Today, I am going to delve into the list of dividend contenders. A dividend contender is a company, which has managed to grow dividends for at least a decade (but far less than 25 years). There are currently 220 dividend contenders. If you add in the list of dividend champions, we have 335 companies in the US, which have managed to grow dividends every single year for at least a decade.
This is a solid starting point for any serious dividend investor, who is looking for a group of quality companies for further research.
To create the list I shared with you today, I went through the following process:
1) Obtained the list of dividend contenders from dripinvesting.org
2) Dump it into a Yahoo! Finance custom portfolio that I downloaded to excel.
3) Remove companies where trailing P/E ratio was above 20
4) Removed companies where the dividend payout ratio was above 60%
5) Added information for the 5 and 10 year annual dividend growth rates
As a result, I came up with 65 dividend contenders for further research.
This is a very large number of companies. I usually look at the earnings trends over the past decade, in order to determine whether these companies are growing distributions out of growing earnings. If they are growing distributions out of increasing the dividend payout ratio, while earnings are flat or declining,
Symbol
|
Trailing
P/E
|
Dividend
Yield
|
Dividend
Payout Ratio
|
Dividend/Share
|
Last
Price
|
10
year Annual Dividend Growth
|
5
year Annual Dividend Growth
|
ACU
|
16.62
|
1.79%
|
29.79%
|
0.42
|
23.43
|
10.84
|
8.45
|
AEL
|
11.14
|
0.75%
|
8.39%
|
0.24
|
31.87
|
15.79
|
11.63
|
AFG
|
13.81
|
1.17%
|
16.11%
|
1.25
|
107.19
|
12.40
|
12.33
|
ALB
|
16.95
|
0.96%
|
16.34%
|
1.27
|
131.72
|
11.66
|
10.30
|
AMNF
|
18.57
|
3.08%
|
57.14%
|
0.08
|
2.6
|
11.90
|
10.76
|
AMP
|
15.91
|
1.86%
|
29.53%
|
3.16
|
170.27
|
19.19
|
17.77
|
AROW
|
17.14
|
2.84%
|
48.74%
|
0.97
|
34.1
|
3.02
|
2.25
|
AUBN
|
16.81
|
2.47%
|
41.44%
|
0.92
|
37.31
|
2.77
|
2.33
|
BANF
|
20.02
|
1.48%
|
29.55%
|
0.78
|
52.85
|
7.74
|
7.24
|
BBY
|
17.30
|
1.89%
|
32.66%
|
1.3
|
68.87
|
11.70
|
14.87
|
BHB
|
17.22
|
2.72%
|
46.88%
|
0.75
|
27.55
|
5.81
|
7.50
|
BMRC
|
20.38
|
1.62%
|
33.03%
|
1.1
|
67.85
|
8.18
|
9.86
|
BOKF
|
19.31
|
1.91%
|
36.90%
|
1.76
|
92.09
|
8.97
|
3.78
|
CAH
|
18.43
|
2.88%
|
53.06%
|
1.82
|
63.22
|
19.71
|
15.03
|
CATC
|
17.53
|
2.39%
|
41.86%
|
1.85
|
77.49
|
4.66
|
4.40
|
CB
|
17.28
|
1.94%
|
33.53%
|
2.8
|
144.26
|
10.41
|
7.84
|
CBRL
|
20.20
|
2.81%
|
56.76%
|
4.7
|
167.24
|
22.86
|
27.41
|
CCFN
|
14.08
|
2.86%
|
40.28%
|
1.43
|
50
|
6.01
|
2.49
|
CFR
|
18.23
|
2.32%
|
42.29%
|
2.22
|
95.72
|
3.86
|
3.44
|
CMI
|
18.44
|
2.29%
|
42.28%
|
4.16
|
181.46
|
25.63
|
18.52
|
CNI
|
20.92
|
1.90%
|
39.66%
|
1.61
|
84.95
|
12.52
|
11.21
