E The Dividend Kings Ranked By Quality Score

David Van Knapp presented a simple and seemingly effective quality scoring system in this article on high-quality, high yield dividend growth stocks. The system employs five widely used quality indicators from independent sources and assigns 0-5 points to each quality indicator, for a maximum of 25 points.

In this article, I use a slightly modified version of the quality scoring system to rank an elite group of stocks called the Dividend Kings. Dividend kings are companies that have increased their dividend payouts for at least 50 consecutive years.

This is a companion article to one in which I ranked the Dividend Aristocrats, which are S&P 500 stocks that have increased their dividend payouts for at least 25 consecutive years. While there is some overlap between Dividend Kings and Dividend Aristocrats, the constitution of these lists is different enough so that several stocks are unique to the Dividend Kings.

Dividend Kings

Dividend Kings are companies that have raised their dividends for 50 consecutive years or more.

To attain this extraordinary track record, Dividend Kings had to survive economic recessions and market crashes, technological advances and busts, and periods of inflation. These companies display the highest degrees of discipline, commitment, stability, resilience, and reliability.

Dividend Kings have performed quite well when compared to the S&P 500. While tracking the performance of the Dividend Kings suffers from survivorship bias, nevertheless, it is informative to consider historical performance.

Simply Safe Dividends provides an informative analysis:

Source: Simply Safe Dividends

An investment of $100,000 in the S&P 500 index in 1991 would have grown to nearly $1.4 million at the end of 2017, at a compound annual growth rate of 10.2%. In comparison, the same investment in the current Dividend Kings would have grown to about $3.2 million, for annual returns of 13.8%.

Notwithstanding the survivorship bias issue, the Dividend Kings' outperformance is significant. Furthermore, over the 27-year period, a portfolio of the Dividend Kings exhibited annual volatility of 12.5%, which is much lower than the volatility of the S&P 500 index of 17.3% of the same period.

Quality Scores

Before presenting my ranking of Dividend Kings, here is a brief summary of David Van Knapp's quality scoring system and my modifications.

As mentioned earlier, the system references five quality indicators, assigning 0-5 points to each quality indicator for a maximum score of 25 points.

The first quality indicator is Value Line's Safety Rank, which measures the total risk of a stock relative to approximately 1,700 other stocks covered by Value Line. The safest stocks get a rank of 1 and the riskiest stocks get a rank of 5.

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Disclaimer: I'm not an investment professional or a licensed financial advisor. This article represents my personal views and decisions, ...

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