Dividend Champion Portfolio – October Update

The High Yield Dividend Champion Portfolio is a publicly tracked stock portfolio on Scott’s Investments.  Its goal is to capture quality high yield stocks with a history of raising dividends.

The screening process for this portfolio starts with the “Dividend Champions” as compiled by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.

I made one change to the screen methodology for 2016 in order to further simplify the process. Stocks from the Dividend Champion list were previously ranked on yield, payout ratio, P/E, and 3 year dividend growth rate.

In 2016 stocks are ranked on yield, P/E and 3 year dividend growth rate but payout ratio is no longer a factor.  The modification has a relatively low impact on screen results.

Stocks will still be sold on the re-balance date (generally around the 5th of the month) when they drop out of the top 15 (to limit turnover) and are replaced with the next highest rated stock.

The top 25 stocks using the new method  are below and displayed in order of their overall ranking (figures are from the end of September):

Name Symbol Yield P/E 3-yr
Target Corp. TGT 3.49 13.34 17.84
T. Rowe Price Group TROW 3.25 16.06 15.21
Altria Group Inc. MO 3.86 21.95 8.36
AT&T Inc. T 4.73 17.50 2.22
Old Republic International ORI 4.26 11.52 1.39
Helmerich & Payne Inc. HP 4.16 N/A 114.15
Eagle Financial Services EFSI 3.41 10.61 3.10
Emerson Electric EMR 3.49 19.61 5.40
Universal Corp. UVV 3.64 17.86 2.00
Computer Services Inc. CSVI 2.94 18.96 21.05
Community Trust Banc. CTBI 3.45 14.06 2.25
Archer Daniels Midland ADM 2.85 17.07 16.96
Coca-Cola Company KO 3.31 24.32 8.97
Consolidated Edison ED 3.56 19.41 2.42
Weyco Group Inc. WEYS 3.13 17.91 6.18
HCP Inc. HCP 6.06 N/A 4.16
Chevron Corp. CVX 4.16 N/A 6.83
ExxonMobil Corp. XOM 3.44 34.63 9.73
McDonald’s Corp. MCD 3.26 21.97 6.22
WGL Holdings Inc. WGL 3.11 17.66 4.80
Wal-Mart Stores Inc. WMT 2.77 15.51 7.78
United Bankshares Inc. UBSI 3.50 19.62 1.06
Mercury General Corp. MCY 4.52 27.29 0.41
Leggett & Platt Inc. LEG 2.98 17.60 3.42
Eaton Vance Corp. EV 2.71 18.77 9.18

There is  turnover in one position this month. Questar (STR) merged with Dominion Resources (D) effective September 16th.  For the purposes of the portfolio we will assume STR was sold at its 9/16/16 closing price.  The proceeds will be used to purchase Universal Corp (UVV).

The current portfolio is below.  A note on CSVI, which was purchased last month.  It is small cap ($551M market cap) and thinly traded stock:

Position Shares Average Purchase Price Initial Purchase Date Percentage Gain/Loss Excluding Dividends
CTBI 630 33.9 7/5/2016 8.47%
EMR 425 49.64 8/4/2015 7.55%
ORI 1145 16.22 4/4/2014 9.80%
CSVI 634 39.2 8/5/2016 0.13%
TGT 391 68.65 6/3/2016 -0.35%
MO 400 58.14 1/7/2016 6.26%
TROW 300 71.35 7/5/2016 -5.62%
HP 341 80.9 10/6/2014 -14.54%
UVV 474 56.96 10/6/2016 0.00%
T 650 38.13 3/7/2016 2.57%