|
CVS
|
16.18
|
2.46%
|
39.79%
|
1.93
|
78.45
|
24.20
|
25.21
|
CZFS
|
15.91
|
2.64%
|
42.05%
|
1.64
|
62.05
|
7.57
|
8.64
|
EAT
|
14.35
|
3.52%
|
50.54%
|
1.4
|
39.75
|
14.25
|
14.87
|
EBMT
|
15.70
|
1.63%
|
25.58%
|
0.33
|
20.25
|
3.45
|
3.59
|
EBTC
|
18.01
|
1.61%
|
29.03%
|
0.54
|
33.49
|
5.37
|
4.18
|
EIX
|
14.38
|
3.45%
|
49.54%
|
2.17
|
62.98
|
6.46
|
10.79
|
ES
|
20.07
|
3.02%
|
60.71%
|
1.87
|
61.82
|
9.38
|
7.51
|
FLIC
|
19.38
|
1.49%
|
28.97%
|
0.42
|
28.1
|
8.49
|
6.41
|
FRFC
|
12.13
|
1.98%
|
23.96%
|
0.81
|
41
|
5.96
|
4.08
|
HAS
|
19.75
|
2.34%
|
46.15%
|
2.16
|
92.41
|
13.98
|
9.98
|
HIFS
|
17.28
|
0.64%
|
11.14%
|
1.3
|
201.6
|
4.97
|
4.97
|
HWKN
|
20.34
|
2.39%
|
48.59%
|
0.86
|
36
|
6.70
|
5.92
|
IBM
|
13.55
|
3.57%
|
48.37%
|
5.8
|
162.49
|
14.68
|
12.32
|
IMASF
|
13.87
|
3.37%
|
46.81%
|
0.22
|
6.52
|
7.16
|
5.59
|
ISBA
|
15.59
|
3.62%
|
56.42%
|
1.01
|
27.9
|
8.86
|
4.98
|
KR
|
16.17
|
1.76%
|
28.40%
|
0.48
|
27.32
|
12.95
|
14.64
|
LAZ
|
15.92
|
2.83%
|
45.01%
|
1.58
|
55.87
|
16.16
|
16.20
|
LYBC
|
14.85
|
1.01%
|
15.06%
|
0.36
|
35.5
|
11.08
|
12.04
|
MCK
|
7.44
|
0.75%
|
5.59%
|
1.18
|
157.16
|
17.26
|
8.08
|
MDNB
|
18.00
|
0.70%
|
12.57%
|
0.22
|
31.5
|
11.08
|
16.36
|
MDP
|
15.75
|
3.16%
|
49.76%
|
2.06
|
65.2
|
10.89
|
6.33
|
MYBF
|
13.65
|
3.26%
|
44.53%
|
1.14
|
34.95
|
9.22
|
9.93
|
NEE
|
17.07
|
2.52%
|
42.97%
|
3.82
|
151.71
|
9.13
|
10.37
|
NEU
|
20.43
|
1.71%
|
34.97%
|
6.85
|
400.32
|
29.92
|
17.95
|
NHC
|
19.72
|
2.96%
|
58.31%
|
1.86
|
62.92
|
9.08
|
9.16
|
NIDB
|
11.49
|
2.28%
|
26.21%
|
0.81
|
35.5
|
3.39
|
4.28
|
NWFL
|
19.13
|
2.69%
|
51.52%
|
0.85
|
31.56
|
4.51
|
3.57
|
OZRK
|
17.16
|
1.37%
|
23.55%
|
0.69
|
50.28
|
20.78
|
23.22
|
PB
|
17.69
|
1.95%
|
34.52%
|
1.36
|
69.71
|
11.69
|
11.20
|
POR
|
19.15
|
3.01%
|
57.64%
|
1.32
|
43.86
|
3.68
|
4.29
|
PSBQ
|
12.30
|
1.19%
|
14.62%
|
0.82
|
69
|
5.00
|
7.13
|
RBC
|
17.22
|
1.26%
|
21.74%
|
1
|
79.2
|
5.60
|
6.21
|
RBCAA
|
16.41
|
2.17%
|
35.54%
|
0.86
|
39.72
|
7.30
|
6.10
|
SBSI
|
17.89
|
3.03%
|
54.17%
|
1.04
|
34.35
|
13.93
|
11.71
|
TJX
|
20.85
|
1.49%
|
31.08%
|
1.15
|
77.15
|
21.56
|
22.17
|
TMK
|
19.37
|
0.65%
|
12.55%
|
0.59
|
91.06
|
9.83
|
9.20
|
TRI
|
10.56
|
3.12%
|
32.94%
|
1.38
|
44.24
|
3.48
|
1.52
|
TRV
|
15.26
|
2.10%
|
32.10%
|
2.78
|
132.16
|
9.62
|
9.59
|
UTX
|
20.40
|
2.04%
|
41.55%
|
2.68
|
131.57
|
8.99
|
6.03
|
VSEC
|
18.05
|
0.52%
|
9.40%
|
0.25
|
48.02
|
13.24
|
11.63
|
VZ
|
13.46
|
4.42%
|
59.49%
|
2.32
|
52.48
|
3.51
|
2.88
|
WRB
|
16.42
|
0.78%
|
12.77%
|
0.54
|
69.45
|
10.44
|
9.69
|
WSM
|
15.06
|
2.85%
|
42.94%
|
1.52
|
53.3
|
13.22
|
11.84
|
XEL
|
20.08
|
3.03%
|
60.94%
|
1.42
|
46.79
|
4.61
|
6.02
|
Average
|
16.76
|
2.19%
|
36.56%
|
10.59
|
9.66
|
For the purposes of this exercise, I decided to not do that.
