Recently, GuruFocus introduced new filters to the Dividend tab in the All-In-One Screener that will better help income investors narrow their stock choices.
One new field is the “% Below Historical High Dividend Yield,” which allows you to set parameters for stocks with yields in certain ranges below the historically high yield. In addition, you can now filter by dividend frequency and dividend payment months.
To test these out, I set the minimum years of dividend increases to 15 years and set the maximum for “% Below Historical High Dividend Yield” at 5%. As of yesterday, this search returned four companies that have solid histories of increasing their dividends and are also within 5% of its historically high yield.
Donaldson Co. Inc.
Donaldson Co. Inc. (DCI, Financial) offers a 2.34% trailing dividend yield, which is close to the 10-year high. The current yield is just 0.43% below the historical high dividend yield.
Donaldson manufactures filtration systems and replacement parts. Its products also include exhaust and emissions controls products. The stock has declined 24% over the past year and currently trades at $28.51, or 18x earnings.
GuruFocus rates the company’s business predictability as 4.5 out of 5 stars. Preliminary data for FY 2014 EPS is $1.49, slightly down from $1.76 per share the year before.
In addition, Donaldson’s operating margin has not dipped below 12% since 2010. This is more than twice as high as the median operating margin for the industrial products industry at 5.7%.
Fastenal
Fastenal (FAST, Financial) pays a dividend yield of 2.86%, close to the 10-year high and 2.37% below its historical high dividend yield. The payout ratio is 60%.
Arguably a darling in the market, Fastenal sells industrial and construction supplies such as fasteners, nuts, bolts, screws and washers, among others. The stock dipped 8% over the past year and currently trades at 21.5x earnings.
Earnings per share have grown by about 15.5% over the past year. Fastenal earned $1.66 per share in 2014, up from $1.51 the year before.
Ruane Cunniff (Trades, Portfolio) is the largest guru shareholder with a 8.27% stake, followed by Ron Baron (Trades, Portfolio) with 1.3%.
IBM
Tech stalwart IBM’s (IBM, Financial) dividend yield is close to the 10-year high at 3.2%, with a 31% payout ratio.
IBM’s stock has declined 18% in the past year and currently trades at 13x earnings. GuruFocus rates its business predictability as 4 out of 5 stars. Despite a dip last year in EPS, IBM has steadily grown its earnings over time, as indicated in the graph below.
Operating margin, too, has not fallen below 19% since 2012. Of the gurus we follow, Warren Buffett (Trades, Portfolio) by far holds the largest stake at 8.12%, followed by Jeremy Grantham (Trades, Portfolio) with 0.28% and Hotchkis & Wiley with 0.17%.
Walmart
Of the four stocks on this list, Walmart (WMT, Financial) has been increasing its dividend for the longest number of consecutive years — since 1984. Its trailing dividend yield is 3.28%, which is close to the 10-year high, while the payout ratio is 41%.
Walmart’s stock is down 20% in the past year and now trades at $59.10, or 12.35x earnings. On Wednesday, Walmart saw the largest stock decline in 27 years after reporting it expects earnings to decline 6% to 12% in FY 2017.
Despite the lowered earnings outlook, Walmart has consistently increased its EPS over time, earning $5.05 per share in 2015.
Buffett is Walmart’s largest shareholder among the gurus with a 1.88% stake, followed by Dodge & Cox with a 0.96% stake.
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