10 Dividend Growth Stocks For November 2023

Welcome to the November version of my month-to-month collection of 10 Dividend Progress Shares!

On this collection, I rank a choice of Dividend Radar shares and current the ten top-ranked shares for additional analysis and potential funding. Dividend Radar is a weekly robotically generated spreadsheet of dividend development [DG] shares with dividend enhance streaks of 5 or extra years.

Each month, I exploit completely different screens to spotlight completely different points of dividend development investing. This month, I am presenting high-quality shares with the very best defensiveness scores based mostly on a scoring system developed by David Van Knapp.

Screening for Defensive Shares

The GICS sectors will be grouped into super sectors based mostly on their efficiency all through the enterprise cycle. In response to this grouping, defensive sectors embody Shopper Staples, Well being Care, and Utilities, and, by implication, shares in these sectors are defensive shares.

David Van Knapp took a special strategy to Defensiveness. Somewhat than labeling shares defensive based mostly on sector membership, he prompt utilizing security indicators to measure a inventory’s defensiveness. The scoring system considers 4 security indicators and assigns 0-3 factors to every indicator for a most of 12 factors.

The security indicators are:

• Beta: A measure of a inventory’s volatility relative to the general market
• Merely Secure Dividends’ Dividend Safety Scores
• Worth Line’s Security Rank
• Nice Recession Efficiency: Was the dividend elevated, maintained, or reduce?

The system is most applicable for DG shares and not directly favors DG shares with dividend enhance streaks of at the very least 10 years.

Rating Candidates

The newest Dividend Radar (November 17, 2023) incorporates 713 DG shares.

Of those, 26 shares have the very best potential defensiveness rating of 12 factors. I eradicated one inventory with a top quality rating beneath 21 factors and ranked the remaining shares by contemplating, in flip, their Dividend Security Scores and their Beta measure of volatility.

Every inventory’s Rank is proven within the tables beneath.

The ten Dividend Progress Shares for November

Listed here are this month’s ten top-ranked DG shares in rank order:

Click on to enlarge

The 5 shares I personal in my DivGro portfolio are highlighted.

Click on to enlarge

The next firm descriptions are my abstract of firm descriptions sourced from Finviz.

1. Hormel Meals (HRL)

HRL is a multinational producer and distributor of consumer-branded meals and meat merchandise to retail, meals service, deli, and business clients. The corporate operates by way of 4 segments: Grocery Merchandise, Refrigerated Meals, Jennie-O Turkey Retailer, and Worldwide & Different. HRL was based by George A. Hormel in 1891 and is predicated in Austin, Minnesota.

2. Procter & Gamble (PG)

Based by William Procter and James Gamble in 1837, PG is concentrated on offering branded shopper packaged items in additional than 180 international locations. PG has 5 reportable segments: Magnificence, Grooming, Well being Care, Material NS House Care, and Child, Female and Household Care. PG is headquartered in Cincinnati, Ohio.

3. Johnson & Johnson (JNJ)

Based in 1886 and headquartered in New Brunswick, New Jersey, JNJ has grown into one of many largest firms on this planet. The corporate is a pharmaceutical, medical expertise, and shopper well being chief. JNJ distributes its merchandise to most of the people, stores and distributors, wholesalers, hospitals, and well being care professionals.

4. Church & Dwight (CHD)

CHD develops, manufactures, and markets a spread of family, private care, and specialty merchandise. The corporate sells its shopper merchandise beneath numerous manufacturers by way of a distribution platform that features supermarkets, mass merchandisers, wholesale golf equipment, drugstores, comfort shops, specialty shops, and web sites. CHD was based in 1846 and is headquartered in Ewing, New Jersey.

5. Chubb (CB)

CB is the world’s largest publicly traded property and casualty insurance coverage firm. The corporate operates in over 50 international locations and presents business and private property and casualty insurance coverage, private accident and supplemental medical health insurance, reinsurance, and life insurance coverage. CB was based in 1882 and is headquartered in Zurich, Switzerland.

6. Public Service Enterprise (PEG)

PEG is an power firm engaged within the enterprise of regulated electrical and gasoline utility and nuclear technology. The corporate’s services and products embody power, capability, ancillary providers, emissions allowances, and congestion credit. PEG was based in 1903 and is headquartered in Newark, New Jersey.

7. Brown-Forman (BF.B)

Based in 1870 and headquartered in Louisville, Kentucky, BFB manufactures, bottles, imports, exports, markets, and sells alcoholic drinks in over 160 international locations. The corporate gives spirits, wines, ready-to-drink cocktails, whiskey, vodka, tequilas, champagnes, wines, brandy, and liqueur. BKB sells its merchandise beneath numerous manufacturers, together with Jack Daniel’s.

