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What are we looking for?

The best U.S. dividend growth stocks.

More about today's screen

Similar to a screen for Canadian dividend growth stocks two weeks ago, today's screen will look for 20 U.S. stocks with high dividend growth, high yields, high earnings growth, low beta and high cash flow compared to debt.

More specifically, the screen will also look for stocks with:

-Market caps greater than $1-billion (U.S.);

-Next four quarters' dividends expected to be greater than the trailing four quarters due to increase(s) in the past year;

-Expected dividend yield greater than 2 per cent;

-Payout on trailing four quarters cash flow less than 50 per cent (trailing four quarters of dividends/trailing four quarters of cash flow);

The results are ranked in order of desirability for the criteria.

More about CPMS

CPMS is an equity research and portfolio analysis firm owned by Morningstar Canada. It maintains a database of about 700 of the largest and more liquid Canadian stocks, plus more than 2,200 U.S. stocks, and spends a lot of time adjusting for unusual accounting items in each company's quarterly results to make sure screens can perform correctly.

What did we find out

CPMS's U.S. dividend growth model portfolio has a total return of 8.2 per cent year-to-date, versus 0.3 per cent for the S&P 500 total return index. Since inception at the end of 1993, the U.S. dividend growth strategy has returned 12 per cent, versus the S&P 500 total return index of 7.7 per cent.

"Higher yielding stocks have done well this year as investors have flocked toward the perceived safety cushion that dividends provide," said Craig McGee, senior consultant with CPMS.