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10 Dividend Growth Stocks For September 2016


I rank a selection of the CCC dividend growth stocks every month. The top 10 ranked stocks are great candidates for further analysis.

The CCC list is an invaluable source for dividend growth investors. Every month I use different screens to trim the list before doing a preliminary ranking.

For the top ranked stocks from the preliminary round, I do a final ranking using additional data and assign a 7-star rating.

This article reveals the top 10 ranked stocks for September, as well as their ratings.

The CCC list is an invaluable source for dividend growth investors. The list is compiled by David Fish and updated every month. It contains U.S. companies with at least 5 consecutive years of increasing dividends. The accompanying spreadsheet provides key statistics of the CCC stocks.

The CCC stocks are dividend into 3 categories based on the number of consecutive years of increases: Champions are stocks with 25 or more years of increasing dividends. Contenders have 10-24 consecutive years of dividend increases. And Challengers have a streak of 5-9 years of increasing dividends. The latest list (dated 8/31/16) contains 790 stocks, with 110 Champions, 239 Contenders, and 441 Challengers.

Trimming The CCC List

Ranking nearly 800 stocks would be quite daunting, so I first apply some screens to reduce the number of stocks to a manageable number. By using different screens every month, I can focus on different criteria and also introduce some variation. Typically, I consider fewer than 300 stocks.

In July, I screened for stocks with a Financial Strength Rating of A++, A+ or A, as determined by Value Line. By definition, these candidates have strong financials and are stable companies with good income and long-term capital gain prospects.

This month I decided to repeat July's screen and to add another screen from Value Line, the Safety Rank. Stocks with a Safety Rank of 1 are the safest, most stable, and least risky investments relative to the Value Line universe. Stocks with a Safety Rank of 2 are safer and less risky than most stocks in the Value Line universe (but not as safe as stocks with a Safety Rank of 1).

Only 150 CCC stocks pass both screens.

The Ranking Process

Since 150 stocks are still too many stocks to process manually, I perform a preliminary ranking of these stocks using a proprietary system that favors established dividend paying stocks with strong fundamentals. This process is based entirely on data available in the CCC spreadsheet.

From the preliminary ranking results, I select the best 24 stocks as well as a few of the top ranked stocks in each sector. This month, I considered a total of 38 stocks during the final ranking process, using data from additional sources like Morningstar, S&P Capital IQ, and F.A.S.T. Graphs.

Here are the top 10 ranked stocks for September 2016:

Stocks I own in my DivGro portfolio are highlighted.

There are 6 new stocks this month. For each of the repeaters, a subscript indicates the stock's ranking last month. For example, HRL1 means that HRL was the top ranked stock last month.

7-Star Ratings

Part of the final ranking process involves assigning a 7-star rating to each stock. Stocks with a 5-star rating or better is worthy of further analysis and only...