10 Dividend Growth Stocks for July, 2014

Each month, in an effort to balance my portfolio holdings across all 10 sectors in my watch list, I search for the best available candidates by sector. My purchases since January have diversified DivGro to 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 July:

Helmerich & Payne Inc. (HP) • rank 1	(*******)	Energy
NEW  Raytheon Company (RTN) • rank 2	(*******)	Industrials
NEW  Coach Inc. (COH) • rank 3	(*******)	Consumer Discretionary
NEW  Horace Mann Educators Corp. (HMN) • rank 5	(*******)	Financials
BHP Billiton Ltd. (BHP) • rank 9	(*******)	Materials
NEW  International Business Machines (IBM) • rank 11	(*******)	Information Technology
Avista Corp. (AVA) • rank 18	(*******)	Utilities
Owens & Minor Inc. (OMI) • rank 21	(*******)	Health Care
NEW  Flowers Foods (FLO) • rank 22	(*******)	Consumer Staples
BCE Inc. (BCE) • rank 29	(*******)	Telecommunication Services

Compared with the June list, there are 5 newcomers: RTN, COH, HMN, IBM, and FLO.

HP repeats in the top spot. BHP has been on the list for 6 consecutive months now. If I didn't own shares of the related BBL, I would buy BHP. AVA and BCE are repeating for the fourth consecutive month, while OMI is making its fifth consecutive appearance.

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

• Helmerich & Payne (HP) | growth 42 yrs | yield 2.38% @ $115.75 | 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 3.4% above my fair value estimate of $111.80. It is a Dividend Champion with an exceptional growth rate. 

• Raytheon Company (RTN) | growth 10 yrs | yield 2.62% @ $91.86 | 3-yr CAGR 14.45%
Established in Cambridge, Mass., in 1922, as the American Appliance Company, today RTN is a leading U.S. military contractor, offering defense and aerospace systems from intelligence and information to missiles. The stock is trading about 4% below my fair value estimate of $95.50. 

• Coach (COH) | growth 5 yrs | yield 3.95% @ $34.19 | 3-yr CAGR 41.50%

COH is an American marketer of fine accessories and gifts for men and women, including handbags, women's and men's accessories, footwear, outerwear, business cases and travel bags, and sunwear, jewelry and fragrances. My fair value estimate is $36.40, so COH is trading at a discount of 5.5%. 

• Horace Mann Educators Corp. (HMN) | growth 5 yrs | yield 2.94% @ $29.82 | 5-yr CAGR 16.24%
HMN is an insurance holding company, which through its subsidiaries, markets and underwrites personal lines of property and casualty and life insurance and retirement annuities in the USA. The stock is trading at a discount of about 4.53% to my fair value estimate of $31.17. 

• BHP Billiton Ltd. (BHP) | growth 11 yrs | yield 3.45% @ $70.49 | 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 3.14% to my fair value estimate is $72.70.

• International Business Machines (IBM) | growth 19 yrs | yield 2.43% @ $188.42 | 5-yr CAGR 14.26%
Incorporated in 1911 and headquartered in Armonk, New York, IBM is an information technology (IT) company engaged in the development and manufacturing of advanced computer systems, software, storage systems and microelectronics. IBM is trading at a discount of about 8% to my fair value estimate of $204.00.

• Avista Corp. (AVA) | growth 12 yrs | yield 3.79% @ $32.52 | 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 $33.05, so its trading at about fair value. 

• Owens & Minor Inc. (OMI) | growth 17 yrs | yield 2.94% @ $34.44 | 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 11% to my fair value estimate of $30.70.

• Flowers Foods (FLO) | growth 13 yrs | yield 2.28% @ $20.34 | 5-yr CAGR 11.69%

FLO is a producer and marketer of packaged bakery foods for retail and foodservice customers. FLO consists of Flowers Bakeries and Mrs. Smith's Bakeries. My fair value estimate is $21.00, so FLO trades at a discount of about 3%. 

• BCE Inc. (BCE) | growth 5 yrs | yield 5.03% @ $46.29 | 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 $45.95, which means BCE trades at a slight discount to fair value.

I have enough cash for a single non-MLP buy. COH and IBM look interesting here, at discounts to fair value of 5.5% and 8%, respectively.

Thanks for reading! Do you like any of these stocks at their current prices?