In this article I analyze the 30 Dividend Kings, an exclusive group of stocks that have increased their dividend for 50+ consecutive years. The top five stocks in the ranking model in order are Commerce Bancshares (CBSH) [DP Score = 9.09], Target (TGT) [DP Score = 9.07], Stepan Company (SCL) [DP Score = 9.05], Hormel Foods (HRL) [DP Score = 9.04], and Cincinnati Financial (CINF) [DP Score = 9.03]. The highest yielding Dividend King at the moment is Altria (MO). The two gas utilities in the Dividend Kings, Northwest Natural Gas (NWN) and National Fuel Gas (NFG) have yields over 4%and may represent good value at this time. The most undervalued Dividend King from the perspective of earnings multiple is 3M Company (MMM). I view 3M as a buy at a stock price below $160 per share.
In these analyses I use nine criteria that permits rapid quantitative screening based on the dividend, earnings growth, dividend growth, dividend safety, and valuation. The nine criteria used in quantitative screening are:
- History of increasing dividends
- Dividend yield
- 5-year EPS growth rate
- 5-year dividend growth rate
- 10-year dividend growth rate
- Payout ratio
- Long-term debt-to-equity ratio (D/E)
- 5-year beta
- P/E Ratio for trailing twelve months
The goal here is to identify stocks for further research not make buy or sell decisions. There are often qualitative factors for each stock that must be researched before making an investment decision. For instance, I also evaluate P/E ratio relative to past 5-years or 10-years and dividend-to-free cash flow ratio. Other qualitative factors can also include management history, recent M&A activity, cost cutting, etc.
Top 5 Dividend Kings In Each Criteria
The table below lists the 30 Dividend Kings in order of number of years of paying a growing dividend. These stocks come from