13 Dividend Stocks Passing Rigorous Quality, Growth and Valuation Filter

  • Only 13 dividend stocks passed basic filter criteria out of the hundreds in the Dividend Champions and Contenders in Dave Fish’s valuable lists
  • Most of those stocks are rated negatively from a technical perspective
  • Only 1 stock passed all the filter criteria and is also rated positively technically

In search of high quality dividend stocks, we performed this basic filter on Sunday October 4, 2015, and found only 13 prospects, most of which are not attractive in terms of current price behavior, but which may have long-term appeal:

  • Using David Fish’s dividend stocks lists, the stocks had to have paid and increased dividends for at least 10 years, and the dividend growth rate for 1, 3, 5 and 10 years each had to be at least 2%.
  • Using Wright’s quality ratings, the stocks had to be rated A or B for “investor acceptance”, A or B for “financial strength”, A or B for “profitability and stability”, and at least 4 on a 20 point scale for “growth” (each of the four dimensions based on eight parameters)
  • Using Standard & Poor’s Capital IQ ratings, the stocks had to be rated at least 3 on a 5 point scale for year ahead performance, and at least 3 on a 5 point scale for fair value pricing.
  • Using Fidelity’s equity summary score, the stocks had to be rated neutral or better (>3.1 on a 10 point scale)
  •  Using Street Consensus data, the stocks had to have a positive PEG that is 2.0 or less; and a 12-month target price that is at least 5% above the current price
  • The current yield must have been at least 2%.

Out of the thousands of listed stocks, and the hundreds of stocks in Fish’s lists, and the hundreds of stocks with high Wright’s quality ratings, only 13 passed those filter criteria — and most of those right now, like the overall market, have negative technical ratings.

  • (EV) Eaton Vance
  • (TROW)  T. Rowe Price Group
  • (ACE) Ace Limited
  • (UTX) United Technologies
  • (IBM) International Business Machines
  • (CAH) Cardinal Health
  • (CHRW) C.H. Robinson Worldwide
  • (FAST) Fastenal
  • (GPS) The Gap
  • (CSX) CSX Corporation
  • (TRV) The Travelers Companies
  • (CMI) Cummins
  • (CR) Crane Company

Only 1 stock was also positively rated technically — C.H. Robinson Worldwide (CHRW).

Its business is described on the Wright’s side as:

“C.H. Robinson Worldwide, Inc. is a third party logistics company. The Company provides freight transportation services and logistics solutions to companies of all sizes, in a variety of industries. The Company operates through a network of 281 offices in North America, Europe, Asia and South America. It has developed global transportation and distribution networks to provide transportation and supply chain services worldwide. It also provides sourcing services through Robinson Fresh. Sourcing business involves the buying, selling and marketing of fresh fruits, vegetables, and other perishable items. The Company supplies fresh produce through its network of independent produce growers and suppliers. Its customers include grocery retailers and restaurants, produce wholesalers and foodservice distributors. It also arranges the logistics and transportation of the products it sells and provides related supply chain services, such as replenishment, category management and merchandising.”

We already own a few of the stocks and have for a while: Travelers, Cummins, United Technologies, and T. Rowe Price.

Here are some tables showing attributes of each stock:

This table shows the Wright’s quality ratings, the S&P Cap IQ rating, the Fidelity equity summary score, the Barchart technical rating and the StockCharts technical rating:

2015-10-05_ratings

IA is for Investor Acceptance
FS is for Financial Strength
PS is for Profitability and Stability
GR is for Growth
SP* is for S&P year ahead total return relative to the market
SP FV is for S&P Fair Value
SM is for Fidelity equity summary score
The rating from StockCharts is on a 100 point scale

This table shows the name and the number of years the stock consecutively paid and increased dividends without interruption; the payout ratio and the current yield.

2015-10-05_select1
This table shows the annualized dividend growth rate over the last 1, 3, 5, and 10 years:

2015-10-05_select2

This table shows the fundamental valuation of the stocks:  Price-to-Book, Price-to-Sales, trailing Price-to-Earnings, forward Price-to-Earnings, PEG ratio, and 12-month forward street consensus target price divided by the current price:

2015-10-05_select4

This chart summarizes some basic technical information: price to 200-day average, 50-day average to 200-day average, the position of the price within the 52-week high to low range, the 12-month target price to the 200-day average, and the short ratio (number of days to cover the total short position at the average trading volume rate):

2015-10-05_select5

The following charts from YCharts.com, each chart for an individual stock, show a normalized 10-year history of price, revenue, cash from operations, dividends, and debt to equity:

ace cah chrw cmi cr csx ev fast gps ibm trow trv utx

There should be enough for do-it-yourself dividend investors to chew on here, as they go to the next level of due diligence and personal suitability review.

We find the low number of stocks that passed our filter to be one indication that the market may be overpriced, and vulnerable to further correction. We would have expected a larger number stocks to pass, but so many had too high PEG ratios, too low yields and too low forward price change estimates, that the list withered to a small number very quickly.

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