Dividends4Life: Low Risk Stocks for Dividend Growth

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Low Risk Stocks for Dividend Growth

Posted by D4L | Wednesday, August 11, 2010 | | 0 comments »

In this screen, we turned our attention to low-risk stocks that have good records for dividend growth. In addition, our selection criteria focused on those issues that our analysts project to continue providing investors with dividends that are likely to increase at above-average rates.
We began our search with stocks whose dividends have advanced at a compounded annual rate of at least 7% over the last five years. Similarly, we next narrowed the list to equities with projected annual dividend growth rates of at least 5% over the next three to five years. We also set a minimum estimated yield for the year ahead of 3.1%, which is 100 basis points (100 basis points equals one percentage point) higher than the current median for all dividend-paying stocks under our review.

The set of stocks that made the final cut are not only judged to be safer than most, but also possess proven and prospective dividend growth rates that have and are likely to advance at a rate exceeding the average rate of inflation under the time periods chosen under this review. Consequently, the list will likely appeal to conservative investors in search of current income. We note that this group is comprised of a fairly wide range of companies, not just regulated utilities and financial institutions as per past dividend-focused screens. Indeed, other industries, such as aerospace/defense, had a strong showing. Not surprising, however, is the fact that our list is dominated by large-cap industry leaders, several of which are Dow 30 components.

Source: Value Line

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