SYMBOL	Name	P/E	Dividend Yield	Dividend Per share	Earnings Per Share	Dividend Payout Rato	Stock Price	10 year Dividend Growth
AFL	AFLAC Inc.	11.51	2.37%	$       1.72	$       6.31	27%	$  72.61	14%
BEN	Franklin Resources	12.66	1.93%	$       0.72	$       2.94	24%	$  37.22	16%
BMS	Bemis Company	19.86	2.41%	$       1.16	$       2.42	48%	$  48.05	5%
CBSH	Commerce Bancshares	20.82	1.63%	$       0.90	$       2.66	34%	$  55.38	5%
CPKF	Chesapeake Financial Shares	13.19	2.37%	$       0.50	$       1.60	31%	$  21.10	8%
CSVI	Computer Services Inc.	19.08	2.85%	$       1.12	$       2.06	54%	$  39.30	16%
EV	Eaton Vance Corp.	18.39	2.93%	$       1.12	$       2.08	54%	$  38.25	12%
GD	General Dynamics	18.05	1.80%	$       3.04	$       9.34	33%	$168.55	13%
GPC	Genuine Parts Co.	20.44	2.78%	$       2.63	$       4.63	57%	$  94.62	7%
GWW	W.W. Grainger Inc.	19.57	2.15%	$       4.88	$     11.58	44%	$226.58	17%
JNJ	Johnson & Johnson	20.78	2.70%	$       3.20	$       5.70	56%	$118.47	9%
LEG	Leggett & Platt Inc.	18.78	2.84%	$       1.36	$       2.55	53%	$  47.88	7%
RPM	RPM International Inc.	18.82	2.34%	$       1.20	$       2.73	44%	$  51.39	6%
SCL	Stepan Company	20.02	1.06%	$       0.82	$       3.87	21%	$  77.48	6%
SRCE	1st Source Corp.	18.39	1.80%	$       0.72	$       2.17	33%	$  39.90	5%
SWK	Stanley Black & Decker	19.12	1.84%	$       2.32	$       6.58	35%	$125.78	7%
TGT	Target Corp.	13.21	3.36%	$       2.40	$       5.40	44%	$  71.35	20%
TMP	Tompkins Financial Corp.	20.74	2.30%	$       1.80	$       3.78	48%	$  78.40	6%
TROW	T. Rowe Price Group	15.91	3.06%	$       2.16	$       4.43	49%	$  70.50	16%
UGI	UGI Corp.	20.34	2.25%	$       0.95	$       2.08	46%	$  42.31	7%

This screen is not an automatic buy however. The investor needs to evaluate each company individually, and determine if the success of the past can be replicated. In addition, readers need to be aware that there are limitations to screening, due to one-time accounting events that may result in companies being included or excluded.

Full Disclosure: Long AFL, EV, GPC, GWW, JNJ, TGT, TROW

Relevant Articles:

- Dividend Champions - The Best List for Dividend Investors
- The ten year dividend growth requirement
- How to value dividend stocks
- The most important metric for dividend investing
- What drives future investment returns?