I published my first article for the new year on the Dividend Kings in January 2020 with an article entitled “Dividend Kings Analysis: Most Are Overvalued.” I skipped February’s article on the Dividend Kings and instead wrote about the Dividend Champions in an article entitled “Dividend Champions Analysis: Canadian National Railways Is The Newest Champion.” What a difference one month makes? The market was trending down in February and of course that has only accelerated in the first half of March. The Dividend Kings valuations are down. The mean PE [TTM] ratio of the Dividend Kings came down to ~24.4 from ~29.9 in early January. The median PE [TTM] ratio came down to ~22.6 from ~26.8 in early January. This is a large drop. But obviously the recent market action and volatility in the past week resulting from the continued coronavirus scare compounded by the oil price war and travel restrictions tells us that further drops in Dividend Kings valuations may occur.
In this article I analyze the 29 Dividend Kings, an exclusive group of stocks that have increased their dividend for 50+ consecutive years. The top five stocks in the ranking model have changed due to change in valuations and a slowdown in earnings and dividend growth rates. The top five stocks in the ranking model in order are Hormel Foods Corp (HRL) [DP Score = 9.26], Commerce Bancshares (CBSH) [DP Score = 9.12], Nordson Corp (NDSN) [DP Score = 9.08], Parker-Hannifin Corp (PH) [DP Score = 9.08], and Stanley Black & Decker (SWK) [DP Score = 9.04]. Notably, Stepan Company (SCL) dropped out of the top 5 as did Target Corp (TGT). 3M Company, which was in the top 5 for many months dropped out in January and continues its downward trend. It is now ranked 20th due to too low earnings growth rate, high payout ratio, and high relative valuation.
In these analyses I use nine criteria that permits rapid quantitative screening based on the dividend, earnings growth, dividend growth, dividend safety, and valuation. The nine criteria used in quantitative screening are…
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.