Top Ranked High Yield & High Dividend Growth Stocks

On Tuesday I summarized a study showing the performance of high yield, high dividend growth stocks.  The study showed that stocks with relatively high yields and relatively high 3 year dividend growth rates have historically outperformed stocks with lower yields and lower dividend growth rates.

I used data provided by DRIP Investing to filter for stocks with high yields and high dividend growth rates.  The data is as of the beginning of December and includes all Dividend Champions, Contenders, and Challengers.  Dividend Champions are stocks that have increased dividends for at least 25 years, Contenders have raised dividends for 10-24 years, and Challengers have raised dividends for 5-9 years.  In other words, I started with a list of stocks that have raised dividends for at least 5 years straight.  The rational is to start with a list of stocks that have a relatively long history of raising dividends and a consistent dividend policy.

Using this list of 449 stocks, I then sorted the stocks into quintiles based on dividend yield and 3 year dividend growth.  Stocks which were in the top quintile in both yield and 3 year dividend growth are listed below.  The list contains only 15 stocks out of a possible 449 and should serve as starting point for further investigation.




It should be noted that the study referenced also showed that those stocks in the 2nd highest yield quintile and highest dividend growth quintile actually performed better than those in the highest yield/highest dividend growth quintiles.  My hypothesis is that the highest yielding stocks have yields reflecting expectations of an uncertain earnings future or unsustainable dividend. Therefore, those stocks with marginally lower yields may have more certain futures while still having the added value of a relatively high yield compared to the entire universe of stocks.

The stocks in the second highest yield quintile and the highest 3 year dividend growth rate quintile are listed below: