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What are we looking for?

U.S. stocks providing a combination of steady dividend growth, low payout and respectable yield.

Dividends are crucial for a consistent income stream. Certain investors depend heavily on the dividend yield as a key factor in assessing a company’s suitability for their portfolio. Nevertheless, discerning investors understand that a thorough evaluation surpasses the sole consideration of dividend yields. While dividends can offer insights into a company’s financial health and valuation, it is crucial to thoroughly examine growth prospects and the continuing sustainability of dividend distributions.

The screen

We screened U.S. companies with a market capitalization greater than US$5-billion. The key criteria:

  • a Stockpointer (SP) score greater than 70. The score mainly considers risk-adjusted return on capital, earnings-per-share growth and free cash flow per share. The score varies between zero and 100. The higher the value, the better the company;
  • one-year, two-year, three-year and four-year dividend growth greater than 7 per cent;
  • payout lower than 50 per cent;
  • dividend yield greater than 2 per cent;
  • return on capital greater than 12 per cent.

Companies receive rankings determined by a score that individually assesses their three-year dividend growth, dividend yield and payout relative to other companies in the screen. The score reflects the average rank across these three variables.

For informational purposes, we have also included one-year price return.

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What we found

Solid U.S. dividend stocks

Dick's Sporting Goods, Inc.DKS-N140.8411.34.07883.653.842.235.02.829.213.59.5
Pnc Financial Services Group, Inc.PNC-N148.9259.35.37010.013.59.610.
Snap-On IncorporatedSNA-N283.9215.06.77514.114.814.514.32.634.516.114.4
Skyworks Solutions, Inc.SWKS-Q102.4816.37.37310.411.011.812.62.741.214.71.2
Lockheed Martin CorporationLMT-N463.18114.47.3767.
Hershey CompanyHSY-N190.6439.07.77615.013.911.210.02.546.121.3-15.0
Lowe's Companies, Inc.LOW-N218.91125.98.08316.223.924.
Sirius Xm Holdings, Inc.SIRI-Q5.2120.08.37910.228.622.
East West Bancorp, Inc.EWBC-Q71.7910.28.77720.320.618.716.22.720.620.24.0
Bank OzkOZK-Q46.845.39.37313.111.19.511.33.324.115.711.1
Equitable Holdings, Inc.EQH-N32.6611.29.77910.59.59.510.72.725.2198.56.7
Cincinnati Financial CorporationCINF-Q107.3716.89.7708.
Aflac IncorporatedAFL-N82.7448.610.7718.514.314.411.62.421.816.415.2
Discover Financial ServicesDFS-N109.5327.411.07718.219.513.912.22.619.327.23.3
American Financial Group, Inc.AFG-N118.8310.011.07412.512.211.912.02.424.821.9-15.9
Mgic Investment CorporationMTG-N19.375.411.37322.126.320.062.22.416.613.945.7

Source: Inovestor

Dick’s Sporting Goods Inc. DKS-N plays a pivotal role in the sports and outdoor retail industry, presenting noteworthy financial metrics. With an exceptional 83.6-per-cent one-year dividend growth rate and a prudent payout ratio of 29.2 per cent, DKS becomes an appealing choice for investors seeking robust dividend increases. The company showcases a Stockpointer score of 78, indicating its status as a quality business trading at a reasonable price.

PNC Financial Services Group Inc. PNC-N distinguishes itself as a formidable financial services giant. For investors prioritizing immediate income, the company offers a substantial 4.2-per-cent dividend yield. Additionally, PNC demonstrates capital efficiency, boasting a return on capital of 17.4 per cent. However, in the past year, the stock lost 11.8 per cent, making it the fourth-worst performer on our list. With a market capitalization of US$59.9-billion, the company ranks as the third largest on our screen.

Snap-on Incorporated SNA-N positions itself as a global leader in delivering innovative tools, equipment and solutions for professionals. Investors aiming for consistent dividend growth should turn their attention to Snap-on, given its unwavering performance with dividend growth rates of 14.1 per cent, 14.8 per cent, 14.5 per cent and 14.3 per cent over one-year to four-year periods respectively. It is also the second-best performer in the past year, with a one-year price return of 14.4 per cent.

Investors are advised to do further research before investing in any of the companies listed in the accompanying table.

For more details about these stocks, subscribe to the Inovestor for Advisors platform for free.

Anthony Ménard, CFA, is vice-president of data management at Inovestor.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 19/04/24 3:31pm EDT.

SymbolName% changeLast
Dick's Sporting Goods Inc
PNC Bank
Snap-On Inc
Skyworks Solutions
Lockheed Martin Corp
Hershey Foods Corp
Lowe's Companies
Sirius XM Holdings
East West Bancorp
Bank Ozk
Cincinnati Financial
Axa Equitable Holdings Inc
Aflac Inc
Discover Financial Services
American Financial Group
Mgic Investment Corp

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