Dividend growth investing is a very popular approach that can fit within the ModernGraham methods. The following companies reviewed by ModernGraham have grown their dividends annually for at least the last 20 years.
Recently, I began tracking the number of years a company has grown its dividend and providing that information in my individual company valuations. I have covered 338 companies since that tracking began. Eventually I will have this data on each of the more than 550 companies covered by ModernGraham, so this list should continue to grow for the next few months.
Out of the 338 companies on which I have dividend growth data, only 42 have grown dividends annually for at least the last 20 years. Here is an overview of those companies:
The elite
The following companies have been rated as the most undervalued and suitable for either the Defensive Investor or the Enterprising Investor:
AFLAC Incorporated
Aflac Inc. (AFL, Financial) qualifies for both the Enterprising Investor and the more conservative Defensive Investor. In fact, the company passes all of the requirements of both investor types, a rare accomplishment indicative of the company's strong financial position. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $4.72 in 2012 to an estimated $6.24 for 2016. This level of demonstrated earnings growth outpaces the market's implied estimate of 0.40% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
Franklin Resources Inc.
Franklin Resources Inc. (BEN, Financial) qualifies for both the Enterprising Investor and the more conservative Defensive Investor. In fact, the company passes all of the requirements of both investor types, a rare accomplishment indicative of the company's strong financial condition. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $2.50 in 2012 to an estimated $3.17 for 2016. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.00% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
Cintas Corporation
Cintas Corp. (CTAS, Financial) qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio as well as the high PEmg and PB ratios. The Enterprising Investor is only initially concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.83 in 2012 to an estimated $3.34 for 2016. This level of demonstrated earnings growth supports the market's implied estimate of 9.49% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value within a margin of safety relative to the price. (See the full valuation)
Dover Corp.
Dover Corp. (DOV, Financial) qualifies for both the Enterprising Investor and the more conservative Defensive Investor. The Defensive Investor is only concerned with the low current ratio and the Enterprising Investor's only concern is the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $3.58 in 2011 to an estimated $5.07 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 1.88% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
Illinois Tool Works Inc.
Illinois Tool Works Inc. (ITW, Financial) qualifies for both the Enterprising Investor and the more conservative Defensive Investor. The Defensive Investor's only concern is the high PB ratio while the Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $3.18 in 2011 to an estimated $5.47 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 3.95% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
People's United Financial Inc.
People's United Financial Inc. (PBCT, Financial) qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research into the company.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from 40 cents in 2011 to an estimated 78 cents for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 6.09% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
Ross Stores Inc.
Ross Stores Inc. (ROST, Financial) qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios. The Enterprising Investor is only initially concerned with the low current ratio. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research into the company.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.07 in 2012 to an estimated $2.13 for 2016. This level of demonstrated earnings growth outpaces the market's implied estimate of 8.48% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
T. Rowe Price Group Inc.
T. Rowe Price Group Inc. (TROW) qualifies for both the Defensive Investor and for the Enterprising Investor. The Defensive Investor is only concerned with the high PB ratio while the Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research into the company.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $2.38 in 2011 to an estimated $4.16 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 4.03% annual earnings loss over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
VF Corp.
VF Corp. (VFC) qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research into the company.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.48 in 2011 to an estimated $2.66 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 7.59% annual earnings loss over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
The good
The following companies have been rated as fairly valued and suitable for either the Defensive Investor or the Enterprising Investor:
Chubb Ltd.
Chubb Ltd. (CB, Financial) qualifies for both the Defensive Investor and the Enterprising Investor. The company passes all of the requirements of both investor types, a rare accomplishment indicative of the company's strong fundamentals. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with the next stage of the analysis.
As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $6.08 in 2011 to an estimated $7.68 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 3.63% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value within a margin of safety relative to the price. (See the full valuation)
Cincinnati Financial Corp.
Cincinnati Financial Corp. (CINF, Financial) qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last 10 years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research into the company.
