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BruceM
Participant ○○○

A list of Dividend paying stocks

Recently received the updated Dividend CCC list that used to be updated and distributed by David Fish who, most unfortunately, departed this world for a better place a couple of years ago. But Justin Law has stepped in and kept the CCC List going, which you can download into Excel and have lots of fun with.

The three groups of dividend paying stocks with consecutive years of dividend growth are Champions (>25 yrs), Contenders (10-25 yrs) and Challengers (5-10 yrs), which total to 879 dividend paying stocks. That's a lot of dividend paying stocks!

So for fun, I sorted the 3 lists as follows:

Screening criteria was done to try to isolate those with a high enough current yield to make their income usuable but not so high as to get into too much income risk

Champions: CY of 3.5% to 4.5%

Contenders: CY of 4% to 5%

Challengers: CY of  4% to 5.5%

This provides the following list of 80 stocks:

oct 19 div stock screen.jpg

I currently hold 6 from the above list. But I'm looking to replace a couple of dividend payers I hold that have not been raising their dividends as planned. So to start, I'll be breaking down CF metrics on WRK, UFS, KEQU and OKE. If these don't pan out, I've got many others to look at.

FYI

BruceM

 

26 Replies
KathieL
Explorer ○○○

Re: A list of Dividend paying stocks

Thanks, Bruce

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stormy
Follower ○○○

Re: A list of Dividend paying stocks

Thanks Bruce. I'm somewhat surprised to see W.P. Carey (WPC) on your list since I believe in previous posts you question their ability to support the dividend they pay. Care to elaborate?

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ElLobo
Participant ○○○

Re: A list of Dividend paying stocks

Bruce, have you thought of taking a position in SDY (SPDR S&P DIvidend ETF)?  It holds the 110 or so 20 year divey aristocrats from the Fishlist.  It currently yields 2.45%, a bit lower in yield than your 3.5% minimum but no individual stock income risk.  It holds all of the Champions and the upper third (>20 year) of Challangers

[Or, given that income risk aversion, take a small position in SDYL, the 2X version of SDY, currently distributing 5.36% in place of one of your individual stocks! 8-))]

Seriously, the old DRIP Investing Resource Center had a tool, Dividend Champions Screener, by Peter Gormsen, that I used in the past.  It is an Excel spreadsheet with some nifty macros.  Every month, whenever the new spreadsheet comes out, you update the tool.  The tool allows you to select up to six criteria to screen on.  You select yes or no, then give a value for the screen.  For example, all yields above 5%.  Since you are familiar with Excel Macros, the tool has instructions on how to add more screening.

Here is a screenshot:

20191018_203538.jpgDividend Champion Screener

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BruceM
Participant ○○○

Re: A list of Dividend paying stocks

Chuck

Sure. What's the Income Expense Ratio (IER)? This wil tell you how much of the fund's gross income is being paid to the house. And how does the fund's income growth compare with the expected inflation rate? is it worth it to turn over the income keys to a fund vs. just buying a large part of the fund's holdings and building your own ETF?

Just a thought

BruceM

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ElLobo
Participant ○○○

Re: A list of Dividend paying stocks


@BruceM wrote:

Chuck

Sure. What's the Income Expense Ratio (IER)? This wil tell you how much of the fund's gross income is being paid to the house. And how does the fund's income growth compare with the expected inflation rate? is it worth it to turn over the income keys to a fund vs. just buying a large part of the fund's holdings and building your own ETF?

Just a thought

BruceM


Certainly considerations.  It's difficult to think 'fund' whenever we've thought 'individual stock' for decades, good buddy!

But it's informative to compare fund to fund, specifically SDY to SPY, the 20 year divey aristrocrats within the S&P1500 (total stock market index) v the plain vanilla S&P500, whether they pay a divey or not.  One difference is the ER, at 0.35% for SDY but only 0.09% for SPY.  OTOH, the distribution yield of both (2.45% for SDY, 1.85% for SPY) is already net of ER, so no problem.

