E Pedigreed Dividend Dogs (5-50 Annual Raises) Show Cash To Cover Dividends

Summary

Despite their five to fifty year records of dividend increases, not all dividend Champion (25+), Contenders (10-24), and Challenger (5-9) dogs show safe margins of cashflow to sustain their payouts.

72 of 150 Dividend Champion Contender & Challenger (CCC) dogs pay dividends deemed safe because their free cash flow yield exceeds dividend yield. These 72 have margin to cover anticipated dividends.

Safe Champions, CTBI; TGT; EFSI; MO; EMR; UVV; ORI; HP; MCI; T yields ranged 3.48%-5.32%. Safe Contenders, NWFL; MDP; FKYS; WHG; VZ; UBA; IMASF; TCP; HEP; APU yields ranged 4.22%-8.03%. Challengers, CHSP; STX; LHO; CLDT;CLNY; SIR; ABR; BKEP; GAIN; GMLP yields were 7.26%-12.27%.

Besides safety margin, CCC dogs were also screened for payout ratios, total annual returns, and dividend growth as of November 7 market close, to further gauge dividend reliability.

Brokers credited 5 top yield safe Champion dogs with 99.08% more, Contender dogs with 9.58% LESS, and Challenger dogs with 14.41% more gains from $5k invested in the lowest priced five than from $5K invested in ten.

The Dividend Dogs Rule

The "dog" moniker was earned by stocks exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs."

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Do CCC "Safe" Dogs Cover All Sectors?

The top 30 of 72safe CCC Dogs came from 9 of 11 business sectors. These were: communication services (3); financial services (8); energy (4); consumer defensive (3); industrial (2); utilities (1); real estate (7); consumer cyclical (1); technology (1). Two sectors were not represented:healthcare; basic materials.

74 of 150 Dividend Champion, Contender & Challenger Dogs Have Cash Margins to Cover Dividends

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Periodic Safety Check

Three previous articles discussed the attributes of these 150 ChampionContender & Challenger dividend dogs from which these "safest" were sorted. You see above the green tinted list that passed the dividend "stress" test. These 72 Dividend CCC dogs report sufficient annual cash flow yield to cover their anticipated annual dividend yield. The margin of excess is shown in the boldface "Safety Margin" column.

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Financial guarantees however are easily over-ruled by a cranky board of directors or company policy canceling or varying the payout of dividends to shareholders. This article asserts that wherewithal in the form of cash flow yield is a strong reason to sustain a track record of annual dividend hikes.

The safe Challengers carry pedigrees of 5 to 9 annual dividend increases. Safe Contenders have demonstrated 10 to 24 such increases, and safe Champions claim 25+ annual increases.

Actionable Conclusions: (1) Ten Top Safe CCC Dogs Showed 19.37% Average Upside, While (2) Four Dropped Down -2.45% To -11.24% Estimated For November 2017

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To quantify top dog rankings, analyst mean price target estimates provided a "market sentiment" gauge of upside potential. Added to the simple high yield "dog" metrics, analyst mean price target estimates were another tool used to dig out bargains.

Actionable Conclusions: Wall St. Wizards Forecast (3) 7.78% Upside & (4) 12.14% Net Gain Averages From 30 Safe Dividend CCCs By November 2017

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Disclosure: Stocks listed above were suggested only as possible starting points for your ...

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Comments

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Dan Richards 3 years ago Member's comment

Great dividend dogs list here, thanks.

Fredrik Arnold 3 years ago Author's comment

Full lists of these dogs are found at: http://www.dripinvesting.org/Tools/Tools.asp

Alexa Graham 3 years ago Member's comment

Thanks, Fredrik, but the link doesn't seem to work.

Fredrik Arnold 3 years ago Author's comment

Not sure why it would fail for you. Try another browser?