As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.16 in 2011 to an estimated $3.12 for 2015. This level of demonstrated earnings growth supports the market's implied estimate of 5.44% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value within a margin of safety relative to the price. (See the full valuation)
Genuine Parts Co.
Genuine Parts Co. (GPC, Financial) qualifies for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio along with the high PB ratio. The Enterprising Investor is only initially concerned with the low current ratio. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $3.08 in 2011 to an estimated $4.41 for 2015. This level of demonstrated earnings growth supports the market's implied estimate of 5.51% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value within a margin of safety relative to the price. (See the full valuation)
W W Grainger Inc.
W W Grainger Inc. (GWW, Financial) qualifies for both the Enterprising Investor and the more conservative Defensive Investor. The Defensive Investor is only initially concerned with the high PB ratio while the Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $7.12 in 2011 to an estimated $10.94 for 2015. This level of demonstrated earnings growth outpaces the market's implied estimate of 4.71% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value above the price. (See the full valuation)
United Technologies Corp.
United Technologies Corp. (UTX) qualifies for both the Enterprising Investor and the more conservative Defensive Investor. The Defensive Investor is only concerned with the low current ratio while the Enterprising Investor is satisfied by default since the company passes the more stringent Defensive Investor requirements. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.86 in 2011 to an estimated $6.25 for 2015. This level of demonstrated earnings growth supports the market's implied estimate of 3.47% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value within a margin of safety relative to the price. (See the full valuation)
Walmart Stores Inc.
Walmart Stores Inc. (WMT) qualifies for both the Enterprising Investor and the more conservative Defensive Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor is satisfied because the company meets the more stringent Defensive Investor requirements. As a result, all value investors following the ModernGraham approach based on Benjamin Graham's methods should feel comfortable proceeding with further research.
As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.10 in 2012 to an estimated $4.75 for 2016. This level of demonstrated earnings growth supports the market's implied estimate of 2.14% annual earnings growth over the next seven to 10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham's formula, returns an estimate of intrinsic value within a margin of safety relative to the price. (See the full valuation)
The full list
For the investor type, a "D" indicates the company is suitable for the Defensive Investor, an "E" indicates the company is suitable for the Enterprising Investor, and an "S" indicates the company is considered speculative at this time.
| Ticker | Name with Link | Investor Type | Latest Valuation Date | MG Value | Recent Price | Price as a percent of Value | PEmg Ratio | Div. Yield |
| ADM | Archer Daniels Midland Company | E | 2/5/2016 | --- | $33.30 | --- | --- | 3.60% |
| ADP | Automatic Data Processing | E | 9/25/2015 | --- | $81.25 | --- | --- | 2.61% |
| AFL | AFLAC Incorporated | D | 2/4/2016 | --- | $58.00 | --- | --- | 2.83% |
| ALB | Albemarle Corporation | D | 11/11/2015 | --- | $48.79 | --- | --- | 2.38% |
