I hope to create a sustainable inflation adjusted stream of income using dividends as my foundation. I don’t screen all that often, but rather wait every month and a half to two months.

Previous Screens From this Year:

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

Within each screen I share my process to whittling down my options and then the eventual purchase.

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 159 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 15 (normally it is 20 but I needed to cut down the numbers);
  • A Dividend Yield of over 2%;
  • Payout Ratio under 30% (normally it is 50% but I needed to cut down the numbers; and
  • Positive EPS Growth for the past 5 years.

This screen on FinViz left with me 170 Companies. Time to cross-reference them.

My Fifth Undervalued Divided Growth Watch List for 2021

I knew this list was going to be short because of the even more restricted metrics, but in total I am left with 13 companies:

AFLAflac IncorporatedFinancialInsurance – Life
BANFBancFirst CorporationFinancialBanks – Regional
CINFCincinnati Financial CorporationFinancialInsurance – Property & Casualty
EBTCEnterprise Bancorp, Inc.FinancialBanks – Regional
MCYMercury General CorporationFinancialInsurance – Property & Casualty
ORIOld Republic International CorporationFinancialInsurance – Diversified
OZKBank OZKFinancialBanks – Regional
SRCE1st Source CorporationFinancialBanks – Regional
THFFFirst Financial CorporationFinancialBanks – Regional
UGIUGI CorporationUtilitiesUtilities – Regulated Gas
LARKLandmark Bancorp, Inc.FinancialBanks – Regional
CATCCambridge BancorpFinancialBanks – Regional
RBCAARepublic Bancorp, Inc.FinancialBanks – Regional

Last time I went through this exercise I ended up focusing on regional banks purchasing a small lot in 4 of them. This time around I would like to focus away from that sector leaving me with:

  • AFL
  • CINF
  • MCY
  • ORI
  • UGI

I am going to add a tiny amount (~$300 to my already open positions in ALF and ORI), and $600 into MCY and CINF. I have decided against getting involved in UGI as it is a natural gas company which is a sector I don’t want to get involved in currently.

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