Undervalued Dividend Growth Screen 2021 – Fourth Screen

I hope one day to have a steady stream of income provided by multiple companies with a long-standing history of increasing their dividend annually. In my mind, it is almost like creating my own private pension. Due to other focuses right now (specifically, pay down the debt I just took on to finish up my pool) I have slowed down my screen and investment from a monthly to every “so often.” Last month, I wrote, “with all the turmoil in the markets, I thought now would be a good time to run the screen and see if anything interesting pops up” well the exact same thing happened and I was inspired to write this post two days ago when the S&P had it’s largest drop of the year:

But unfortunately, I didn’t get to the screen till the night of 7/20. Still, it may be interesting to see if there was any companies that took it on the chin and didn’t recover a day later.

Previous Screens From this Year:

1. January 2021 Stock Screen
2. February 2021 Stock Screen
3. May 2021 Stock Screen

Dividend Stocks with 20+ Years of Dividend Growth

First and foremost, I want companies that have dividend growth in their DNA. As such, I use the Dividend Champion (25+yrs) and part of the Dividend Contenders List (20+ Years). While the number will change month to month it should be unusually stable as companies don’t often drop off (and to get on they would have had to started while Bush was President, and survived the dot.com bubble, 2007 – 2009 and the first phase of COVID).

This month I learned that this list may not be maintained and distributed for free going forward. If it goes live behind a paywall I’ll probably just focust on the Dividend Aristocrats which has the same 25+ year requirement, but along with market cap and S&P500 membership requirements.

This provides me with 171 companies that have increased their dividend for the past 20 years.

Metric Screens

Once I have those companies I can screen them for particular metrics. Please review my larger discussion on screening for undervalued dividend growth stocks for definitions and thoughts on each:

• Company has to have a P/E under 20;
• A Dividend Yield of over 2%;
• Payout Ratio under 50%; and
• Positive EPS Growth for the past 5 years.

This screen on FinViz left with me 271 Companies. Time to Cross Reference

My Fourth Undervalued Divided Growth Watch List for 2021

Ticker	Company	Sector	Industry	Market Cap	P/E
ADM	Archer-Daniels-Midland Company	Consumer Defensive	Farm Products	32.54B	15.63
AFL	Aflac Incorporated	Financial	Insurance – Life	35.46B	6.65
AROW	Arrow Financial Corporation	Financial	Banks – Regional	561.24M	12.14
ATO	Atmos Energy Corporation	Utilities	Utilities – Regulated Gas	12.88B	18.02
BANF	BancFirst Corporation	Financial	Banks – Regional	1.89B	12.59
CINF	Cincinnati Financial Corporation	Financial	Insurance – Property & Casualty	18.38B	6.04
CTBI	Community Trust Bancorp, Inc.	Financial	Banks – Regional	708.08M	9.04
EBTC	Enterprise Bancorp, Inc.	Financial	Banks – Regional	392.87M	10.32
FLIC	The First of Long Island Corporation	Financial	Banks – Regional	491.77M	11.45
MGRC	McGrath RentCorp	Industrials	Rental & Leasing Services	1.83B	18.56
MCY	Mercury General Corporation	Financial	Insurance – Property & Casualty	3.34B	5.35
MDU	MDU Resources Group, Inc.	Basic Materials	Building Materials	6.11B	14.66
NC	NACCO Industries, Inc.	Energy	Thermal Coal	173.26M	9.53
ORI	Old Republic International Corporation	Financial	Insurance – Diversified	7.24B	4.22
OZK	Bank OZK	Financial	Banks – Regional	5.18B	11.76
SBSI	Southside Bancshares, Inc.	Financial	Banks – Regional	1.17B	10.36
SRCE	1st Source Corporation	Financial	Banks – Regional	1.08B	11.51
THFF	First Financial Corporation	Financial	Banks – Regional	533.77M	9.73
TMP	Tompkins Financial Corporation	Financial	Banks – Regional	1.11B	11.51
TROW	T. Rowe Price Group, Inc.	Financial	Asset Management	45.01B	16.76
UGI	UGI Corporation	Utilities	Utilities – Regulated Gas	9.43B	10.94
NUS	Nu Skin Enterprises, Inc.	Consumer Defensive	Household & Personal Products	2.64B	12.5
CATC	Cambridge Bancorp	Financial	Banks – Regional	580.37M	15.33
NWFL	Norwood Financial Corp.	Financial	Banks – Regional	208.45M	11.19
PB	Prosperity Bancshares, Inc.	Financial	Banks – Regional	6.38B	11.72
RBCAA	Republic Bancorp, Inc.	Financial	Banks – Regional	956.79M	11.65
SJM	The J. M. Smucker Company	Consumer Defensive	Packaged Foods	14.40B	17.24

Again, another screen with a crazy amount of regional banks, and every time I say I am going to figure out some fundamental metrics to try and compare them…and then I don’t. Think I am going to change that this time around, and as such, I am working with the following 13 companies:

First thing I did was see the 5 year trend line of outstanding shares. I was/am looking for a company that has flat to decreasing amount of shares outstanding.

1. AROW – Flat for 5 years and then a 6% growth in the last quarter. Not eliminated but worrisome.
2. BANF – Mostly flat for 4 years
3. CTBI – Flat for 5 years
4. EBTC – Flat for 4.5 years
5. FLIC – Increased for first 2 years, then started coming down regularly. I like the way the chart looks.
6. OZK – Big increase a few years back then flattened and just tipped up last quarter
7. SBSI – Big Increase from 2016 to 2017 but steady decline since.
8. SRCE – Flat for 5 years then a nice drop last quarter
9. THFF – Steady Increases past few years.
10. TMP – Chart didn’t sow up on MacroTrends. Not going to do the manual research.
11. CATC – Steady Increases past Few Years
12. NWFL – Flat for over 4 years, increased last few quarters.
13. PB – Increased last few quarters
14. RBCAA – Flat for 5 years

Only eliminated a few. So Need to come up with a different metric and for that I think I am going to go with Price to Book. According to Investopedia,

The price-to-book (P/B) ratio is an evaluation metric that is used to compare the current market price of a company’s stock to its book value. The P/B ratio is favored by value investors for its usefulness in identifying undervalued companies.

The average P/B ratio for banking firms, as of the first quarter of 2021, is approximately 1.28.

P/B is sometimes calculated as an absolute value, dividing a company’s total market capitalization by the book value from the company’s current balance sheet. The calculation is sometimes done on a per-share basis.

They all survived!

Lastly, I increased Earnings per Share to postive 10% over the past 5 years and I was left with EBTC, NWFL, RBCAA and THFF. I plan on taking a small position in each one over the next few weeks and just let this sector ride.