Dividend Growth Stock Ranking Results – June 2015

The results are in from my monthly dividend growth stock ranking system!  This is a screen that I will run every month that is based on dividend growth stocks from David Fish’s CCC list.  This month I have included stocks from Michael Weber’s Canadian Dividend All-Star list and Trevor Witten’s UK Dividend Champions list as well.  I will list these separately below as they are missing some of the criteria that are included in the CCC list.

If you would like to read the details about how I run this screen, including the criteria used and how each parameter is scored, please check out my post on the Dividend Growth Stock Ranking System.  I won’t add any details on the stocks in this post since I haven’t had a chance to fully analyze them yet.  The purpose of this post is to offer a high quality basket of stocks to serve as a starting point for everyone to do their own due diligence.

Once I have gone through the top stocks from this screen in detail I will publish a follow-up post with what I consider to be the best dividend growth stocks for June, 2015.

OK enough rambling…Here are the results:

 

Dividend Growth Stock Ranking Results

Brief ranking system overview: 10 points possible based on dividend strength, financial strength, valuation and technical analysis (click HERE for details).  Green highlights indicate that the stock’s score has increased since last month.  Red highlights indicate that the stock’s score has decreased since last month.  No highlight means no change in score.  A dash means the stock did not pass the CCC cutoff to receive a final score or the stock is new to the CCC list.

From the CCC list:

June 2015 Dividend Growth Stock Rankings - CCC

 

As expected, many of the stocks on the list are the same as last month.  T Rowe Price Group (TROW) still tops the list with a score of 8.5 out of 10.  The lowest scoring stock on the CCC list is Duke Energy Corp (DUK), scoring just 1.5 out of 10.

The biggest score increase belongs to TESSCO Technologies (TESS), mostly due to a recent pullback that makes the current stock price much more attractive.  The biggest decrease belongs to Canadian Natural Resources (CNQ) brought on by an increase in payout ratio, increased debt/equity and a weaker consensus price target.

There are 5 newcomers on the list: Gentex Corp (GNTX), FedEx Corp (FDX), Jones Lang Lasalle (JLL), Applied Materials (AMAT) and Union Pacific (UNP).  JLL and FDX both have very low yields right now (less than 0.5%) so I will most likely pass on them.  I’m pleased to see Union Pacific on the list since I recently added UNP to my Dividend Retirement portfolio.  I will have to look at GNTX and AMAT in more detail as I am not too familiar with these companies.

I also want to point out that the average score from the CCC list was 5.34 so it is worth highlighting some of the stocks that scored between 6 and 7.5.

  • Notable 7.25’s: Stage Stores (SSI), Cardinal Financial (CFNL), BlackRock (BLK), Macquarie Infrastructure (MIC)
  • Notable 7’s: Franklin Resources (BEN), Qualcomm (QCOM), Canadian National Railway (CNI)*, Harley-Davidson (HOG)
  • Notable 6.75’s: Corning (GLW), General Dynamics (GD)
  • Notable 6.5’s: Archer Daniels Midland (ADM)
  • Notable 6.25’s: ExxonMobil (XOM), GAP (GPS)
  • Notable 6’s: Caterpillar (CAT), Dow Chemical Company (DOW)

*I was interested in CNI so I dug a little deeper.  According to Nasdaq.com, CNI’s dividend increase streak ended in 2014 with a substantial dividend cut.  Not sure where the error lies (Nasdaq or the CCC list) but I though it was worth mentioning.

 

From the Canadian Dividend All-Star list:

This screen lacks the following criteria:  Past 5-year earnings growth (not on list), debt/equity ratio (not on list) and both subjective parameters.  Therefore the max score for this list is 6.5.  Here are the top 10 stocks:

June 2015 Dividend Growth Stock Rankings - Canadian

 

The best dividend growth stock pulled out of this screen is Canadian National Railway (CNR.TO).

 

From the UK Dividend Champions list:

This screen lacks the following criteria: In addition to the missing criteria in the Canadian Dividend All-Star list, this screen lacks the next 5-year earnings growth and the dividend acceleration parameters.  Therefore the max score for this list is 5.  Here are the top 10 stocks:

June 2015 Dividend Growth Stock Rankings - UK

The best dividend growth stocks pulled out of the UK list are Hargreaves (HSP), CareTech (CTH), Novae Group (NVA) and Pennant (PEN).

I don’t know too much about the Canadian and UK companies so I will leave judgement up to the readers.