8. Medtronic plc (MDT)

MDT develops, manufactures, distributes, and sells device-based medical therapies and providers worldwide. Prospects embody hospitals, physicians, clinicians, and sufferers. The corporate operates in 4 segments: Cardiovascular Portfolio, Medical Surgical Portfolio, Neuroscience Portfolio, and Diabetes Working Unit. MDT was based in 1949 and is headquartered in Dublin, Eire.

9. Jack Henry (JKHY)

JKHY is a monetary expertise firm offering expertise options and cost processing providers to monetary establishments and firms. The corporate presents data and transaction processing, core knowledge processing, on-line and cellular options, and specialised imaging and cost processing providers. JKHY was based in 1976 and is headquartered in Monett, Missouri.

10. Brown & Brown (BRO)

BRO is an insurance coverage company, wholesale brokerage, insurance coverage program, and repair group. It gives insurance coverage brokerage and casualty insurance coverage underwriting providers to numerous clients, together with companies, public entities, people, commerce teams, {and professional} associations. BRO was based in 1939 and is headquartered in Daytona Seashore, Florida.

Please observe that the highest ten DG shares are candidates for additional evaluation, not suggestions.

Key Metrics and Truthful Worth Estimates

Beneath, I current key metrics of curiosity to dividend development buyers, together with high quality indicators and truthful worth estimates:

Click on to enlarge

Click on to enlarge

Projected Dividend Progress Charge

The 5-DGR is a trailing development charge metric. Whereas some analysts use the 5-DGR to undertaking future dividend development, there isn’t any assure that an organization will keep the identical development charge.

I exploit two further metrics to foretell future development: the 5-year EPS development charge [5-EGR] and the 5-year income development charge [5-RGR]. These metrics present further hints of future development prospects as firms pay dividends from earnings, and earnings depend upon income.

Conservatively, I ignore the utmost of the three development charge metrics and common the decrease pair, additional limiting the projected dividend development charge to 30%:

Click on to enlarge

Danger-Adjusted Purchase Beneath Worth

To estimate truthful worth [FV], I gather FV estimates and value targets from a number of sources, together with Morningstar and Finbox. I additionally estimate truthful worth utilizing every inventory’s five-year common dividend yield. With as much as 12 estimates and targets accessible, I ignore the outliers (the bottom and highest values) and use the common of the median and imply of the remaining values as my FV estimate.

My risk-adjusted Purchase Beneath costs enable premium valuations for the highest-quality shares however require discounted valuations for lower-quality shares:

My Purchase Beneath costs acknowledge that the highest-quality shares hardly ever commerce at discounted valuations. As a dividend development investor with a long-term funding horizon, I am extra excited by proudly owning high quality shares than getting a cut price on lower-quality shares.

Commentary

This is a comparative evaluation of an equal-weighted portfolio of this month’s prime ten DG shares, courtesy of Finbox.com:

From a price-performance perspective, the portfolio would have underperformed the S&P 500 (as represented by the SPDR S&P 500 Belief ETF (SPY)) over the past 5 years, returning 34% versus SPY’s 65%. The shares supply yields from 0.70% (BRO) to three.53% (PEG). Solely two shares yield greater than 3.5%, PEG and MDT. These are good candidates for earnings buyers.

BRO has a projected DGR of 12.3% and is the most effective candidate for growth-oriented buyers.

4 shares (BRO, PG, CB, and CHD) have double-digit proportion TTRs and are the shares on this month’s record which have outperformed SPY over the trailing 5-year interval:

As for valuations, MDT (-26%) and HRL (-25%) are discounted most relative to my Purchase Beneath costs and are nice candidates for worth buyers.

Of the shares I personal in my DivGro portfolio, HRL, PG, and JNJ are underweight positions. Primarily based on how I calculate target weights, I would want so as to add 167 shares of HRL, 34 shares of PG, and 45 shares of JNJ to show these into full-sized positions.

HRL now presents the very best ahead yield since 1995:

It seems to be a good time so as to add shares to my HRL place!

Not one of the shares I do not personal move my inventory choice standards for including new positions to my DivGro portfolio:

Click on to enlarge

Consequently, I am not wanting so as to add any of this month’s top-ranked shares to my portfolio.

Concluding Remarks

This month, I screened Dividend Radar shares for high-quality shares with the very best defensiveness scores based mostly on a scoring system developed by David Van Knapp. Twenty-five have high quality scores above 20 and the very best potential defensiveness rating of 12 factors.

I personal 5 of this month’s top-ranked shares in my DivGro portfolio and am contemplating including HRL shares to my DivGro portfolio.

Primarily based in your funding model, you might need to goal the next shares:

• For earnings buyers: PEG and MDT
• For worth buyers: MDT and HRL
• For growth-oriented buyers: BRO

As at all times, I encourage readers to do their due diligence earlier than shopping for any shares I cowl.

Thanks for studying, and pleased investing!