I made some major improvements and updates to the Dividend Geek Watchlist. I hope they benefit you as much as they have helped me!
- The most noticeable is that I combined the Champions & Contenders list and the Challengers list into one single list called (you guessed it) the ‘Champions, Contenders & Challengers’ watchlist. I found myself going back and fourth between the two lists comparing the stocks listed in the same sector or comparing DGI stocks with the lowest price to fair value rating. It seemed to make sense to just combine them for better visibility and easy comparison of all the dividend growth stocks.
- All of the data has been updated to reflect David Fish’s most recent US Dividend Champions Dec 30, 2016 spreadsheet, so all of the latest end-of-year data is there.
- Companies added to the Watchlist include:
- Flowers Foods (FLO)
- Nike (NKE)
- Stryker (SYK)
- Williams-Sonoma (WSM)
- Companies dropped from the Watchlist include:
- Archer Daniels Midland (ADM) – Thinned out some of the no economic moat companies.
- HCP, Inc (HCP) – They spun off part of their business which caused a reduction in dividends.
- Norfolk Southern (NSC) – Did not raise there dividend this year and were dropped from David Fish’s CCC list.
- Version (VZ) – High yield but dividend growth is so low (3%) it will not beat inflation.
- YUM – They spun off their China business which caused a reduction in dividends.
- Now that the Global Industry Classification Standard (GICS) recently made REIT’s their own sector I updated the sector groupings, while maintaining a total of 10 sectors, as follows:
- Separate ‘REIT’s’ sector (no longer combined with Utilities)
- ‘Utilities’ is an individual sector
- Dropped the ‘Retail’ sector and moved those companies into their respective GICS classification which was either the ‘Consumer Staples’ or the ‘Consumer Discretionary’ sector.
- On the far right side of the Watchlist under the Score heading I added a column called (Dividend Growth Type) (Div Grw Type). This is my own classification to quickly identify the dividend growth rate type of stock.
I have grouped dividend growth stocks into the following three growth rate types:
- Low (L) – Dividend growth rate between 5-7%, these are typically your older ‘cash cow’ blue chip type of companies with higher current yields that are good core holdings for stable long-term sources of income.
- Medium (M) – Dividend growth rate between 8-11%, youngish companies still growing but not as fast as the High dividend growth companies.
- High (H) – Dividend growth rates of 12% or more. These are young high growth companies typically with low dividend payout ratios with low current dividend yields, that are able to increase their dividend payments at a high percentage rate, but will not be able to sustain the high rate.
Similar to diversifying across industry sectors I like to have a good mix of all three dividend growth stock types to improve my dividend growth rate while reducing risk.
I hope you will find these changes useful as you track and research the best dividend growth stocks!