What's interesting is a comparison of SDY to SPY over its lifetime (Dec 2005), which obviously includes the 2007/08 financial meltdown.  Turns out that, with distributions reinvested, SDY outperformed SPY 8.9% to 8.6% at a smidgeon less risk.  Take the distributions in cash and the roles are reversed.  The SPY NAV rose 6.4% while SDY rose only 4.7% (all numbers nominal, not real, inflation adjusted).  Bottom line is that SDY outperformed the SPY but, for income investors such as you and I, SDY turned some of that appreciation into income, 'manufacturing' income, as Swedroe touts!  SDY, obviously, produced more income than SPY whenever those distributions were taken as cash from the portfolio, rather than reinvested.

Here is the PV link for the no reinvestment of distributions situation.

It may not be for you or I (different reasons!) but for most investors who hold SPY/VFINX/VTSMX as a core holding, whether accumulating or decumulating, SDY seems a better investment than SPY, in today's efficient market! 8-))

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Bentley
Contributor ○

Re: A list of Dividend paying stocks


@ElLobo wrote:

@BruceM wrote:

Chuck

Sure. What's the Income Expense Ratio (IER)? This wil tell you how much of the fund's gross income is being paid to the house. And how does the fund's income growth compare with the expected inflation rate? is it worth it to turn over the income keys to a fund vs. just buying a large part of the fund's holdings and building your own ETF?

Just a thought

BruceM


Certainly considerations.  It's difficult to think 'fund' whenever we've thought 'individual stock' for decades, good buddy!

But it's informative to compare fund to fund, specifically SDY to SPY, the 20 year divey aristrocrats within the S&P1500 (total stock market index) v the plain vanilla S&P500, whether they pay a divey or not.  One difference is the ER, at 0.35% for SDY but only 0.09% for SPY.  OTOH, the distribution yield of both (2.45% for SDY, 1.85% for SPY) is already net of ER, so no problem.

What's interesting is a comparison of SDY to SPY over its lifetime (Dec 2005), which obviously includes the 2007/08 financial meltdown.  Turns out that, with distributions reinvested, SDY outperformed SPY 8.9% to 8.6% at a smidgeon less risk.  Take the distributions in cash and the roles are reversed.  The SPY NAV rose 6.4% while SDY rose only 4.7% (all numbers nominal, not real, inflation adjusted).  Bottom line is that SDY outperformed the SPY but, for income investors such as you and I, SDY turned some of that appreciation into income, 'manufacturing' income, as Swedroe touts!  SDY, obviously, produced more income than SPY whenever those distributions were taken as cash from the portfolio, rather than reinvested.

Here is the PV link for the no reinvestment of distributions situation.

It may not be for you or I (different reasons!) but for most investors who hold SPY/VFINX/VTSMX as a core holding, whether accumulating or decumulating, SDY seems a better investment than SPY, in today's efficient market! 8-))


 

 

 If distribution are taken and spent.

                                                       SDY       
Start date:12/01/200512/01/2005
End date:10/18/201910/18/2019
Start price/share:$55.03$126.69
End price/share:$103.27$297.97
Dividends collected/share:$35.91$48.07
Total return:152.93%173.14%
Average Annual Total Return:6.91%7.50%
Starting investment:$10,000.00$10,000.00
Ending investment:$25,288.18$27,296.34
Years:13.8813.88
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Highlighted
cliff
Explorer ○○

Re: A list of Dividend paying stocks

 

Bruce, I have a considerable position in one of those you’re going to look at — ONEOK (OKE).  I first invested in December, 2014; it was paying $2.36 for a 5.1% yield.  Today it’s paying $3.56 and sports the same 5.1% yield.  Which means, of course, that the stock price has moved in concert over the 5 years with dividend increases.

Along with some periodic buys and dividend reinvestment, I also got a big jag of shares when the OKS deal was done in mid-2017.

