The criteria used to screen the list of dividend champions are listed below:
1) A trailing P/E ratio below 20
2) A dividend payout ratio below 60%
3) A ten year dividend growth of at least 3%/year
4) A history of earnings growth over the past decade
5) A 25 year streak annual of dividend increases ( being a dividend champion meets this requirement automatically)
The process of screening is fairly straightforward.
The first step involves creating a portfolio in Yahoo Finance, which includes the dividend champions from the latest update.
The second step involves creating a custom view, which allows you to see the ratios that are most important for you. In my case, I look for price, prospective dividend and earnings. I used trailing earnings per share for this screen, but I usually use forward earnings in order to account for one-time accounting items distorting short-term results. For example, my screen excluded Becton Dickinson (BDX) since it was showing to be having negative earnings ( caused by one-time items). But a review using forward earnings would have included it for potential screening. Trailing earnings are automatically populated, but for some reason I have to manually look for forward earnings for each company individually, because their “Forward Earnings” column shows the earnings for the year after next year. This is way too forward for me.
The third step involves copying and pasting the information from the list into an excel file. Unfortunately, Yahoo doesn’t let me download the information with my custom view. It only lets me download generic information such as stock symbol, last price, daily trading range and volume. These are not as helpful for me – which is why I have to copy and paste in excel.
The fourth step involves calculating the payout ratio, populating the ten year dividend growth rates from a custom spreadsheet where I keep information. I also review the ten year trends in fundamentals such as earnings. You can do that using any of the dividend investing resources I have outlined in a previous article. This is the step that is the most subjective. In this step I eliminated a few companies such as Archer Daniels Midland (ADM) because they had failed to grow earnings per share over the past decade. In addition, I removed McCormick & Co (MKC) because the trailing P/E was artificially lower because trailing EPS were juiced up by one-time events; the forward earnings painted a stock that is overvalued at the time.
As a result of the screen, I came up with a list of the following 22 dividend champions for further research:
Company Name
|
Symbol
|
Trailing P/E
|
Forward Annual Div Yield
|
Dividend Payout Ratio
|
Last Price
|
Forward Annual Div Rate
|
10 year Annual Dividend Growth
|
5 year Annual Dividend Growth
|
AFLAC Inc.
|
(AFL)
|
7.19
|
2.35%
|
17%
|
$
42.91
|
$
1.04
|
8.1%
|
5.4%
|
Chubb Limited
|
(CB)
|
15.8
|
2.33%
|
36%
|
$ 129.19
|
$
2.92
|
10.4%
|
7.8%
|
Commerce Bancshares
|
(CBSH)
|
20.59
|
1.45%
|
30%
|
$
65.24
|
$
0.94
|
4.4%
|
5.3%
|
Community Bank System
|
(CBU)
|
19.11
|
2.30%
|
42%
|
$
61.58
|
$
1.36
|
4.8%
|
4.2%
|
Cullen/Frost Bankers
|
(CFR)
|
18.66
|
2.37%
|
46%
|
$ 109.03
|
$
2.68
|
3.9%
|
3.4%
|
Chesapeake Financial Shares
|
(CPKF)
|
12.69
|
1.96%
|
25%
|
$
28.45
|
$
0.56
|
7.7%
|
6.3%
|
Carlisle Companies
|
(CSL)
|
11.59
|
1.37%
|
15%
|
$ 112.30
|
$
1.48
|
9.9%
|
13.6%
|
Computer Services Inc.
|
(CSVI)
|
17.82
|
2.90%
|
52%
|
$
49.55
|
$
1.44
|
15.1%
|
17.4%
|
Dover Corp.
|
(DOV)
|
14.87
|
2.59%
|
38%
|
$
72.90
|
$
1.88
|
11.0%
|
10.4%
|
Eagle Financial Services
|
(EFSI)
|
15.95
|
2.44%
|
39%
|
$
37.95
|
$
0.92
|
3.2%
|
3.8%
|
Eaton Vance Corp.
|
(EV)
|
19.62
|
2.38%
|
46%
|
$
52.61
|
$
1.24
|
8.5%
|
8.1%
|
General Dynamics
|
(GD)
|
19.41
|
2.00%
|
38%
|
$ 188.84
|
$
3.72
|
11.5%
|
10.4%
|
Lowe's Companies
|
(LOW)
|
20.95
|
1.95%
|
42%
|
$
96.14
|
$
1.92
|
19.3%
|
20.4%
|
Altria Group Inc.
|
(MO)
|
10.41
|
4.93%
|
50%
|
$
58.29
|
$
2.80
|
11.3%
|
8.3%
|
PPG Industries Inc.
|
(PPG)
|
16.56
|
1.75%
|
29%
|
$ 103.00
|
$
1.80
|
5.2%
|
7.8%
|
Stepan Company
|
(SCL)
|
20.63
|
1.15%
|
23%
|
$
79.64
|
$
0.90
|
7.4%
|
7.7%
|
Stanley Black & Decker
|
(SWK)
|
20.32
|
1.90%
|
38%
|
$ 133.14
|
$
2.52
|
7.1%
|
6.1%
|
Target Corp.
|
(TGT)
|
14.4
|
3.45%
|
47%
|
$
76.79
|
$
2.48
|
16.7%
|
13.1%
|
T. Rowe Price Group
|
(TROW)
|
18.62
|
2.42%
|
45%
|
$ 115.50
|
$
2.80
|
12.9%
|
10.9%
|
UGI Corp.
|
(UGI)
|
15.26
|
2.00%
|
29%
|
$
53.93
|
$
1.04
|
7.3%
|
6.6%
|
UMB Financial Corp.
|
(UMBF)
|
14.93
|
1.52%
|
22%
|
$
77.76
|
$
1.16
|
6.4%
|
4.5%
|
Walgreens Boots Alliance Inc.
|
(WBA)
|
14.9
|
2.93%
|
41%
|
$
63.30
|
$
1.76
|
16.2%
|
9.2%
|
This is the process I use to find promising dividend growth stocks. Of course, this list is not an automatic buy recommendation. It is just a list of stocks for further research.
Happy Investing and Thanks for Reading!
Relevant Articles:
- My Entry Criteria for Dividend Stocks
- Dividend Champions List For June 2018
- S&P Dividend Aristocrats Index – An Incomplete List for Dividend Investors
- How to retire in 10 years with dividend stocks