Income Investing: 7 Dividend Champions With Growth Potential
James Dennin, Kapitall: We decided to screen a list of 80 dividend champions to look for potential growth or value investments.
One of the most popular resources on dividend investing is DRiP's list of "Dividend Champions," stocks that have a record of 25 years of consecutive dividend increases. This kind of dividend payout is usually a good sign for many reasons: it shows steady growth over a very long period of time, skillful management, and a dedication to rewarding shareholders.
In other words, not a bad place to start earning some extra income.
But we wanted to narrow down this list even more. With stock market valuations at extremely high levels, and anxiety growing about how much longer the stock-market's run will continue, we thought it was important to whittle the list down by looking for relatively low valuations.
Read more from Kapitall: Income Investing: 3 Undervalued Dividend Champions
So we limited our screen to stocks with low forward price to earnings ratios (Forward P/E) and price to earnings growth ratios (PEG), often considered signs of undervaluation.
Once we had a list of stocks with a forward P/E below 15 and a PEG below 2, we added a final screen to look for growth potential. We looked at projected earnings per share growth for next year, only including dividend stocks with projected EPS growth above 10%.
There were seven stocks left on our list.
Click on the interactive chart below to see data over time.
Are you in the market for some dividend stocks? Use the list below to begin your own analysis.
1. Archer Daniels Midland Company (ADM): Procures, transports, stores, processes, and merchandises agricultural commodities and products in the United States and internationally. Market cap at $27.41B, most recent closing price at $41.47.
Forward P/E Ratio: 12.76
PEG Ratio: 1.86