The Contenders: High Dividend Growth Stocks

As I pointed out last week, gas prices are declining and down nearly $1 per gallon on average to $4.113 per share. Demand is declining, production is increasing, and inventories are rising. Furthermore, oil prices are slipping, and food prices are falling, all of which will probably make for better headline inflation numbers. Moreover, Job growth numbers have been near 400,000 for months and went over 500,000 in July, combined with a lower 3.5% unemployment rate shattering expectations. Next, reported second-quarter earnings are coming in better than expected. However, despite the recent rally, the stock market is still undervalued. Investor fears drove down prices of some stocks well into a bear market territory, and they are still worried about inflation and the inverted yield curve.

Therefore, we screen for undervalued Dividend Contenders and stocks with 10+ years of high dividend growth and identify five potential buys. Below, we discuss Brunswick Corporation (BC), Celanese (CE), Corning (GLW), Primerica (PRI), and Williams-Sonoma (WSM) as long-term buys.

Overview

We utilize six filters in this analysis to narrow the list of dividend growth stocks focusing on the Dividend Contender dataset. According to Dividend Radar, there are 348 stocks on the list in the last weekly update.

The six filters employed in the analysis are:

• Payout Ratio is not more than 65% – We pick this target value as a measure of dividend safety.
• Adjusted P/E Ratio TTM is less than or equal to 18X – This value is below the S&P 500 Index average.
• 5-Year Dividend Growth Rate CAGR is at least 10% – We are looking for stocks with double-digit dividend growth rates.
• 10-Year Dividend Growth Rate CAGR is at least 10% – We are looking for stocks with double-digit dividend growth rates.
• Market Cap is at least $1 billion – We are looking at large-cap stocks.
• YTD Returns are below (-20%) – We are searching for stocks in a bear market.

Additionally, we exclude distressed stocks by filtering for a positive P/E Ratio.

Results

The results are shown in the table below, sorted by ticker…

Please read the complete article at my profile on Seeking Alpha for The Contenders: High Dividend Growth Stocks.

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