When you look at the company, it would not surprise me if you grab some.

 

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BruceM
Participant ○○○

Re: A list of Dividend paying stocks

Stormy

WPC is on the list because that's the result of the sort I ran.

As a triple-net REIT, WPC has not had a good CF history.

For comparison, the following is a 25Q CF chart of NNN, a triple net least REIT that is on the above list

NNN CFs oct19.jpg

This is a good looking CF progression of rolling 4Q. Now, look at WPC over the same period

WPC CFs oct19.jpg

This makes me wonder how or why WPC would pay such large dividends in 2013 and 2014, but then gradually slowed the DGR over the past 5 years while NNN and O DGR over the same 5 year period showed much better rates.

5 year DGR O NNN WPC 2019.jpg

Over this period, the mrket seemed to show concern over this as the Current Yield (CY) of WPC has been consistently higher than NNN and O since 2013, using end of year price and that year's total dividend

EOY net lease CY oct19.jpg

But since 2018, despite the slowing DGR, the market has seen fit to bring thee price of WPC up to where its CY has come much closer to O and NNN, currently to about 4.5% compared to their CY of about 3.5%. Not sure if this is due to some perception of improving CF fundamentals or the broad market redeploying investments into what are perceived as 'safe'.

As to fundamentals, here is a chart of these Triple-nets dividend to net CFFO payout ratios using rolling 4Q

Net Lease PO ratio thru 2019.jpg

To each their own, but at 95%, that's just a bit much for my interest. I means, with gradually declining dividend growth rate and gradually increasing POR is not a good combination.

BruceM

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tomtom218
Follower ○○

Re: A list of Dividend paying stocks

Bruce & all,

    WPC's price was held down for a very long period because of a few private REIT funds/investment pools (? correct word) that WPC put together for private investors and managed (for a fee, of course). Price of the stock was held down (IMO) because of the apparent conflict of interest (who got the better properties- private or public investors). The first private pool was merged/bought out into WPC maybe 3-5 years ago (unsure of time) and the second private pool was done about a year to year and a half ago. Again was what WPC paid to the private investors a fair price?  I have no idea, but since no more private investments exists WPC's price has taken off.

     I'm sure the hot REIT market has something to do with it, too.

     If I've misstated any facts, please correct me. I used to own WPC, but no longer do.

Tom T

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BruceM
Participant ○○○

Re: A list of Dividend paying stocks

"It may not be for you or I (different reasons!) but for most investors who hold SPY/VFINX/VTSMX as a core holding, whether accumulating or decumulating, SDY seems a better investment than SPY, in today's efficient market! 8-))"

What is revealing about the dividends of SDY vs. SPY during the 2008/09 recession looks something like this...

SDY vs SPY div 2018.jpg

The SDY dividend for 2015/16 (small)/17 includes sizable capital gains, while although I don't know, but I'd imagine the SPY ETF contains far fewer, if any, CGs.

And per their 2018 Shareholder reports, the IER for SDY was 12.14% while the index SPY was 5.01%.

The dividend decline for 2008-2009 for SDY was -21.5% while SPY was -20%, so quite close. The difference is the dividend recovery rate, which was much slower for SDY than SPY. This is a guess, but I'd say this is due to the large financials like C and BAC and BNY, which make up a larger % of SDY's dividend at that time than SPY.

Yes, dividend ETFs are a lot easier and there is income diversification. But as the chart shows, dividend cuts can be real, and the income investor is giving up a chunk of the dividend to 'the house' with the IER. So indeed, its a trade-off.

BruceM

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ElLobo
Participant ○○○

Re: A list of Dividend paying stocks


@BruceM wrote:

"It may not be for you or I (different reasons!) but for most investors who hold SPY/VFINX/VTSMX as a core holding, whether accumulating or decumulating, SDY seems a better investment than SPY, in today's efficient market! 8-))"

What is revealing about the dividends of SDY vs. SPY during the 2008/09 recession looks something like this...

