This screen looks for mid cap stocks between $2 Billion and $5 Billion in market capitalization paying dividends. We want the dividend to be growing, looking back atleast 5 years, and the business fundamentals also improving so the company is likely to sustain dividend growth in the future. Screen criteria is as follows:
- Dividend Yield > 1.5% and < 3.75%
- Dividend 1 Year Change > 8%
- Dividend 3 Year Avg Growth > 8%
- Dividend 5 Year Avg Growth > 8%
- EPS 5 Year Avg Growth > 8%
- Payout Ratio < 40% and > 10%
- Sales 5 Year Avg Growth > 4%
Here we are coming at the valuation after we have screened for dividend growth. In practice, this may not give us the best value stocks, but it will certainly give us stocks that can create value from compounding dividends for long time (assuming the management continues their track record of growing dividends). I have pointed out a macro trend that favors residential home manufacturers. There are a few other trends worth keeping an eye on. Online grocery shopping has been all the rage during the pandemic. As the economy settles back into the rhythm of new normal, we will have winners and losers – however the overall trend will continue. Travel will come back and commercial real estate may not recover for a few years.
I have spent the last few weeks with screens and there are enough stocks to dig deeper now for our portfolios.