| AOS | A. O. Smith Corp. | E | 11/24/2015 | --- | $62.97 | --- | --- | 1.52% |
| APD | Air Products & Chemicals Inc. | E | 2/9/2016 | --- | $130.75 | --- | --- | 2.48% |
| BCR | C R Bard Inc. | E | 11/6/2015 | --- | $179.65 | --- | --- | 0.53% |
| BDX | Becton Dickinson and Co. | S | 8/19/2015 | --- | $132.88 | --- | --- | 1.99% |
| BEN | Franklin Resources Inc. | D | 1/28/2016 | --- | $32.46 | --- | --- | 2.22% |
| BF.B | Brown-Forman Corporation | S | 9/25/2015 | --- | $94.32 | --- | --- | 1.44% |
| BMS | Bemis Company Inc. | E | 1/28/2016 | --- | $47.07 | --- | --- | 2.46% |
| CB | Chubb Ltd. | D | 9/21/2015 | --- | $109.05 | --- | --- | 2.09% |
| CINF | Cincinnati Financial Corporation | E | 11/6/2015 | --- | $60.93 | --- | --- | 3.15% |
| CL | Colgate-Palmolive Company | S | 1/27/2016 | --- | $66.07 | --- | --- | 2.30% |
| CLX | Clorox Co. | S | 9/10/2015 | --- | $126.93 | --- | --- | 2.43% |
| CTAS | Cintas Corporation | E | 12/10/2015 | --- | $82.64 | --- | --- | 1.27% |
| DOV | Dover Corp. | D | 12/11/2015 | --- | $59.69 | --- | --- | 2.81% |
| ESS | Essex Property Trust Inc. | S | 10/9/2015 | --- | $198.17 | --- | --- | 2.91% |
| EXPD | Expeditors International of Washington | E | 1/4/2016 | --- | $46.05 | --- | --- | 1.56% |
| GPC | Genuine Parts Company | E | 1/30/2016 | --- | $85.27 | --- | --- | 2.88% |
| GWW | W W Grainger Inc. | D | 1/8/2016 | --- | $210.32 | --- | --- | 2.23% |
| HP | Helmerich & Payne Inc. | D | 11/27/2015 | --- | $49.64 | --- | --- | 5.54% |
| HRL | Hormel Foods Corp. | E | 9/21/2015 | --- | $81.39 | --- | --- | 1.43% |
| IBM | International Business Machines Corp. | S | 11/10/2015 | --- | $127.00 | --- | --- | 4.09% |
| ITW | Illinois Tool Works Inc. | D | 1/5/2016 | --- | $90.26 | --- | --- | 2.44% |
| JNJ | Johnson & Johnson | D | 1/8/2016 | --- | $102.00 | --- | --- | 2.94% |
| LLTC | Linear Technology Corporation | E | 1/31/2016 | --- | $40.87 | --- | --- | 3.13% |
| LOW | Lowe's Companies Inc. | S | 1/8/2016 | --- | $63.55 | --- | --- | 1.76% |
| MCD | McDonald's Corporation | E | 11/10/2015 | --- | $116.07 | --- | --- | 3.07% |
| MDT | Medtronic PLC | D | 1/31/2016 | --- | $72.64 | --- | --- | 2.09% |
| MKC | McCormick & Company Incorporated | S | 8/15/2015 | --- | $87.87 | --- | --- | 1.96% |
| MMM | 3M Co. | E | 2/3/2016 | --- | $153.87 | --- | --- | 2.89% |
| NEE | NextEra Energy Inc. | S | 8/13/2015 | --- | $114.17 | --- | --- | 2.70% |
| PBCT | People's United Financial Inc. | E | 12/10/2015 | --- | $14.36 | --- | --- | 4.67% |
| PH | Parker-Hannifin Corp. | D | 1/31/2016 | --- | $101.10 | --- | --- | 2.49% |
| ROST | Ross Stores Inc. | E | 12/10/2015 | --- | $53.33 | --- | --- | 0.88% |
| SWK | Stanley Black & Decker Inc. | S | 1/28/2016 | --- | $90.46 | --- | --- | 2.43% |
| SYY | SYSCO Corporation | S | 9/8/2015 | --- | $43.12 | --- | --- | 2.88% |
| TROW | T. Rowe Price Group Inc. | D | 9/22/2015 | --- | $65.97 | --- | --- | 3.15% |
| UTX | United Technologies Corporation | D | 11/16/2015 | --- | $86.78 | --- | --- | 2.95% |
| VFC | VF Corp. | E | 2/1/2016 | --- | $57.00 | --- | --- | 2.60% |
| WMT | Walmart Stores Inc. | D | 11/18/2015 | --- | $66.92 | --- | --- | 2.93% |
Disclaimer:Â The author held a long position in Dover Corporation and People's United Financial Inc. but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours. See my current holdings here. This article is not investment advice, and all readers are encouraged to speak to a registered investment adviser prior to making any investing decisions. Please also read our full disclaimer.
This article first appeared on ModernGraham.
