The Winter Olympics are in full swing and close to wrapping up. Many participants have already won their medals. Why can’t stocks have their own Olympic games? How about dividend stocks? What are the gold, silver and bronze dividend growth stocks on Wall Street to buy now? Check out our criteria for grading our dividend stock medalists. 

Wall Street Olympics: Three Dividend Growth Stocks to Buy Now

Why not get festive with piece this month? I love the Olympics and seeing other countries compete. Why can’t dividend growth stocks compete as well? Dividend growth investing is a core focus of mine and there continues to be a number of myths about dividend investing. Larry Light, a contributor from Forbes, highlights several myths about dividend investing that should be considered. For me, I love the ability to receive both residual income and have the long-term upside potential through capital appreciation with dividend growth investing. Find out who should be crowned gold in all of dividend stock glory. We’ve already given how to find undervalued dividend growth stocks.

What dividend growth stocks qualify for the Wall Street Olympics?

To qualify for the Wall Street Olympics, our selected dividend growth stocks must qualify as dividend paying companies and must be listed on a Wall Street exchange, but are not limited to U.S. companies. These are the Olympics of course! All countries are welcome and all are encouraged (except for Russian stocks)! Jokes aside. All countries are welcome.

Our criteria for grading our dividend stock Olympians include:

We believe people use the annual dividend yield too much in considering an investment decision, so here are our grading criteria for our Wall Street Olympics. We rate each section out of 50 to arrive at an aggregate total rating of 150.

1. Dividend growth history:
   • How long has the company increased its dividend payments and at what growth rate? Do we expect similar dividend growth in the future?
2. Valuation:
   • What is the company currently valued on a P/E ratio and EV/EBITDA basis? Is the stock reasonably priced for it’s valuation?
3. Financial Health
   • What does the current balance sheet look like? Is the company highly levered? Is the company paying too much in dividends relative to their earnings?

Practice makes perfect. Repetition.

Our Bronze Medalist for Dividend Growth: CVS Health Corporation (Ticker: CVS)

CVS is our bronze medalist for dividend growth stocks to buy now

1. Dividend Growth History: 40 out of 50
   • CVS has increased its dividend for 21 consecutive years.
   • CVS’ dividend growth rate was 22.7% and 17.3% over the last 10 years and 5 years, respectively.
2. Valuation: 41 out of 50
   • CVS is reasonably undervalued with a PE ratio of 10x and commands a forward PE ratio of 10x.
   • Earnings concerns relate to Amazon potentially entering the pharmacy market and the financing for the potential acquisition of Aetna. I believe now is a good time to be a contrarian on a longer-term play here. I believe CVS has a reasonable moat and can overcome some of the recent slowness in retail and threats from Amazon.
3. Financial Health: 45 out of 50
   • CVS offers a current respectable Price to Book Value of ~1.4x.
   • The dividend is safe as it only represents 30.80% of current EPS.

Our Silver Medalist for Dividend Growth: Nucor Corporation (Ticker: NUE)

Nucor is our silver medalist (no pun intended) for dividend growth stocks to buy now.

1. Dividend Growth History: 40 out of 50
   • Nucor has increased its dividend for 25 consecutive years.
   • Nucor’s dividend growth rate was 1.61% and 0.54% over the last 10 years and 5 years, respectively. While the recent dividend growth rate is somewhat concerning, we are forward-looking and with EPS growth rates anticipated in the double-digits for the next five years. I believe Nucor will be able to increase their dividend growth rate in the future.
2. Valuation: 42 out of 50
   • Nucuro is reasonably valued with a PE ratio of 17.3x and commands a forward PE ratio of 12.9x.
3. Financial Health: 45 out of 50
   • AFLAC offers a current respectable Price to Book Value of ~2.54x.
   • The dividend is somewhat safe as it only represents 38.50% of current EPS.

Our Gold Medalist for Dividend Growth: AFLAC Inc. (Ticker: AFL)

AFLAC is our gold medalist dividend growth stock to buy now.

1. Dividend Growth History: 43 out of 50
   • AFLAC has increased its dividend for 35 consecutive years.
   • AFLAC dividend growth rate was 6.7% and 5.2% over the last 10 years and 5 years, respectively.
2. Valuation: 47 out of 50
   • AFLAC is currently undervalued with a PE ratio of 8x and commands a forward PE ratio of 11x as rising interest rates will hurt earnings in the near-term. However, earnings will improve over the long-term as the company reinvest premiums received at higher rates.
3. Financial Health: 45 out of 50
   • AFLAC offers a current respectable Price to Book Value of ~1.4x.
   • The dividend is very safe as it only represents 25.50% of current EPS.

Conclusion on the Winter Olympics for Dividend Growth Stocks

After screening over 600 distinct stocks, we are surprised that our three medalists are all U.S. based businesses. AFLAC is our true dividend gold medalist with a solid valuation and a clear runway for further dividend growth with limited risk. This dividend growth stock can be bought at current levels. On any dips, purchase it hand over fist. AFLAC combines the track record of dividend growth, valuation, and financial health to sleep well at night knowing that you have a compound interest machine making your money work for you.

However, all three of these dividend growth stocks represent a great opportunity to buy value now at a reasonable price. All three dividend stocks are in different industries and should be a great starting point to building a dividend portfolio. Based on your income from investing in these three stocks, try our the dividend calculator from Dividend Investor to see the benefits from dividend growth and compound interest.

What are your medalists for dividend growth stocks? We’d love to hear from you on your favorite dividend stocks to buy now for your dividend portfolio. Please leave a question or comment below.