10 Dividend Growth Stocks For February 2020

The Dividend Champions [CCC] list contains nearly 900 dividend growth [DG] stocks trading on U.S. exchanges that have paid higher dividends for at least five consecutive calendar years. An accompanying spreadsheet provides valuable data and is updated monthly, courtesy of SA author Justin Law.

In this article, I rank a subset of the CCC stocks and present the 10 top-ranked stocks for consideration. I now use a ranking system derived from David Van Knapp's Quality Snapshot Grading System, which employs five widely used quality indicators from independent sources to assess the quality of DG stocks.

This month I decided to rank high-quality CCC stocks with qualifying Chowder Numbers [CDNs]. Last month's article used similar screens, but this month I'm considering only high-quality CCC stocks (quality scores 20-25) and I'm including stocks trading at premiums up to 10% of my fair value estimates.

I Also Trimmed CB

Earlier, I reported that I'd trimmed my Procter & Gamble (PG) position because it looks unlikely that PG will produce total returns in excess of 5%, whereas I'm looking for annualized returns of at least 8% from my DivGro holdings.

I identified another stock, Chubb (CB), with lower than expected growth prospects — at least when considering its unfavorable Chowder Number [CDN] of 5.

CB's dividend yield of 1.82% at $164.56 per share is on the low side and about 15% below its 5-year average dividend yield of 2.14%. Furthermore, CB's 5-year dividend growth rate [DGR] is quite low at 3%. To achieve annualized returns of 8%, a stock yielding less than 3% should have a CDN of at least 15, according to the Chowder Rule. For low-yielding stocks such as CB, CDN's less than 10 are unfavorable, meaning such stocks are unlikely to deliver annualized returns of 8% or more.

I decided to trim my CB position and to invest the proceeds in a higher DGR stock. This article details my CB trade.

Dividend Increases: February 8-14, 2020 (Part 2)

Last week, another 29 companies in the Dividend Champions List [CCC list] announced dividend increases. Once again, I've split my weekly Dividend Increases article into two parts.

Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

In Part 2, I'm covering the Dividend Challengers (5-9 years), five of which announced double-digit percentage increases!

Dividend Increases: February 8-14, 2020 (Part 1)

Another 29 companies in the Dividend Champions List [CCC list] announced dividend increases last week. With so many companies announcing, I split my summary article into two parts. The first covers Dividend Champions and Contenders. The second will cover the Challengers.

Four of the stocks in my DivGro portfolio announced dividend increases. Two are doulbe-digit percentage increases, which makes me a very happy dividend growth investor!

I Trimmed PG

This year I'm looking to improve DivGro's growth prospects by favoring stocks with higher dividend growth rates [DGRs].

To identify stocks with questionable growth prospects, I consider the so-called Chowder Number [CDN], a metric that adds a stock's current yield and its 5-year DGR. For stocks yielding at least 3%, a favorable CDN is 12 or higher. Stocks that yield less than 3% require a CDN of 15 or higher. Utilities yielding more than 4% get a special dispensation: a CDN of 8 is considered favorable.

I've identified two stocks in my portfolio that have questionable growth prospects. Rather than close them outright, I decided to trim these positions. This article details the first trade.

Monthly Review Of DivGro: January 2020

Once a month, I review my portfolio of dividend growth stocks, DivGro. The goal of these reviews is to provide a summary of dividends received and to detail buy and sell transactions. I also look at how DivGro's projected annual dividend income (PADI) has changed.

In January, I closed three positions and added shares to four existing positions. Twelve DivGro stocks announced dividend increases in January. The net result of these changes is that PADI increased by about 0.8% in January. Year over year, PADI increased by 5.7%.

As for dividend income, in January I received dividends totaling $1,899 from 27 stocks in my portfolio, a year over year increase of 8%. So far in 2020, I've collected $1,899 in dividends or about 7% of my 2020 goal of $27,000.

Options Update: January 2020

I write monthly update articles to summarize options trades and to keep track of options income. These updates also serve as a status report on open options and the obligations I still have.

In 2016, I added options trading to my dividend growth investing arsenal. Selling options provided access to additional funds to buy dividend growth stocks, indirectly boosting DivGro's ability to generate dividend income. And for two years running (2018 and 2019), DivGro's options income has exceeded its dividend income!

