3/28/2013

20 Safest Dividend Income Growth Stocks From The Early Stage

Dividend Challengers with low beta ratios originally published at "long-term-investments.blogspot.com". Some investors are greedy and tend to overlook risks. Others are too anxious and avoid to buy stocks in a larger amount. They could “lose money” or they “can get quick rich” are two psychological factors that investors prevent to make real money with investing. Both are not true and only an illusion.

If you invest money into the stock market and you do it wisely and diversified, you should only count with a return close to the performance of the broad market. I believe that a return of 8 percent is realistic and good enough to beat inflation and grow wealth.

Today I like to screen a category of stocks with a longer dividend growth history, the Dividend Challengers. Those stocks have achieved to raise dividends over a period of more than five years in a row but less than 10 years. 167 companies have fulfilled these dividend growth criteria. 

Below is a list of the safest stocks from the investment category "Challengers". They have a beta ratio of less than 0.5 as well as a market capitalization over USD 2.0 billion.

20 Dividend Challengers are on the list of the safest dividend income growth stocks and six of them have a high yield; Nine are recommended to buy.

Here are my favorite stocks:
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Boardwalk Pipelines (NYSE:BWP) has a market capitalization of $6.65 billion. The company employs 1,200 people, generates revenue of $1.185 billion and has a net income of $306.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $726.10 million. The EBITDA margin is 61.27 percent (the operating margin is 39.98 percent and the net profit margin 25.82 percent).

Financial Analysis: The total debt represents 45.01 percent of the company’s assets and the total debt in relation to the equity amounts to 91.28 percent. Due to the financial situation, a return on equity of 7.43 percent was realized. Twelve trailing months earnings per share reached a value of $1.28. Last fiscal year, the company paid $2.13 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 22.58, the P/S ratio is 5.61 and the P/B ratio is finally 1.75. The dividend yield amounts to 7.39 percent and the beta ratio has a value of 0.24.

BWP Dividend Chart

BWP Dividend Yield Chart


Kellogg (NYSE:K) has a market capitalization of $23.38 billion. The company employs 31,000 people, generates revenue of $14.197 billion and has a net income of $962.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2.010 billion. The EBITDA margin is 14.16 percent (the operating margin is 11.00 percent and the net profit margin 6.78 percent).

Financial Analysis: The total debt represents 52.04 percent of the company’s assets and the total debt in relation to the equity amounts to 326.66 percent. Due to the financial situation, a return on equity of 45.60 percent was realized. Twelve trailing months earnings per share reached a value of $2.68. Last fiscal year, the company paid $1.74 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 24.13, the P/S ratio is 1.66 and the P/B ratio is finally 9.65. The dividend yield amounts to 2.72 percent and the beta ratio has a value of 0.48.

K Dividend Chart

K Dividend Yield Chart


General Mills (NYSE:GIS) has a market capitalization of $31.55 billion. The company employs 35,000 people, generates revenue of $16.657 billion and has a net income of $1.500 billion. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $3.103 billion. The EBITDA margin is 18.63 percent (the operating margin is 15.38 percent and the net profit margin 9.01 percent).

Financial Analysis: The total debt represents 35.22 percent of the company’s assets and the total debt in relation to the equity amounts to 115.70 percent. Due to the financial situation, a return on equity of 24.51 percent was realized. Twelve trailing months earnings per share reached a value of $2.71. Last fiscal year, the company paid $1.22 in the form of dividends to shareholders.

Market Valuation: Here are the price ratios of the company: The P/E ratio is 18.00, the P/S ratio is 1.89 and the P/B ratio is finally 4.93. The dividend yield amounts to 2.71 percent and the beta ratio has a value of 0.18.

GIS Dividend Chart

GIS Dividend Yield Chart



Take a closer look at the full list of the safest early stage dividend growth stocks. The average P/E ratio amounts to 21.35 and forward P/E ratio is 16.09. The dividend yield has a value of 3.75 percent. Price to book ratio is 3.68 and price to sales ratio 3.38. The operating margin amounts to 18.99 percent and the beta ratio is 0.37. Stocks from the list have an average debt to equity ratio of 1.49.

Here is the full table with some fundamentals (TTM):

20 Safest Dividend Income Growth Stocks (Click to enlarge)

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Related stock ticker symbols:
BWP, APU, EPB, LO, OKS, SEP, DUK, VZ, CMS, XEL, CHL, WES, GIS, K,  CPB, AWK, KGC, KR, SLGN, GOLD

Selected Articles:


*I am long LO, GIS, K and CPB. I receive no compensation to write about these specific stocks, sector or theme. I don't plan to increase or decrease positions or obligations within the next 72 hours.

For the other stocks: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I receive no compensation to write about any specific stock, sector or theme.


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