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Monday, April 13, 2020

The Top-Ranked Dividend Growth Stocks By Sector

The COVID-19 pandemic has ended the 11-year bull market and stock prices have dropped precipitously. These are troubling times, but Trouble is Opportunity. Many high-quality dividend growth stocks that traded at premium valuations just two months ago are available at discounts now!

This article presents the three top-ranked dividend growth stocks in each of the GICS sectors. For each stock, I provide quality indicators, key metrics, and fair value estimates. I also provide charts showing how each of these stocks performed since 19 February when the S&P 500 closed at an all-time high of 3,386.15.

I consider dividend growth stocks to be stocks with increasing dividend payouts in each of the past five years. The Dividend Champions list covers such stocks listed on U.S. exchanges.

To rank dividend growth stocks, I sort them by decreasing quality scores as determined by DVK Quality Snapshots. The system assigns quality scores by employing five quality indicators and assigning 0-5 points to each quality indicator, for a maximum of 25 points. To break ties, I compare up to three additional metrics, in turn.

To see the top-ranked dividend growth stocks by sector, please read this article at Seeking Alpha.

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  1. Thanks for all hard work you are doing and sharing it with others, appreciate it!

    1. You're welcome! I appreciate your comment and kind words. All the best!

  2. Thanks for all the nice work! Very interesting to see ranking as such. One thing I am not understanding (might be my English) is the formula you use for coloring the CDN. I read the logic you describe, and tried to understand the coloring as such from the linked Google Doc, but there is an error-link in the conditional formatting. Could you explain, when you consider it Red/Yellow/Green, related to its value?

    1. Which linked Google Doc?

      This article describes the color-coding in more detail. Let me know if that still doesn't answer your question:

  3. The one linked in

    In the one where you link to, it shows:
    red < 8 ≤ yellow < 12 ≤ green

    THere is some text above, which made me think there is more then just these 3 ones,
    as in the link I gave JNJ and DOV, both have 9, so should be Yellow, DOV is red, JNJ is yellow.


    1. There's actually three categories.

      "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%."

      (1) utilities with yields of at least 4%
      (2) stocks with yields of at least 3%
      (3) stocks with yields below 3%

      Utilities yielding at least 4% get a special dispensation.

      The above are all color-coded green.

      Somewhere, Chowder mentioned he had a "warning" zone and when a CDR for the higher yielding category dropped below 8, he seriously considered selling.

      So, for (2) above: red < 8 ≤ yellow < 12 ≤ green

      By extension, I surmised (and in the spirit of Chowder's approach):

      For (1) above: red < 5 ≤ yellow < 8 ≤ green
      and for (3) above: red < 10 ≤ yellow < 15 ≤ green

      The color-coding is my scheme, not Chowder's.

  4. Would you add to your WFC position if it wasn't full yet at these prices? How safe is its dividend?

    1. Simply Safe Dividends now says the dividend is "Borderline Safe", which means its dividend is as safe as the average company's dividend.

      I'm unsure if I would add now. While The Fed's stress test on the nation's largest banks last year suggested that they could maintain adequate capital levels in "severely adverse" economic conditions, the coronavirus pandemic is black swan event and likely worse than "severely adverse".


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