Tuesday, November 12, 2019

Reasonably Valued High-Quality, High-Yield Dividend Growth Stocks

I've been using a modified version of David Van Knapp's quality scoring system to rank the Dividend Aristocrats, the Dividend Kings, and the Dividend Champions.

The system employs five widely used quality indicators from independent sources and assigns 0-5 points to each quality indicator, for a maximum of 25 points. I call the total score a stock's quality score.

This article presents reasonably valued, high-quality dividend growth stocks (with quality scores of 20-24) that yield at least 3%.

For each stock, I present key metrics, quality indicators, a fair value estimate, and the Chowder number.

The Chowder Rule presents a popular metric for screening DG stocks for possible investment. Named for the SA author Chowder, the metric favors DG stocks likely to produce annualized returns of 8%. Essentially, you add the current dividend yield and the five-year annual dividend growth rate to obtain the so-called Chowder Number [CDN].
Chowder used 8 as a minimum number for utilities yielding at least 4%, 12 for stocks yielding at least 3%, and 15 for stocks yielding less than 3%. 

I've added the CDN to my spreadsheets and I'm planning to include it in future articles.

In my view, the stocks presented in this article are good candidates for further research and possible investment. As always, though, I encourage readers to do their own due diligence before investing in any of these stocks.

To see the 18 candidates, please read this article at Seeking Alpha.

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