United Technology Is #1 in Dividend Valuation

Dividends play two important roles in our stock selection process. 1) They produce a cash return that has represented nearly 40% of the total return of the S&P 500 Index over the last 80 years. 2) For select companies, dividend growth and changes in interest rates provide an excellent valuation tool.

Each week we run all the stocks in the Russell 1000 through our Dividend Valuation model. A look at the model as of Friday reveals that the stock we own with the best overall score is United Technology (UTX). As shown above, the model (blue line) for UTX has been very tightly associated with UTX's actual price (red line) over the last 20 years. The R-squared is .94. The models suggests that UTX is undervalued by about 12%, including dividend. UTX's sponsorship or momentum score is 67, which means that it has outperformed 67% of all stocks over four time frames, from 12 months to one month.

Source: Rising Dividend Investing

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