My 2020 goal to collect at least $24,000 in options income. This is a modest target given 2019's total of $30,120. Still, my 2020 goal represents a 14% increase from last year's goal and I anticipate a trickier market context in 2020.

Dividend Increases: February 1-7, 2020 (Part 2)

Last week, another 32 companies in the Dividend Champions List [CCC list] announced dividend increases, so I decided to split my weekly Dividend Increases article into two parts.

Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

In Part 2, I'm covering the Dividend Challengers (5-9 years), six of which announced double-digit percentage increases!

Dividend Increases: February 1-7, 2020 (Part 1)

I monitor dividend increases for stocks in the Dividend Champions List [CCC list]. The CCC list is separated into three categories based on how long companies have maintained their streak of annually increasing dividends: Champions (25+ years), Contenders (10- 24 years), and Challengers (5-9 years).

In the past week, 32 companies in the CCC list decided to increase their dividends, including four of my DivGro holdings. In Part 1 of this article, I share dividend increases announced by Champions and Contenders. Please see Part 2 of this article for coverage of the Dividend Challengers.

More Recent Buys

Recently, I closed my position in Boeing (BA) because of the company's grim outlook following the grounding of the Boeing 737 MAX. Closing the position reduced DivGro's projected annual dividend income by $246.60.

To replace some of that dividend income, I decided to add shares to two existing DivGro positions with high Chowder Numbers [CDNs]. One stock is a high-quality but low-yielding stock. The other has a lower quality score but offers a generous yield.

This article details these buys.

Dividend Increases: January 25-31, 2020 (Part 2)

With more than 40 companies in the Dividend Champions List [CCC list] announcing dividend increases, I decided to split my weekly Dividend Increases article into two parts.

Part 1 covered dividend increases announced by Dividend Champions (stocks with 25 or more consecutive years of higher dividend payments) and Dividend Contenders (10-24 years).

In Part 2, I'm covering the Dividend Challengers (5-9 years).

Dividend Increases: January 25-31, 2020 (Part 1)

I monitor dividend increases for stocks in the Dividend Champions List [CCC list]. The CCC list is separated into three categories based on how long companies have maintained their streak of annually increasing dividends: Champions (25+ years), Contenders (10- 24 years), and Challengers (5-9 years).

In the past two weeks, 41 companies in the CCC list decided to increase their dividends, including six of my DivGro holdings. In Part 1 of this article, I share dividend increases announced by Champions and Contenders. Part 2 will cover the Challengers.

Another Recent Sell

Recently, I closed two of the weaker positions in my DivGro portfolio, Nestlé SA (NSRGY) and Stanley Black & Decker (SWK), In my view, these positions are unlikely to deliver annualized returns of at least 8% going forward.

NSRGY and SWK are both high-quality stocks, based on their quality scores of 25 and 20, respectively. But I'm looking to improve DivGro's growth prospects by favoring stocks with higher dividend growth rates [DGRs], and NSRGY and SWK just didn't make the cut anymore.

I've identified another stock with questionable growth prospects, at least in the near term. The stock has a quality score of 21 and a favorable Chowder Number [CDN], but serious headwinds will affect the stock for the foreseeable future. This article provides details.

Recent Buys

Yesterday, I reported two recent sells.

I closed my positions in Nestlé SA (NSRGY) and Stanley Black & Decker (SWK), two positions I identified as weaker positions based on their Chowder Numbers [CDNs]. Both stocks have low current yields and their 5-year dividend growth rates [DGRs] just do not merit continued investment.

I used some of the proceeds to increase two of my current positions. These replacements are high-quality dividend growth [DG] stocks with favorable CDNs. This article details the new buys.

Recent Sells

I've adopted the DVK quality scoring system as the primary way to assess the quality of dividend growth [DG] stocks. I love the simplicity of the system, which does a remarkable job identifying high-quality stocks!

Another recent addition to my evaluation process is the use of the so-called Chowder Number [CDN], a popular metric that favors DG stocks likely to produce annualized returns of at least 8%.

I now regularly rank my DivGro stocks by quality score and by CDN. Following a recent ranking, I identified two weaker positions that I decided to eliminate. This article provides details.