Instead, I poked around the spreadsheet, in order to come up with different scenarios. For example, I know that there is a great diversity in the investor base reading dividend growth investor website. Some of you are retired and looking for current income, which is safe and reliable. Others may still be in the accumulation phase.
Therefore, they may be more interested in future yields on cost decades from, as opposed to higher current yields.
I decided to screen out those companies from that list above, in order to obtain a portfolio of companies with decent current income, and another portfolio of companies with decent dividend growth. I primarily did this, in order to illustrate the trade-off between dividend yield and dividend growth, which we all have to make in our choices of portfolio selections. I also did this exercise, in order to provide factual data points to illustrate that trade-off.
For the first list, I sorted the group of 65 companies by dividend yield, and selected the top 30 by yield.
I came up with the following group of companies.
Symbol
|
Trailing
P/E
|
Dividend
Yield
|
Dividend
Payout Ratio
|
Dividend/Share
|
Last
Price
|
10
year Annual Dividend Growth
|
5
year Annual Dividend Growth
|
VZ
|
13.46
|
4.42%
|
59.49%
|
2.32
|
52.48
|
3.51
|
2.88
|
ISBA
|
15.59
|
3.62%
|
56.42%
|
1.01
|
27.9
|
8.86
|
4.98
|
IBM
|
13.55
|
3.57%
|
48.37%
|
5.8
|
162.49
|
14.68
|
12.32
|
EAT
|
14.35
|
3.52%
|
50.54%
|
1.4
|
39.75
|
14.25
|
14.87
|
EIX
|
14.38
|
3.45%
|
49.54%
|
2.17
|
62.98
|
6.46
|
10.79
|
IMASF
|
13.87
|
3.37%
|
46.81%
|
0.22
|
6.52
|
7.16
|
5.59
|
MYBF
|
13.65
|
3.26%
|
44.53%
|
1.14
|
34.95
|
9.22
|
9.93
|
MDP
|
15.75
|
3.16%
|
49.76%
|
2.06
|
65.2
|
10.89
|
6.33
|
TRI
|
10.56
|
3.12%
|
32.94%
|
1.38
|
44.24
|
3.48
|
1.52
|
AMNF
|
18.57
|
3.08%
|
57.14%
|
0.08
|
2.6
|
11.90
|
10.76
|
XEL
|
20.08
|
3.03%
|
60.94%
|
1.42
|
46.79
|
4.61
|
6.02
|
SBSI
|
17.89
|
3.03%
|
54.17%
|
1.04
|
34.35
|
13.93
|
11.71
|
ES
|
20.07
|
3.02%
|
60.71%
|
1.87
|
61.82
|
9.38
|
7.51
|
POR
|
19.15
|
3.01%
|
57.64%
|
1.32
|
43.86
|
3.68
|
4.29
|
NHC
|
19.72
|
2.96%
|
58.31%
|
1.86
|
62.92
|
9.08
|
9.16
|
CAH
|
18.43
|
2.88%
|
53.06%
|
1.82
|
63.22
|
19.71
|
15.03
|
CCFN
|
14.08
|
2.86%
|
40.28%
|
1.43
|
50
|
6.01
|
2.49
|
WSM
|
15.06
|
2.85%
|
42.94%
|
1.52
|
53.3
|
13.22
|
11.84
|
AROW
|
17.14
|
2.84%
|
48.74%
|
0.97
|
34.1
|
3.02
|
2.25
|
LAZ
|
15.92
|
2.83%
|
45.01%
|
1.58
|
55.87
|
16.16
|
16.20
|
CBRL
|
20.20
|
2.81%
|
56.76%
|
4.7
|
167.24
|
22.86
|
27.41
|
BHB
|
17.22
|
2.72%
|
46.88%
|
0.75
|
27.55
|
5.81
|
7.50
|
NWFL
|
19.13
|
2.69%
|
51.52%
|
0.85
|
31.56
|
4.51
|
3.57
|
CZFS
|
15.91
|
2.64%
|
42.05%
|
1.64
|
62.05
|
7.57
|
8.64
|
NEE
|
17.07
|
2.52%
|
42.97%
|
3.82
|
151.71
|
9.13
|
10.37
|
AUBN
|
16.81
|
2.47%
|
41.44%
|
0.92
|
37.31
|
2.77
|
2.33
|
CVS
|
16.18
|
2.46%
|
39.79%
|
1.93
|
78.45
|
24.20
|
25.21
