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Forget The Past – Dividend Aristocrats Ranked by the Future

Dividend Stock List

As dividend investors, we sometimes become so focused on past performance, especially dividend history, we forget how important the future is to investing. Since the majority of companies we invest in are stable and mature, our attention gets stuck on performance consistency, rather than future growth.

Habits are often hard to break, which is why we love to see companies with many years, or even decades, of dividend growth. But to be successful investors, we must also take into account future earnings, since these will have a major influence over price movements.

With that in mind, I’ve organized the entire Dividend Aristocrats list based off their forward p/e ratio, from the lowest to the highest. This is not by any means a recommendation to buy these stocks, but it may give you some ideas for companies worth investigating.

Ticker Forward p/e
Aflac (AFL) 9.4
Abbott Labs (ABT) 10.4
Chubb Insurance (CB) 10.5
Pitney Bowes (PBI) 10.9
Archer Daniels Midland (ADM) 11
Walmart (WMT) 11.7
Exxon Mobil (XOM) 11.9
Target (TGT) 12.1
Johnson and Johnson (JNJ) 12.7
Kimberly Clark (KMB) 13.2
McGraw Hill (MHP) 13.5
Bemis (BMS) 13.6
CenturyLink (CTL) 13.6
V.F. Corporation (VFC) 13.8
Consolidated Edison (ED) 13.9
Pepsi (PEP) 14.1
3M (MMM) 14.5
Becton Dickinson (BDX) 14.5
PPG Industries (PPG) 14.9
Mcdonalds (MCD) 15.1
Dover (DOV) 15.1
CR Bard (BCR) 15.2
Lowes (LOW) 15.4
Stanley Black and Decker (SWK) 15.4
Proctor and Gamble (PG) 15.8
Family Dollar Stores (FDO) 16
Air Products and Chemicals (APD) 16.1
Hormel (HRL) 16.3
Sherwin Williams (SHW) 16.3
Coca Cola (KO) 16.6
Walgreens (WAG) 16.6
McCormic & Co. (MKC) 16.9
W.W. Grainger (GWW) 17
Clorox (CLX) 17.2
Leggett & Platt (LEG) 17.5
Cintas (CTAS) 17.8
Sigma Aldrich (SIAL) 18
Emerson Electric (EMR) 18.2
Ecolab (ECL) 19.4
Automatic Data Processing (ADP) 19.9
Brown Forman (BF.B) 20.9
Cincinnati Financial (CINF) 23.2

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  • Moneycone Mar 1, 2011, 8:02 am

    Very timely DP! I was thinking of running a screen myself for my IRA now that the tax deadline is looming, you saved me the trouble!

    Thanks DP!

  • My Own Advisor Mar 2, 2011, 5:49 pm

    Cool post. I wish I owned more than 3 of the above, KO, JNJ and ABT. Love those guys and ABT is so cheap right now! Love the fact my ABT divies are buying more stock at such cheap prices!

    I will try and stop by more often!

  • Dan Mar 5, 2011, 6:21 pm

    Sorry, I’m new to this. All other things being equal, is a high forward P/E a good indicator or a caution flag?

    • The Dividend Pig Mar 5, 2011, 11:02 pm

      Price to earnings is a simple ratio. Basically, it tells us how much we are paying for each dollar of a business’s earnings. So if a company is selling at a p/e of 10, then you are paying 10 dollars for every dollar of net earnings. Generally, you can look at two different p/e ratios: the forward p/e, which is based on the company’s expected earnings for it’s current fiscal year, and trailing twelve month earnings (ttm), based on the earnings of the past fiscal year.

      The past is the past, and the future is what matters most when it comes to a stocks price. Company history gives us a good idea of the way a business is run, but stock price is always based on expectations, not past performance. So by looking at the forward p/e , we can estimate how expensive the company is in relation to it’s future earning power.

      Rarely are all other things equal, so it’s important to look at and understand all aspects of a business and it’s financials. But in a very general sense, a low forward p/e indicates the company is selling cheaply. Hope this helps.

  • Tim Mar 5, 2011, 7:12 pm

    Thanks – very helpful. And I appreciate the emphasis on the FORWARD p/e.

  • Jason Mar 6, 2011, 7:32 pm

    Thanks for the solid work. I think ABT is attractive priced by almost any measure and it is the largest holding I have or I would be adding more. If AFL had a larger entry yield I’d buy, but it would take too long to get my YOC to an acceptable level, even at it’s great growth rate.

  • Barry Pither Mar 15, 2011, 4:12 pm

    On the contrary a p/e average going back 10 years is my metric. Too often forward p/e is revised by “one time charges”.

    Having said that I picked up ABT at 46.06 the day before they declared a 9% dividend increase in February. They are well managed with a 39 year record of rising investor income, and held up handsomely during 2008 – 09. Moreover, they haven’t participated in the rally since August, their stock dropping 12% year on year by the time I bought it.

    • The Dividend Pig Mar 15, 2011, 8:16 pm

      ABT is a great buy right now. I only wish I had some cash to put towards it!

      I always look at average p/e over 5 and 10 year periods, mostly so I can gauge where the stock will go over the next year or two if earnings increase as predicted. Forward p/e is an important metric, but it’s definitely not something I use in a vaccum.

      • Barry Pither Mar 17, 2011, 3:41 pm

        Yes … and here’s a quote from Wall Street Revalued by Andrew Smithers “The reason why current PEs provide no guide to value is that profits are highly volatile and rotate around their equilibrium level.” p.82 Chapter 9

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