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Monday, February 3, 2014

10 Dividend Growth Stocks for February, 2014

In shifting focus to balancing my portfolio holdings across all 10 sectors in my watch list, I've changed how I identify candidates for further analysis. I now look for the top performers by sector based on my selection criteria.

Using Dave Fish's CCC list, a spreadsheet providing financial data of companies with 5 or more consecutive years of dividend increases, I apply a series of filters to reduce the number of candidates to 30 stocks. I then score these stocks based on my selection criteria, assigning a star rating to each candidate out of a maximum of 7 stars.

The following stocks are the sector winners for February:

Meredith Corp. (MDP) • rank 1 (*******) Consumer Discretionary
PennyMac Mortgage Investments Trust (PMT) • rank 2 (*******) Financials
Johnson & Johnson (JNJ) • rank 4 (*******) Health Care
 NEW  BHP Billiton Ltd. (BHP) • rank 6 (*******) Materials
 NEW  Deere & Company (DE) • rank 8 (*******) Industrials
 NEW  Philip Morris International (PM) • rank 11 (*******) Consumer Staples
Accenture plc (ACN) • rank 13 (*******) Information Tech
Alliance Resource Partners LP (ARLP) • rank 16 (*******) Energy
BCE Inc. (BCE) • rank 19 (*******) Telecommunication Services
CMS Energy Corp. (CMS) • rank 26 (*******) Utilities

I posted January's version of this list only about two weeks ago, so there are many repeaters. MDP and PMT repeat in the top two spots. JNJ improved from an overall rank of 10 to rank 4. BHP, DE, and PM are the only new candidates.

Please note that these stocks are candidates for further analysis, not recommendations.

Meredith Corporation (MDP) | growth 20 yrs | yield 3.56% @ $45.78 | 5-yr CAGR 13.64%
Founded in 1902 and headquartered in Des Moines, Iowa, MDP is a media and marketing company serving American women. The stock trades at nearly 15 percent below my fair value estimate of $52.49. MDP appears to be an attractive stock for investors seeking both growth and income. 

• PennyMac Mortgage Investment Trust (PMT) | growth 5 yrs | yield 10.02% @ $23.55 | 3-yr CAGR 43.60%
PMT is a real estate investment trust (REIT) operating as a specialty finance company investing primarily in residential mortgage loans and mortgage-related assets. The company's objective is to provide risk-adjusted returns to investors over the long-term, primarily through dividends. PMT carries more risk than other REITs due to exposure to both interest rate and credit risk. 

• Johnson & Johnson (JNJ) | growth 51 yrs | yield 2.98% @ $88.47 | 5-yr CAGR 7.61%
JNJ is a holding company based in New Brunswick, New Jersey, operating worldwide through more than 275 subsidiaries. The company is engaged in the development, manufacturing and marketing of pharmaceutical, medical, and consumer-related healthcare products. My fair value estimate is $90.65.

• BHP Billiton Ltd. (BHP) growth 11 yrs | yield 3.69% @ $63.95 | 5-yr CAGR 10.63%
BHP is one of the world's largest diversified natural resources companies. It is involved in mineral exploration, production and processing; oil and gas exploration and development; and steel production and merchandising. My fair value estimate is $70.90.

• Deere & Company (DE) | growth 10 yrs | yield 2.37% @ $85.96 | 5-yr CAGR 13.43%
Founded in 1837 and headquartered in Moline, Illinois, DE (a.k.a. John Deere), together with its subsidiaries, manufactures and distributes agriculture and turf as well as construction and forestry equipment worldwide. My fair value estimate is $94.50. DE has a strong balance sheet and cash flow position, which allows it to increase dividends regularly. 

• Philip Morris International (PM) | growth 6 yrs | yield 4.81% @ $78.14 | 5-yr CAGR 28.40%
PM is a holding company engaged in the manufacture and sale of tobacco products outside the US. It trades at a discount of 10.7% to my fair value estimate. Since its spin off from Altria Group Inc. (MO) in 2008, PM has returned more than $59 billion to its shareholders through share repurchases and dividends. 

• Accenture Plc (ACN) | growth 9 yrs | yield 2.33% @ $79.88 | 5-yr CAGR 28.33%
ACN is a global management consulting, technology services and outsourcing organization with headquarters in New York. The company operates in 54 countries and generated $28.6b in net revenues in 2013. It recently announced a 15% increase in its semi-annual dividend. It trades at about my fair value.

• Alliance Resource Partners LP (ARLP) | growth 12 yrs | yield 5.81% @ $82.40 | 5-yr CAGR 12.53%
ARLP is a master limited partnership (MLP) engaged in the production and marketing of coal primarily to utilities and industrial users in the United States. It was founded in 1971 and is headquartered in Tulsa, Oklahoma. It trades at a discount of about 8% to my fair value estimate. 

• BCE Inc. (BCE) | growth 5 yrs | yield 5.44% @ $41.97 | 5-yr CAGR 25.59%
BCE is Canada's largest communications service provider and serves as the holding company
for Bell Canada. The company provides wireless, data communications, telephone, high-speed Internet, direct-to-home satellite television and voice over IP services. My fair value estimate for BCE is $44.00.

• CMS Energy Corp. (CMS) | growth 8 yrs | yield 3.89% @ $27.79 | 5-yr CAGR 23.16%
CMS is holding company based in Jackson, Michigan. Subsidiaries of CMS are engaged in the generation of electricity in Michigan. It trades at a 9% premium to my fair value estimate of $25.27.

With enough cash for one purchase, I'll be buying shares in one of these candidates soon. I'll probably look at MDP and JNJ first.

Full Disclosure: Long MO


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    1. Thanks Elizabeth -- I'm glad that you find my blog helpful. Take care!


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