|
HWKN
|
20.34
|
2.39%
|
48.59%
|
0.86
|
36
|
6.70
|
5.92
|
CATC
|
17.53
|
2.39%
|
41.86%
|
1.85
|
77.49
|
4.66
|
4.40
|
HAS
|
19.75
|
2.34%
|
46.15%
|
2.16
|
92.41
|
13.98
|
9.98
|
Average
|
16.71
|
2.98%
|
49.18%
|
9.71
|
9.06
|
The average yield of these 30 companies is 2.98%. I essentially added up all companies by yield, until the average yield was around 3% and I had a decent sized group and diversified group of stocks. This yield of 2.98% is higher than the 2.19% yield of the 65 companies. The average dividend payout ratio for the 30 companies was 49.18%, versus 36.55% for the whole population of 65 companies. The average P/E ratio was in line at 16.70 for the high-yield list, as well as the whole population.
The 10 year annual dividend growth for the 30 companies was 9.06%/year, while the 5 year annual dividend growth was 9.06%. The corresponding numbers for the full population was 10.59% and 9.74% (10 and 5 year annual dividend growth). It is intuitive that by focusing on higher dividend yield today, you sacrifice some dividend growth. The “sacrifice” didn’t seem so big. However, the average dividend payout ratio was higher for the higher yielding companies.
Some may argue that companies should be reinvesting all earnings back into the business, in order to grow earnings per share and grow intrinsic value. Unfortunately, they are forgetting that in the real world nothing is guaranteed – a company may sink that money into new projects that fail to generate any excess profits. The competitors may also sink in enough so that overcapacity and overproduction depresses profit margins. As an investor, the only thing I can do is identify companies with the culture of paying and raising dividends, and isolate those that have the financials to do so. Even if I fail at my assessment, on average I can be pretty successful in reasonably estimating is that the current dividend in a portfolio will hold. This is a long-winded way of saying that a current yield of 3% is easier to achieve from a sustainable dividend payout ratio, than a growth of 3% from a low dividend payout ratio.
I then screened the list for the companies with the highest 10 year dividend growth rates. If those companies continues growing dividends at a high pace, hopefully because their earnings are growing, they can generate some mind boggling future yields on costs and strong total returns to shareholders over time.
For the 30 highest growth companies, we have an average yield of 1.97%, and a 10 year annual dividend growth rate of 15.53%/year. I checked the 5 year annual dividend growth rate next, and noticed that it dropped to 14.05%/year, which is not that bad relative to the 10 year average. The dividend payout ratio was at 33.33%, which is low. The average P/E ratio was in line at 16.70 for the high growth list, as well as the whole population.
