In basketball, a brace is a combination of at least 10 or more of the following in a game: score, bounce, assist, save or steal.
For dividend stocks, you may find the double screen below fascinating. Screen of S&P 500
SPX
highlight dividend-paying companies that have at least doubled their payouts and share prices over the past 5 years.
Investors use dividend stocks to pursue different strategies. Here is a summary of three of them:
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An investor may choose a stock with a high dividend yield because they need to maximize earnings now. The second long-term goal is growth when the stock price is expected to rise. A very high current dividend yield could be a warning sign that professional investors expect payouts to be cut. Stock prices may have dropped to push output up.
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An investor may prefer a long-term growth strategy that focuses on companies that have steadily increased their dividend payouts over the years. This means that stocks can have low dividend yields based on current share prices. But income is not the goal. An example of a fund that follows this strategy is the ProShares Dividend Aristocrats ETF
NOBL,tracks an index of 66 stocks in the S&P 500 that have raised their dividends regularly for at least 25 consecutive years. That’s the only requirement – it doesn’t matter how high the current dividend yield is, and it doesn’t matter if the dividend increases by a relatively small amount.
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Another strategy that can be overlooked is develop a long-term income stream. This means holding the stock for many years as the dividend increases, so that eventually the yield will be substantial compared to the price you paid for the stock. This can be a “growth, then income” strategy, where you reinvest for a while, before turning to income by receiving dividend payments instead of buying more shares with them. .
To select individual stocks while pursuing any long-term strategy, you need to look ahead and consider the strategies of the companies and their ability to remain competitive over the coming decades. . You can also read companies’ earnings announcements, quarterly and annual reports, and preview consensus estimates of earnings, revenue, and cash flow to see if there are any signs of deterioration. .
But sometimes looking back can be a real eye-opener. Here is an example:
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If you have purchased shares of UnitedHealth Group Inc.
UNHfive years ago (that is, at closing on February 15, 2018), you paid $226.02 for your stock. The annual dividend rate at the time was three dollars a share, so your dividend yield would be 1.33%.
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Over the next five years, the company’s annual dividend payout increased 120% to $6.6 a share, while its share price increased 117% to $491.25. That compares to a five-year increase (excluding dividends) of 52% for the S&P 500 through February 15, 2023.
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For a new investor coming in at the close of February 15, 2023, UnitedHealth stock’s dividend yield was 1.34% — roughly the same yield five years ago. But your five-year-old stock yield will now be 2.92%.
The example of raising your own yield to 2.92% may not sound too impressive at first, but UnitedHealth shareholders have had a stellar ride over the past five years. And this stock ranks last in terms of 5-year price gains on the following list.
Double dividend screen
Starting with the S&P 500, we’ve looked back five years to narrow the list down to 319 stocks with a dividend yield of at least 1.00% as of the close on February 15, 2023, according to FactSet . A 1% dividend yield seems modest, but as you can see from the UnitedHealth example above, it’s a reasonable floor for this display.
We then further narrow down to companies that have at least doubled their annual dividend payouts over the past 5 years, while their stock prices have increased by at least 100% to date. closed on February 15, 2023. This brings the list down to 14 companies. Here are them, sorted by how much their stock price rose:
| Company | share | 5 year price change | total profit in 5 years | dividend increase | Current dividend yield | Dividend yield five years ago | Dividend yield per share purchased 5 years ago |
|
Monolithic Power Systems Inc. |
MPWR |
356% |
376% |
233% |
0.75% |
1.03% |
3.44% |
|
Eli Lilly and Co. |
LLY |
329% |
371% |
101% |
1.35% |
2.88% |
5.79% |
|
MSCI Inc. Type A |
MSCI |
283% |
301% |
263% |
0.97% |
1.03% |
3.72% |
|
Tractor supply company |
TSCO |
247% |
272% |
281% |
1.72% |
1.56% |
5.96% |
|
CDW Group |
CDW |
198% |
216% |
181% |
1.11% |
1.18% |
3.31% |
|
Lam Research Corp. |
LRCX |
180% |
204% |
245% |
1.33% |
1.08% |
3.72% |
|
Dynamics Steel Inc. |
STLD |
167% |
201% |
119% |
1.08% |
1.32% |
2.89% |
|
Swimming Pool Corporation |
POOL |
162% |
175% |
170% |
1.04% |
1.01% |
2.72% |
|
Deere & Co. |
DE |
146% |
165% |
100% |
1.17% |
1.44% |
2.88% |
|
Broadcom Inc |
AVGO |
141% |
188% |
163% |
3.03% |
2.78% |
7.31% |
|
Dollar Corporation |
FIRE |
136% |
147% |
112% |
0.95% |
1.06% |
2.23% |
|
Companies of Lowe Inc. |
SHORT |
123% |
144% |
156% |
1.95% |
1.70% |
4.35% |
|
Dr Horton Inc. |
university |
120% |
134% |
100% |
1.01% |
1.11% |
2.22% |
|
UnitedHealth Group Consolidation |
UNH |
117% |
134% |
120% |
1.34% |
1.33% |
2.92% |
|
Source: FactSet |
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Click on the ticker for more information about each company or exchange-traded fund.
Click This for Tomi Kilgore’s detailed guide to the wealth of information freely available on the MarketWatch quotes page.
Starting on the left, the table has 5-year bull runs, then total returns with dividends reinvested. You may then find that some of these stocks have current yields below 1.00%. But moving to the rightmost column, you can see the yield on stocks bought 5 years ago. The highest yield on this measure is that of Broadcom Inc.
AVGO,
at 7.31%; Tractor supply company
TSCO,
at 5.96%; and Elli Lilly and Co.
LLY,
at 5.79%.
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