SDY vs SPY div 2018.jpg

The SDY dividend for 2015/16 (small)/17 includes sizable capital gains, while although I don't know, but I'd imagine the SPY ETF contains far fewer, if any, CGs.

And per their 2018 Shareholder reports, the IER for SDY was 12.14% while the index SPY was 5.01%.

The dividend decline for 2008-2009 for SDY was -21.5% while SPY was -20%, so quite close. The difference is the dividend recovery rate, which was much slower for SDY than SPY. This is a guess, but I'd say this is due to the large financials like C and BAC and BNY, which make up a larger % of SDY's dividend at that time than SPY.

Yes, dividend ETFs are a lot easier and there is income diversification. But as the chart shows, dividend cuts can be real, and the income investor is giving up a chunk of the dividend to 'the house' with the IER. So indeed, its a trade-off.

BruceM


Without looking into the details, one reason for erratic SDY distributions is whenever individual divey growth stocks go above the 20 year divey growth point, joining the index, and whenever 20 year aristrocrats drop off whenever they cut their divey.

Also, I'm not sure how your chart compares with the yearly income chart found at the bottom of the PV, but I think you missed something.  Although SDY distributed only $1.77 in 2006, it's share price was about $55 on Jan 1 of that year.  SPY, distributing $2.45, was trading about $125 at that time.  So, for the same amount invested in each on Jan 1, SDY distributed $4.02 while SPY distributed $2.45, since 1 share of SPY equated to .2.27 shares of SDY.

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BruceM
Participant ○○○

Re: A list of Dividend paying stocks

Chuck

The purpose of the chart is not to compare how much in dividend dollars each pays but how the dividend responded to the recession of 2008/09. To know the former, you must know the equal dollar amount invested in each ETF which will determine the number of shares purchased which in turn compares the actual dollar value of dividends paid. To know the latter you only need know the dividend paid per share for each.

As to the make-up of the dividend paid, I didn't show a graphic of it but did mention it....the amount of the annual dividend due to capital gains, which funds and REITs must pass through to shareholders. So here is this graph for SDY

SDY ord inc and CG annual dividend.jpg

This is right out of my holding of 200 shares of SDY, so I know the ordinary dividends and CGs are accurate. Why was the 2014 ordinary dividend almost twice that of 2015? And why such large CGs, including STCGs? Certainly, this had something to do with pushing some non-dividend raisers/dividend cutters out of the ETF thus reducing the ordinary dividends while creating CGs. Then slowly replacing and growing ordinary income dividends in the years ahead as other stocks met the dividend growth years requirement and fewer stocks were kicked out due to a flat or cut dividend. I haven't checked this, but this is my best guess.

I didn't do this for SPY as I don't hold it and am too lazy to go back and dig out the old 1099-DIVs. But dollars-to-donuts, it will not show this kind of CF vs. ordinary dividend fluctuation, as the number of stocks entered into and ejected from the index will almost certainly be much, much less than SDY.

But the primary take-away from this is yes, SDY has higher divided payers than the broad S&P 500, but it also carries more income risk when the market goes South and more long dividend paying stocks do not meet the annual dividend growth requirement and so much be given the boot.

BruceM

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ElLobo
Participant ○○○

Re: A list of Dividend paying stocks

Roger that, my friend.  The aristrocrats are still good waters to fish in!

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bluezy
Explorer ○

Re: A list of Dividend paying stocks

Gladly hold 17 or the 80.  Do not hold any of the 5 you are looking at so no comment.

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ElLobo
Participant ○○○

Re: A list of Dividend paying stocks

As a general comment, the divey aristrocrats are like migrating salmon.  They have, consistently, been able to swim upstream (continuously increase their diveys) for at least the last 5 years and, in the best case, the last 64 years (American States Water).

Think about that for a moment.  In 1955, Eisenhower was POTUS and I was in the fifth grade, learning that I = P*r*t (interest equals principle times rate times time)!  The Korean conflict had just ended with a cease fire, the Vietnam war was just starting, and the war on terrorism was just a twinkle in Osama bin Laden's parent's eyes.

