Friday, June 6, 2014

10 Dividend Growth Stocks for June, 2014

This year, I've shifted focus to balance my portfolio holdings across all 10 sectors in my watch list. Rather than search for the best available candidates, I search for the best available candidates by sector. DivGro has at least 2 holdings per sector, except for Materials, in which I have a single holding. I'll continue to bias purchases with the goal to improve DivGro's diversification, but only if I can identify candidates with good dividend yields and strong dividend growth rates trading at a discount to fair value.

The following stocks are the sector winners for June:

 NEW  Helmerich & Payne Inc. (HP) • rank 1 (*******) Energy
Sturm Ruger & Company Inc. (RGR) • rank 2(*******) Consumer Discretionary
 NEW  Western Union Company (WU) • rank 3 (*******) Financials
Copa Holdings SA (CPA) • rank 4(*******) Industrials
 NEW  Wal-Mart Stores Inc. (WMT) • rank 5 (*******) Consumer Staples
BHP Billiton Ltd. (BHP) • rank 6 (*******) Materials
Daktronics Inc. (DAKT) • rank 7 (*******) Information Technology
Avista Corp. (AVA) • rank 17 (*******) Utilities
Owens & Minor Inc. (OMI) • rank 29 (*******) Health Care
BCE Inc. (BCE) • rank 25 (*******) Telecommunication Services

Compared with the May list, there are 3 newcomers: HP, WU, and WMT. Please note that these stocks are candidates for further analysis, not recommendations.

• Helmerich & Payne (HP) | growth 42 yrs | yield 2.27% @ $111.19 | 5-yr CAGR 46.91%

HP is an energy-oriented company engaged in contract drilling of oil and gas wells. The company was incorporated under the laws of the State of Delaware on February 3, 1940. HP is trading at a premium of 6% above my fair value estimate of $104.05. It is a Dividend Champion with an exceptional growth rate. 

• Sturm Ruger & Company Inc. (RGR) | growth 5 yrs | yield 3.50% @ $60.71 | 3-yr CAGR 85.83%
Incorporated in 1969, RGR is engaged in the design, manufacture, and sale of firearms and precision metal investment casings. The stock is trading about 2.5% below my fair value estimate of $62.22. With a yield of 3.5% and an impressive dividend growth rate, RGR appears to be an attractive stock for investors seeking both growth and income. 

• Western Union Company (WU) | growth 5 yrs | yield 3.09% @ $16.25 | 5-yr CAGR 65.72%
A leader in global money transfer, WU was formed as a result of a spin-off from First Data Corporation in 2006. My fair value estimate is $19.50, so WU is trading at a discount of 20%. WU offers a solid yield and an impressive dividend growth rate. 

• Copa Holdings SA (CPA) | growth 5 yrs | yield 2.69% @ $141.40 | 5-yr CAGR 58.57%
Incorporated in 1998, CPA is a Latin American provider of airline passenger and cargo service. The stock is trading at a discount of about 15% to my fair value estimate of $162.10. 

• Wal-Mart Stores Inc. (WMT) | growth 41 yrs | yield 2.50% @ $76.77 | 5-yr CAGR 14.15%

 The first Walmart store opened in 1962 in Rogers, Arkansas. Incorporated in 1969 as Wal-Mart Stores Inc., the company is now the world's largest retailer. WMT is trading at a 5% discount to my fair value estimate of $80.50.

• BHP Billiton Ltd. (BHP) 
growth 11 yrs | yield 3.48% @ $67.68 | 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. BHP trades at a discount of 8% to my fair value estimate is $73.20.

• Daktronics Inc. (DAKT) | growth 10 yrs | yield 3.22% @ $11.79 | 5-yr CAGR 27.23%
DAKT is one of the the world's largest suppliers of electronic scoreboards, computer-programmable displays, and large screen video displays and controls systems. My fair value estimate is $11.57, so DAKT trades at a slight premium. DAKT has a great dividend growth rate.

• Avista Corp. (AVA) | growth 12 yrs | yield 4.06% @ $31.80 | 5-yr CAGR 12.07%
AVA is a diversified energy company engaged in the generation, transmission and distribution of energy in North America. My fair value estimate for AVA is $33.04, so its trading at a discount of about 4%. Sporting a great dividend yield and a decent dividend growth rate, AVA looks quite attractive.

• Owens & Minor Inc. (OMI) | growth 17 yrs | yield 2.88% @ $34.84 | 5-yr CAGR 12.48%
OMI is a Fortune 500 company providing third-party logistics services to manufacturers and suppliers of healthcare and life-science products. It currently trades at a premium of about 10% to my fair value estimate of $31.35.

• BCE Inc. (BCE) | growth 5 yrs | yield 4.97% @ $46.42 | 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 $44.90, which means BCE trades at a slight premium.

I have enough cash for a single non-MLP buy. As several times before, BHP is top Materials sector stock. I don't want to buy BHP because I already own the related BBL. Syngenta AG (SYT) is the runner-up in the Materials sector and is ranked 18th in my dashboard.

Most of these stocks are making repeat appearances from last month. Do you like any of these stocks at their current prices? 


  1. I like OMI but want the shares for cheaper so I'll wait for now. HP is another interesting one and that was an investment that I let slip away. Since I work in the oil field I know HP and about 2 years ago started seeing a lot more of their rigs especially in the south Texas/Eagle Ford area. Should have bought some then but the low yield was annoying of course they have an awesome DG streak. I'm still looking to add to WMT and if it dips a bit from here I'll probably be adding to my position. Thanks for the update.

    1. Hi Passive IncomePursuit -- thanks for your note and, especially, the information about HP. I'm already overweight in Energy, so I won't be looking to buy shares of HP at this time. Besides, it would have to drop to less than $100 to pique my interest.

      WMT looks interesting here. It would be a great buy on a dip, though I'm somewhat interested at the current level, too.

      I agree with you about OMI -- it is too expensive right now. Below $30 would be nice...


  2. At current prices I like WMT the most from your list. I grabbed some OMI about a month ago, but wouldn't buy at $35 where it's at right now. I don't know, everything seems expensive right now. Tough to be excited at these levels...

    1. I agree -- I'm not really excited to jump in at these levels, though, as I mentioned, WMT looks interesting here. I'm not considering HP and WU, 'cause I'm overweight in those sectors. RGR is too expensive and COPA only recently started paying quarterly dividends.

      Good luck!

  3. I like WU here - it pays a dividend of 3.10%, has a low P/E of 11, has 5 consecutive years of dividend increases, has a low payout ratio of 35%, and I also like that 87% of institutions hold WU. This may in fact be our upcoming purchase. :) AFFJ

    1. Hi AFFJ -- thanks for stopping by and sharing those details... I like WU too, though I'm already overweight in the Financials sector. If not for that fact, I would seriously consider WU myself.

      Good luck!

  4. Thanks for the list. I am always looking for info on dividend growth stocks. I'm a fairly new investor and have almost $10000 invested right now. Just found your blog and bookmarked it

    1. You're welcome, bentodd2000! Hope you find the blog useful... and good luck with your investment journey. I started in January 2013, some 18 months ago, so I still feel "fairly" new myself -- at least compared with other dividend growth bloggers who've been at it for 4 to 7 years or longer...



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