 

Union Pacific Ranking Details

I like to provide the ranking details for one stock to illustrate how the ranking system is set up.  This month I chose UNP since it is new to the top scores list and also because many DGI bloggers out there have been accumulating this stock.

UNP Dividend Growth Stock Ranking

 

Dividend Strength Category:

UNP received 2.5 points out of a possible 4.5 in the dividend strength category.  It got penalized 0.5 points for yield (3% is required for a full point), but this is a bit unfair considering the incredible 5 year dividend growth rate (27.3%).  The most recent dividend increase was not higher than the 5 year average, a parameter that I use to measure dividend acceleration.  Again, this is understandable given the high 5 year growth rate.  UNP also received partial credit for payout ratio (35% is the cutoff for 1 point) and dividend increase streak (25 years gets a full point).

Financial Strength Category:

UNP received 3.5 points out of a possible 4 in the financial strength category.  The only parameter that did not receive full points was debt/equity, which stands at 0.58 for UNP (less than 0.5 is required for a full point).  Past and future earnings growth look very strong at 25% and 13.5%.

Subjective Category:

UNP received 1.5 points out of a possible 1.5 in the subjective category.  These are the least important parameters to me and therefore are worth the least amount of points.  The consensus analyst price target for UNP is $122, which is 20.1% higher than the current price.  This was good enough to receive a full point.  Due to the recent pullback to the $100 support level, UNP’s chart looks very attractive right now and receives 0.5 points.

 

These criteria are quite harsh and I made them that way for a reason.  It is very difficult to score 7.5 or higher in this screen.  Therefore, when a stock hits the 7.5 mark I am confident that it is worth looking at in more detail.

I hope you found this dividend growth stock screen useful.  I plan on using the stocks listed in the tables as a starting point for further research.  If I come across any exciting stocks I will publish a detailed analysis.  Thanks for reading!

 

What do you think of my dividend growth stock ranking system?  Are any of the top stocks in your portfolio or on your wish list?  Do you have any recommendations on how I can improve this screen?  Please let me know in the comments section below – your feedback is always welcome and encouraged.

Full Disclosure: Long TROW, CMI, UNP, GLW, GD, XOM and GPS

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45 Responses

  1. Hi, Thank you for using referencing my list! I should point out that a couple of the entries in your screened results are mutual funds which you might want to exclude from your screen on that basis; they’re all grouped under the “Equity Investment” sector category in the file. I’m going to remove them from the next version of the list to avoid any confusion.

    I am looking at including more financial information in the list but it takes time to collect and it seems that UK stocks don’t get as much analyst coverage as US ones so finding 5-year EPS projections is quite difficult.

    I like your screening methodology and a high-level screen is a great way to narrow focus to a smaller range of companies to research. Certainly a screener aimed at identifying stocks likely to continue paying / growing dividends will be quite different than a screener looking for value or total return.

    Best wishes,
    -DL

    • Dividend Empire Dividend Empire says:

      DL – thank you so much for taking the time to put together such a useful resource! I’m not too familiar with UK stocks so thank you for bringing the mutual funds to my attention.

      I totally understand the difficulties in finding the earnings growth info. This screen is all about finding good dividend growth stocks and the info that you provide in your list is great for that purpose.

      Thanks again for all of your hard work.

      Ken

  2. vivianne says:

    Wow, extremely helpful list. the S&P are at the all time high again, it is difficult to pick a value stock at this point. I’m considering UNP at some point as it cover 2/3 of the US railways. I would like to see the US to invest more in the rail way infrastructure in the near future though. Mass ground transportation should be the way to go. 4 hours from chicago to DC is ideal.

    • Dividend Empire Dividend Empire says:

      Thanks for the feedback Vivianne! I’m glad you found this post useful. UNP is a great dividend growth stock at a very fair price right now. I will most likely average down my position at some point this month.

      Ken

  3. Thanks for sharing this great list of stocks. Many of them I haven’t heard of recently, and its good to broaden the options with investing. One thing I like to look at is how the stock performed the last 10 years. If it hasn’t done well, I will probably pass on it. Low yield is a big turn off, as I want income and not the possibility of price growth only.

    • Dividend Empire Dividend Empire says:

      Hi EL – thanks for stopping by! Glad you enjoyed the list. I agree with you regarding looking at the 10 year stock performance. This is something I do as well when I dig deeper into the stocks I find interesting from this list.

      Ken

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