(Side note - I wonder how General Patton would would have handled NoKo, Vietnam, the two Gulf wars, and today's conflicts?)

Think about the world economies over that period of time.  The baby boomers, born since then, are now well into retirement.  The companies funding those retirements have, each year, booked a profit, paid expenses, returned cash to investors AND increased that cash each and every year, regardless of the economic conditions affecting that performance!

For me, that was good enough to NOT do any DD on any individual stock that was not an aristrocrat.  I used to start with the complete list of all 874 individual stocks on the list, sorted by yield (highest at the top of the list), then work downward, looking for reasons NOT to buy it!

That period of time included all post war economic booms as well as all post war market collapses.  What it doesn't include are the 1920's market crashes, the 1930's and 40's recessions/depressions, or the internet!

The divey aristrocrats.  The best of the best.  Diversify using the best of the best, rather than 'the market'!

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bluezy
Explorer ○

Re: A list of Dividend paying stocks

Bruce, when evaluating a possible holding and reviewing my portfolio my first goto  is your work on cash flow analysis.  Using M* data I tabulate and chart your recommended data points of interest as a percent of CFFO+interest, revenue/share, CFFO/share, dividends/share, CFFI/share, CFFO POR ratio, and CFFO-distributions  for R4Qs and Year-Ends.  I calculate trends on the full data set as well as last 4 R4Qs and 5 Year-ends.

Are my following observations in line with your analysis of the 4 possible replacements?

UFS - CFFO/share and CFFO-dividends are both down in the last 4 R4Qs and last 5 Year-ends. CFFO POR is also down trending over the last 5 Year-ends. These downward trends eliminate UFS from consideration.

OKE - The steadily declining revenue/share over the last 8 R4Qs eliminates this one.

KEQU - Too many downward trends and high CFFO POR for this to be further considered.

WRK - Interest slope is down for the last 4 R4Qs as well as in the last 5 Year-ends. Revenue/share and CFFO POR are down in the last 5 Year-ends. However, CFFO-Distributions is up significantly in those 5 years. The graphing shows an increased CFFI/share over the last 3 R4Qs without an increase in CFFO/share. The increasing interest is most likely due to the increased CFFI. Will wait another quarter to see if CFFO reacts to the CFFI increase.

Hope I am learning to use your tools effectively.

Your 4 possible replacements yield 4.8-5.2%. In that range consider IP and BEP two of my holdings from the 80.

Regards,

Dick

 

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BruceM
Participant ○○○

Re: A list of Dividend paying stocks

Dick

Had family in town last week so I've not done anything with those 4 stocks yet.

Suggest you post graphic results here of what you mention then we can discuss.

Your description sounds right, but a graph will speak loudly.

BruceM

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bluezy
Explorer ○

Re: A list of Dividend paying stocks

Bruce, original post supplemented with graphs and commentary.

UFS - CFFO/share and CFFO-dividends are both down in the last 4 R4Qs and last 5 Year-ends. CFFO POR is also down trending over the last 5 Year-ends. These downward trends eliminate UFS from consideration.

UFS' CFFO/share is moving down over the last 2 quarters. Does not seem to be getting a boost from the CFFI increase. UFSperShare.png UFS's POR is moving back up to where it was 13 R4Qs back.

UFS_POR.png

OKE - The steadily declining revenue/share over the last 8 R4Qs eliminates this one.

OKE_Revenues.png

KEQU - Too many downward trends and high CFFO POR for this to be further considered.

KEQU_POR.png

WRK - Interest slope is down for the last 4 R4Qs as well as in the last 5 Year-ends. Revenue/share and CFFO POR are down in the last 5 Year-ends. However, CFFO-Distributions is up significantly in those 5 years. The graphing shows an increased CFFI/share over the last 3 R4Qs without an increase in CFFO/share. The increasing interest is most likely due to the increased CFFI. Will wait another quarter to see if CFFO reacts to the CFFI increase.