Symbol
|
Trailing
P/E
|
Dividend
Yield
|
Dividend
Payout Ratio
|
Dividend/Share
|
Last
Price
|
10
year Annual Dividend Growth
|
5
year Annual Dividend Growth
|
NEU
|
20.43
|
1.71%
|
34.97%
|
6.85
|
400.32
|
29.92
|
17.95
|
CMI
|
18.44
|
2.29%
|
42.28%
|
4.16
|
181.46
|
25.63
|
18.52
|
CVS
|
16.18
|
2.46%
|
39.79%
|
1.93
|
78.45
|
24.20
|
25.21
|
CBRL
|
20.20
|
2.81%
|
56.76%
|
4.7
|
167.24
|
22.86
|
27.41
|
TJX
|
20.85
|
1.49%
|
31.08%
|
1.15
|
77.15
|
21.56
|
22.17
|
OZRK
|
17.16
|
1.37%
|
23.55%
|
0.69
|
50.28
|
20.78
|
23.22
|
CAH
|
18.43
|
2.88%
|
53.06%
|
1.82
|
63.22
|
19.71
|
15.03
|
AMP
|
15.91
|
1.86%
|
29.53%
|
3.16
|
170.27
|
19.19
|
17.77
|
MCK
|
7.44
|
0.75%
|
5.59%
|
1.18
|
157.16
|
17.26
|
8.08
|
LAZ
|
15.92
|
2.83%
|
45.01%
|
1.58
|
55.87
|
16.16
|
16.20
|
AEL
|
11.14
|
0.75%
|
8.39%
|
0.24
|
31.87
|
15.79
|
11.63
|
IBM
|
13.55
|
3.57%
|
48.37%
|
5.8
|
162.49
|
14.68
|
12.32
|
EAT
|
14.35
|
3.52%
|
50.54%
|
1.4
|
39.75
|
14.25
|
14.87
|
HAS
|
19.75
|
2.34%
|
46.15%
|
2.16
|
92.41
|
13.98
|
9.98
|
SBSI
|
17.89
|
3.03%
|
54.17%
|
1.04
|
34.35
|
13.93
|
11.71
|
VSEC
|
18.05
|
0.52%
|
9.40%
|
0.25
|
48.02
|
13.24
|
11.63
|
WSM
|
15.06
|
2.85%
|
42.94%
|
1.52
|
53.3
|
13.22
|
11.84
|
KR
|
16.17
|
1.76%
|
28.40%
|
0.48
|
27.32
|
12.95
|
14.64
|
CNI
|
20.92
|
1.90%
|
39.66%
|
1.61
|
84.95
|
12.52
|
11.21
|
AFG
|
13.81
|
1.17%
|
16.11%
|
1.25
|
107.19
|
12.40
|
12.33
|
AMNF
|
18.57
|
3.08%
|
57.14%
|
0.08
|
2.6
|
11.90
|
10.76
|
BBY
|
17.30
|
1.89%
|
32.66%
|
1.3
|
68.87
|
11.70
|
14.87
|
PB
|
17.69
|
1.95%
|
34.52%
|
1.36
|
69.71
|
11.69
|
11.20
|
ALB
|
16.95
|
0.96%
|
16.34%
|
1.27
|
131.72
|
11.66
|
10.30
|
LYBC
|
14.85
|
1.01%
|
15.06%
|
0.36
|
35.5
|
11.08
|
12.04
|
MDNB
|
18.00
|
0.70%
|
12.57%
|
0.22
|
31.5
|
11.08
|
16.36
|
MDP
|
15.75
|
3.16%
|
49.76%
|
2.06
|
65.2
|
10.89
|
6.33
|
ACU
|
16.62
|
1.79%
|
29.79%
|
0.42
|
23.43
|
10.84
|
8.45
|
WRB
|
16.42
|
0.78%
|
12.77%
|
0.54
|
69.45
|
10.44
|
9.69
|
CB
|
17.28
|
1.94%
|
33.53%
|
2.8
|
144.26
|
10.41
|
7.84
|
Average
|
16.70
|
1.97%
|
0.33
|
1.78
|
90.84
|
15.53
|
14.05
|
While I argued above that the investor can more easily depend on dividend yield than dividend growth, you can also argue that for the certain type of wide-moat company, you can bank on a certain level of growth that is dependable. This is where it pays to research companies one at a time, familiarize yourself with the business and its economics, in order to determine if it fills a niche in the economy that can result in an almost monopoly type pricing power.
Conclusion:
Today we screened the list of dividend contenders, using my entry criteria. This list is a great starting point for further research, which should include analyzing each company in more detail, in order to determine if it is a good fit for the dividend portfolio.
We also narrowed the list down to the thirty highest yielding dividend contenders and the thirty high dividend growth dividend contenders. Each sub-list appeals to a different investor demographic. The lesson learned is that there is a trade-off between dividend yield and dividend growth. We should not look at dividend growth in isolation, the same way we shouldn’t chase yield blindly. Investors need to be focusing on the complete picture, and knowing what their goals and objectives are, when buying securities. This would involve looking at yield, growth, sustainability and valuation.
The lists shared today, coupled with the results from my screen earlier this week, contain a total of 79 dividend growth companies for further research. While the stock market is hitting all time highs, I believe that someone who is willing to do a little work will be able to find quality and value today.
Thank you for reading!
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