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Top Ranked High Yield & High Dividend Growth Stocks

On Tuesday I summarized a study showing the performance of high yield, high dividend growth stocks.  The study showed that stocks with relatively high yields and relatively high 3 year dividend growth rates have historically outperformed stocks with lower yields and lower dividend growth rates.

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I used data provided by DRIP Investing to filter for stocks with high yields and high dividend growth rates.  The data is as of the beginning of December and includes all Dividend Champions, Contenders, and Challengers.  Dividend Champions are stocks that have increased dividends for at least 25 years, Contenders have raised dividends for 10-24 years, and Challengers have raised dividends for 5-9 years.  In other words, I started with a list of stocks that have raised dividends for at least 5 years straight.  The rational is to start with a list of stocks that have a relatively long history of raising dividends and a consistent dividend policy.

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Using this list of 449 stocks, I then sorted the stocks into quintiles based on dividend yield and 3 year dividend growth.  Stocks which were in the top quintile in both yield and 3 year dividend growth are listed below.  The list contains only 15 stocks out of a possible 449 and should serve as starting point for further investigation.

Company Ticker Yield 3 Year Dividend Growth %
Altria Group Inc. MO 5.72 18.33
UniSource Energy Corp. UNS 4.56 20.12
Alliance Holdings GP LP AHGP 4.81 22.64
Empresa Nacional de Electricidad SA EOC 4.58 26.27
Genesis Energy LP GEL 6.55 17.01
Lockheed Martin LMT 5.12 21.55
National CineMedia Inc. NCMI 6.75 33.89
National Presto Industries NPK 8.73 28.96
PennantPark Investment Corp. PNNT 10.57 41.96
Spectra Energy Partners LP SEP 6.21 78.28
Targa Resources Partners LP NGLS 6.21 35.51
Teekay Offshore Partners LP TOO 7.17 18.21
Telefonica S.A. TEF 11.42 24.16
Textainer Group Holdings Ltd. TGH 5.17 70.43
Triangle Capital Corp. TCAP 10.38 18.97

It should be noted that the study referenced also showed that those stocks in the 2nd highest yield quintile and highest dividend growth quintile actually performed better than those in the highest yield/highest dividend growth quintiles.  My hypothesis is that the highest yielding stocks have yields reflecting expectations of an uncertain earnings future or unsustainable dividend. Therefore, those stocks with marginally lower yields may have more certain futures while still having the added value of a relatively high yield compared to the entire universe of stocks.

The stocks in the second highest yield quintile and the highest 3 year dividend growth rate quintile are listed below:

Company Ticker Yield 3 Year Dividend Growth %
Nucor Corp. NUE 3.68 31.73
Novartis AG NVS 4.35 22.50
Southside Bancshares SBSI 3.32 18.71
Westwood Holdings Group Inc. WHG 3.89 18.17
Avista Corp. AVA 4.40 18.89
China Mobile Limited CHL 4.10 18.10
CMS Energy Corp. CMS 4.02 48.88
Darden Restaurants DRI 3.61 24.55
Digital Realty Trust DLR 4.28 19.22
Greif Inc. A GEF 3.60 20.26
Hanover Insurance Group (The) THG 3.33 35.72
Healthcare Services Group Inc. HCSG 3.52 28.73
NV Energy Inc. NVE 3.39 41.16
Rogers Communications Inc. RCI 3.83 58.13
Strayer Education Inc. STRA 4.11 35.29
Tower Group Inc. TWGP 3.57 46.12

Disclaimer: No current positions in stocks mentioned. Please note that Scott’s Investments and its author is not a financial adviser. Please consult your own investment adviser and do your own due diligence before making any investment decisions. Please read the full disclaimer at the bottom of Scott’s Investments.

12 High Yield, Rising Dividend, Low Payout Stocks

Below is a list of 12 stocks yielding more then 3% with a dividend payout ratio less than 70% as of the close on February 24th.  In addition, I required the stocks have a recent history of rising dividends. I looked for Dividend Percent Change, Year Over Year (%) > 10, Dividend Growth Rate, 3 Years (%) > 15, Dividend, 5 Year Growth Rate (%) > 20.  The screen was done using stockscreen123.   The list includes some familiar names such as Lockheed Martin, China Mobile, and McDonalds.  

There are also some small cap names which may fly under the radar such as Life Partners (LPHI), with a market cap of around $300 million.  Taking a closer look at LPHI on Finviz, it has 0 long term debt and a PEG of .80 with a history of high returns on equity and investment.  It is engaged in the secondary market of ‘life settlements’ which involves purchasing life insurance policies at a discount to their face value for investment purposes.  LPHI receives a fee for facilitating these transactions.  A copy of this size could carry additional risks, so I always try to have a stop loss or trading strategy in place prior to purchasing any security.

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Ticker Name Last Trend Yield Div5Y Cgr% Pay Ratio
CHL China Mobile Ltd. (ADR) 49.45 Here 3.57 44.75 42.88
CTL CenturyTel, Inc. 35.28 Here 7.98 58.02 60.2
GEF Greif, Inc. 49.45 Here 3.08 38.34 66.42
HCBK Hudson City Bancorp, Inc. 13.31 Here 4.53 22.03 58.92
LLTC Linear Technology Corporation 27.61 Here 3.4 25.16 62.1
LMT Lockheed Martin Corporation 77.56 Here 3.28 20.79 30.03
LPHI Life Partners Holdings, Inc. 20.15 Here 4.99 26.48 13.54
MCD McDonald’s Corporation 65.26 Here 3.39 30.1 49.12
MSA Mine Safety Appliances 24.74 Here 3.9 29.31 47.76
SAFT Safety Insurance Group, Inc. 37.1 Here 4.35 36.31 37.03
TEF Telefonica S.A. (ADR) 69.21 Here 6.48 31.95 61.22
TNP Tsakos Energy Navigation Ltd. 14.83 Here 4.05 38.75 33.13
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