David Fish’s Dividend Champions, Contenders and Challengers by Fair Value

This list is a modified version of David Fish’s popular “CCC” list of stocks that have raised dividends each year for at least the past five years, with the following modifications:

MS Econ Moat – Added Morningstar economic moat ratings, only companies with a competitive advantage of either a ‘Wide’ or ‘Narrow’ rating are listed, companies with a economic moat rating of “None” have been excluded.

MS Fair Value – Added Morningstar fair value estimates (credit: www.morningstar.com)

% Fair Value – Calculates the percentage below or above the fair value estimate based on current market price. This column is then sorted by the most under-valued companies (highlighted in descending order of green, light green, yellow) to the over-valued companies (highlighted in red).

Quality Score – Ranks companies on strength, dividend yield, dividend growth, and sustainability (see bottom of page for details).

The purpose of this chart is to present David’s work with additional filtering that we use to start the evaluation process for Dividend Geek readers. For additional data, we encourage you to check out the full CCC version, which can be found here. Disclaimer: The following information is updated at the end of each month. Although all figures are thought to be correct, no guarantee is expressed, nor should any be implied.

David Fish’s dividend growth investing categories includes companies that have raised their dividend payment for the following number of consecutive years:

1.) Champions – 25 or more
2.) Contenders – between 10-24
3.) Challengers – between 5-9

How I use the CCC Fair Value list

Notice the list of dividend growth stocks are sorted by ‘% Fair Value’ with the lowest discount to fair value is at the top (highlighted in bright green). Starting at the top I scan across each row (stock). If there are any red highlighted cells I skip that stock and move down to the next row, until I find a stock without any red cells for further investigation. Red cells indicate that my minimum criteria has not been met. Yellow highlighted cells indicate warnings that are approaching the red limit, which I need to investigate deeper.

Watchlist Screening Criteria

Listed below are descriptions for each column on the watch list (starting at the first column on the left). There are nine first level criterion indicated in italics that need to be met before I proceed to investigate the company in further detail.

Company Info

Sector and Ticker are informational only.  For page spacing reasons I had to abbreviate some sector names. Companies are divided into the following 11 industry sectors:

  1. Con Disc = Consumer Discretionary
  2. Con Stap = Consumer Staples
  3. Energy
  4. Financials
  5. Healthcare
  6. Industrial
  7. Materials
  8. REITs = Real Estate Investment Trusts
  9. Tech = Technology
  10. Telecomm = Telecommunications
  11. Utilities

Strength

# Years Div Increase Dividend distributions for 5 or more consecutive years.

Economic Moat Company has at least a Narrow (Narr) competitive advantage rating. Naturally a Wide moat is preferred, but a narrow moat is acceptable. CCC companies with no form of competitive advantage “None” are not listed.

Growth Potential

Yield Company must yield a minimum of 2.00% at time of purchase.

5 Year Div Growth 5-year dividend growth rate must be greater than 5.00%.

5 Year Est Growth Rate Company cannot have a future estimated growth rate less than 3.00%.

Sustainability

Dividend Payout Ratio No payout ratios above 90% (red flag) and a yellow warning of payout ratios between 75% to 90% for further investigation. My limits are high since payout ratio’s have to be evaluated on the individual stock and industry it’s in. For example, many companies are required to payout the majority of earning in dividends (utilities, REIT’s MLP’s, tobacco). The lower the payout ratio the better, since it leaves room for consistent dividend growth.

Debt to Equity The ratio of shareholder equity to debt to finance a company. The lower the ratio (less debt) the better. Typically a ratio of 1 or less is acceptable. From 1 to 1.6 is a yellow warning. A debt-to-equity greater than 1.6 is a red flag warning.

Price

Current Price, and % Change are informational

Valuation & Timing

Fair Value The current fair value price rating (credit: Morningstar.com)

% Fair Value This is the percent difference that a stocks current price is either below (undervalued) or above (overvalued) its fair value price estimate.

52 Week Low, and 52 Week High are informational.

% L/H Range This column lists the stocks current price as a percentage within its 52 week low and high range. When the stock price is within 15% of its 52 week low this indicator will turn green. I prefer to purchase stock when it is close to its 52 week low. However, this is not a required criteria.

P/E In most cases I prefer a price to earning ratio below 22. A yellow warning is triggered between 22-25. Ideally I want to purchase fair to under-valued companies when their price/earning ratio is below 22. However, not all companies and the industries they compete in fall into similar price/earning ranges, so I have some flexibility to investigate. Basically this criteria lowers my risk of purchasing over-valued companies.

Score

Quality this is the total point score for the eight columns under the strength, growth and sustainability categories which represents an overall quality analysis score for each company. Each of the eight areas can receive up to 10 points for a maximum of 80 total points. The higher the score the better. Points are awarded based on the following:

Area 10 Points 8 Points 5 Points 3 Points 1 Point
Years Dividend Increased 25+ 24-20 19-15 14-10 9-5
Economic Moat Wide Narrow
Yield 4.5%+ 4.49%-4.0% 3.99%-3.5% 3.49%-3.0% 2.99%-2.5%
Most Recent % Increase 15%+ 14.9%-12.5% 12.4%-10% 9.9%-7.5% 7.4%-5%
3-Year Dividend Growth Rate 15%+ 14.9%-12.5% 12.4%-10% 9.9%-7.5% 7.4%-5%
Estimated 5-Year Earning Growth Rate  15%+  14.9%-12.5%  12.4%-10% 9.9%-7.5%  7.4%-5%
Dividend Payout Ratio <=35  36-45 46-55 56-65 66-75
Debt to Equity  0-0.25 0.26-0.5 0.51-0.75 0.76-1.0 1.1-1.6

After I find a company that meets the basic entry criteria on my watch list I then analyze the company in more depth. I find out more about its financial stability, and review its historical trends to make sure it is a company that I feel good about owning.

*Disclaimer: Information is provided “as is” and solely for informational purposes, not for trading purposes or advice. Sources may not always provide data. Quotes may be delayed up to 20 minutes.

Column Sources

Heading Source
Ticker David Fish, Dividend Champions spreadsheet
Sector David Fish, Dividend Champions spreadsheet
# of Years Dividend Increase David Fish, Dividend Champions spreadsheet
MS Economic Moat Morningstar.com
Dividend Yield Formula: (Dividend payment / Current price)
5 Year Dividend Growth David Fish, Dividend Champions spreadsheet
Estimated 5-Yr Growth Rate David Fish, Dividend Champions spreadsheet
Most Recent % Increase David Fish, Dividend Champions spreadsheet
1-Year Dividend Growth Rate David Fish, Dividend Champions spreadsheet
3-Year Dividend Growth Rate David Fish, Dividend Champions spreadsheet
5-Year Dividend Growth Rate David Fish, Dividend Champions spreadsheet
10-Year Dividend Growth Rate David Fish, Dividend Champions spreadsheet
EPS % Payout David Fish, Dividend Champions spreadsheet
Debt to Equity David Fish, Dividend Champions spreadsheet
Current Price Google Finance
% Change Google Finance
MS Fair Value Morningstar.com
% Fair Value Formula: (Current Value / Fair Value)-1
52 Week Low Google Finance
52 Week High Google Finance
% > Low Formula: (Price-52 Week Low)/52 Week Low
P/E Google Finance
Quality Score (80 points max) Dividend Geek formula (see above)

Back to Top

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.