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

TickerCompanySectorIndustryMarket CapP/E
ADMArcher-Daniels-Midland CompanyConsumer DefensiveFarm Products32.54B15.63
AFLAflac IncorporatedFinancialInsurance – Life35.46B6.65
AROWArrow Financial CorporationFinancialBanks – Regional561.24M12.14
ATOAtmos Energy CorporationUtilitiesUtilities – Regulated Gas12.88B18.02
BANFBancFirst CorporationFinancialBanks – Regional1.89B12.59
CINFCincinnati Financial CorporationFinancialInsurance – Property & Casualty18.38B6.04
CTBICommunity Trust Bancorp, Inc.FinancialBanks – Regional708.08M9.04
EBTCEnterprise Bancorp, Inc.FinancialBanks – Regional392.87M10.32
FLICThe First of Long Island CorporationFinancialBanks – Regional491.77M11.45
MGRCMcGrath RentCorpIndustrialsRental & Leasing Services1.83B18.56
MCYMercury General CorporationFinancialInsurance – Property & Casualty3.34B5.35
MDUMDU Resources Group, Inc.Basic MaterialsBuilding Materials6.11B14.66
NCNACCO Industries, Inc.EnergyThermal Coal173.26M9.53
ORIOld Republic International CorporationFinancialInsurance – Diversified7.24B4.22
OZKBank OZKFinancialBanks – Regional5.18B11.76
SBSISouthside Bancshares, Inc.FinancialBanks – Regional1.17B10.36
SRCE1st Source CorporationFinancialBanks – Regional1.08B11.51
THFFFirst Financial CorporationFinancialBanks – Regional533.77M9.73
TMPTompkins Financial CorporationFinancialBanks – Regional1.11B11.51
TROWT. Rowe Price Group, Inc.FinancialAsset Management45.01B16.76
UGIUGI CorporationUtilitiesUtilities – Regulated Gas9.43B10.94
NUSNu Skin Enterprises, Inc.Consumer DefensiveHousehold & Personal Products2.64B12.5
CATCCambridge BancorpFinancialBanks – Regional580.37M15.33
NWFLNorwood Financial Corp.FinancialBanks – Regional208.45M11.19
PBProsperity Bancshares, Inc.FinancialBanks – Regional6.38B11.72
RBCAARepublic Bancorp, Inc.FinancialBanks – Regional956.79M11.65
SJMThe J. M. Smucker CompanyConsumer DefensivePackaged Foods14.40B17.24

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:

AROWArrow Financial CorporationFinancialBanks – Regional
BANFBancFirst CorporationFinancialBanks – Regional
CTBICommunity Trust Bancorp, Inc.FinancialBanks – Regional
EBTCEnterprise Bancorp, Inc.FinancialBanks – Regional
FLICThe First of Long Island CorporationFinancialBanks – Regional
OZKBank OZKFinancialBanks – Regional
SBSISouthside Bancshares, Inc.FinancialBanks – Regional
SRCE1st Source CorporationFinancialBanks – Regional
THFFFirst Financial CorporationFinancialBanks – Regional
TMPTompkins Financial CorporationFinancialBanks – Regional
CATCCambridge BancorpFinancialBanks – Regional
NWFLNorwood Financial Corp.FinancialBanks – Regional
PBProsperity Bancshares, Inc.FinancialBanks – Regional
RBCAARepublic Bancorp, Inc.FinancialBanks – Regional

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.