Sunday, September 8, 2013

7 Dividend Growth Candidates for September, 2013

Once a month I score stocks in my watch list based on several selection criteria. I assign star ratings out of a maximum of 7 stars and compile a dashboard of the best candidates. This month, the ten stocks at the top of the list are CHL, INTC, NTT, MSFT, PNNT, SNP, DCM, COP, SXL and BHP. The first 4 earned 7 stars; the rest earned 6 stars each.

I already own shares of the highlighted stocks. In order to diversify my portfolio, I look further down the list and select 7 candidates for further analysis. The 7 candidates for September are:

PennantPark Investment Corp. (PNNT): (*******)
China Petroleum & Chemical Corp. (SNP): (*******)
Procter & Gamble Co. (PG): (*******)
Consumer Staples
Shaw Communications Inc. (SJR): (*******)
Consumer Discretionary
Johnson & Johnson. (JNJ): (*******)
Health Care
Edison International (EIX): (*******)
Coach Inc. (COH): (*******)
Consumer Discretionary
Below is my September dashboard with some of the data I used in scoring the candidates:
PNNT, SNP and PG all earned 6 stars, while SJR, JNJ, EIX, and COH all earned 5 stars.

PNNT is a business development company, meaning it pays out a significant percentage of its earnings in the form of dividends. PNNT's high yield looks interesting, but I wonder how sustainable it is. SNP pays semi-annual dividends, in May or June and in September. They've just paid their September dividend, so you'd have to wait 8 months before the next dividend is paid. PG trades at about fair value, though its P/E ratio is somewhat high.

SJR is trading at a premium of about 5% to fair value and its Debt to Equity ratio is quite high. JNJ's P/E ratio is somewhat high and it doesn't adhere to the Chowder Dividend Rule. Likewise, EIX, with its low growth rate doesn't adhere to the Chowder Dividend Rule. It also has a high Debt to Equity ratio. COH is a repeat candidate from last month and looks like a good candidate for an analysis.

I currently have enough cash for one purchase. However, I'm considering adding another bonus deposit to DivGro, which would give me more flexibility. Stand by for my next stock purchase!

Full Disclosure: Long CHL, INTC, NTT, MSFT, COP


  1. SNP looks interesting, too bad it's a semi annual payer though.

    1. Yes, Captain Dividend, unfortunately my timing on SNP is poor -- it just payed out $1.303/share. For that reason I'm not really interested in pursuing SNP now. 8 months is too long to wait for a dividend payment, in my view.

  2. Great write up. Going to add PNNT and SNP to my watch list.

    1. Thanks, Felix Martinez! I note that PNNT chose not to raise its dividend, so I think it might be disappearing from Dave Fish's CCC list soon. I'm still going to analyze the stock, though, 'cause the high yield is very attractive.

  3. I own SNP and JNJ right now, and have owned PG in the past (a little rich at current prices). I will have to check the others out! Thanks.

    1. Thanks for stopping by, S.B. If you already own SNP, you picked up a nice dividend recently!


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