WRK_Interest.png

Note the interest climbing (above) most likely due to increased CFFI/share (below).  Will  CFFO/share start moving further up?

WRK_Pershare.png

My comments are from the perspective of initiating a position.  Would be looking more deeply at the numbers and eagerly awaiting next quarters data if I held them in my income portfolio.

Dick

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BruceM
Participant ○○○

Re: A list of Dividend paying stocks


Hi Bluezy
See my comments in Red below
@bluezy wrote:

Bruce, original post supplemented with graphs and commentary.

UFS - CFFO/share and CFFO-dividends are both down in the last 4 R4Qs and last 5 Year-ends. CFFO POR is also down trending over the last 5 Year-ends. These downward trends eliminate UFS from consideration.

UFS' CFFO/share is moving down over the last 2 quarters. Does not seem to be getting a boost from the CFFI increase. UFSperShare.png

A couple of concerns on this graph. The long trend on the CFFO/Share is likely positive, but barely. You don't say, but I'll assume the graph data points are rolling 4Q. Over the past 3 4Q periods, CFFO per share has been on a decline while CFFI/share spending has been on an up-swing over this period. That is concerning, as it suggests the company is not getting a positive response on its investments. The other metric I'd want to see is R4Q Revenue per share. If this is also declining, this is a bright red flag that investments are losing their productivity. If it is positive, it suggests the company simply hasn't been able to make their new investments profitable yet.

UFS's POR is moving back up to where it was 13 R4Qs back.

UFS_POR.png

 

 

 

A dividend to Net CFFO POR of under 24% is good dividend coverage, and the 3 year spread of 19.5% to <24% is not bad either, although the most recent 3Q trend is negative.

OKE - The steadily declining revenue/share over the last 8 R4Qs eliminates this one. I'd agree with that.

OKE_Revenues.png

KEQU - Too many downward trends and high CFFO POR for this to be further considered. I assume this relates the graph below. If so then yes, anytime a rolling 4Q dividend to Net CFFO POR exceeds 100%, I tend to stop and look somewhere else.

BTW, I assume the CFFO you're using is NET. That is, CFFO minus any preferred dividends and minus any distributions to non-controlling interests, as these are paid first before the common dividend.

KEQU_POR.png

WRK - Interest slope is down for the last 4 R4Qs as well as in the last 5 Year-ends. Revenue/share and CFFO POR are down in the last 5 Year-ends. However, CFFO-Distributions is up significantly in those 5 years. The graphing shows an increased CFFI/share over the last 3 R4Qs without an increase in CFFO/share. The increasing interest is most likely due to the increased CFFI. Will wait another quarter to see if CFFO reacts to the CFFI increase.

It looks like WRK, a paper materials company, has only been around for 4 years, so not much history to work from. 14.5% of interest to [CFFO + Interest] is high for a C-Corp, but my be appropriate for such a young company in its early growing stages. CFFO per share is growing, and this is good. But again, we're early in the company's life. My sense is the CFFO should be probably be growing faster than it is.

WRK_Interest.png

Note the interest climbing (above) most likely due to increased CFFI/share (below).  Will  CFFO/share start moving further up?

WRK_Pershare.png

My comments are from the perspective of initiating a position.  Would be looking more deeply at the numbers and eagerly awaiting next quarters data if I held them in my income portfolio.

Good charts and you're definitely on the right track. The other metric I'd be watching is dividend growth rate. I will download at least 10 years of dividends from either David Fish's Excel SS or from Yahoo Finance and from this, determine annual dividend growth rate trend. The other thing I do with companies I'm not familiar with is see if Seeking Alpha has any recent articles on them. If so, I will screen them to see if any significant events are on the horizon for the company, such as up coming regulatory changes, major changes in business operations, dependence on foreign markets and the like.

BruceM

Dick


 

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