MSFT

Microsoft Corporation

267.70
USD
3.41%
267.70
USD
3.41%
241.51 349.67
52 weeks
52 weeks

Mkt Cap 2.01T

Shares Out 7.51B

Chat
Send me real-time posts from this site at my email

7 Dividend Growth Stocks For May 2022

These investment-grade Dividend Radar stocks would have doubled your investment in three years, based on their 5-year trailing total returns. In my monthly 7 Dividend Growth Stocks series, I present seven dividend growth stocks from my Dividend Radar watch list for further analysis and possible investment. I use different screens every month to highlight specific elements of dividend growth [DG] investing. For example, income investors prefer stocks with higher yields, while growth-oriented investors favor higher DG rates. To compile this month's candidates, I considered investment-grade stocks with a 5-year trailing total return [TTR] of at least 26%, which is the rate that would double an investment every three years. Dividend investors focusing on growth and total return will find some high-quality candidates worth consideration. Note: Interested in getting periodic e-mail notifications when articles are published here? Drop your e-mail in the box below! I ranked candidates that passed my screens using DVK Quality Snapshots and my ranking system. In case you missed previous articles in this series, here are links to them: Screening and Ranking For this month’s article, I used the following screens: Stocks in Dividend Radar Investment Grade stocks (DVK Quality Scores of 15-25) Stocks with a 5-year trailing total return [TTR] of at least 26% Stocks trading below my risk-adjusted Buy Below prices (see below) My risk-adjusted Buy Below prices allow premium valuations for the highest-quality stocks but require discounted valuations for lower-quality stocks: I use a survey approach to estimate fair value [FV]. In addition to estimating fair value using a stock’s five-year average dividend yield, I collect fair value estimates and price targets from sources such as Portfolio Insight, Finbox, and Morningstar. With up to eleven estimates and targets available, I ignore the outliers (the lowest and highest values) and use the average of the median and mean of the remaining values as my FV estimate. The latest Dividend Radar (dated May 13, 2022) contains 743 stocks. Of these: 326 stocks have DVK Quality Scores in the range of 15-25, considered Investment Grade 64 stocks have a 5-year trailing total return of 26% or higher 250 stocks trade below my Buy Below price Only 16 stocks passed all my screens. I ranked these candidates by sorting their DVK Quality Scores in descending order and breaking ties using the following metrics, in turn: Note that I’ve implemented a slight change in calculating quality scores to reduce the outsized impact on a stock’s quality score with no Value Line [VL] coverage. 7 Top-Ranked Dividend Growth Stocks for May Here are the top-ranked DG stocks that passed this month’s screens: I own the four highlighted stocks in my DivGro portfolio. Below, I provide a table with key metrics of interest to DG investors: Yrs: years of consecutive dividend increases Fwd Yield: forward dividend yield for a recent share Price 5-Avg Yield: 5-year average dividend yield 5-DGR: 5-year compound annual growth rate of the dividend 5-YOC: the projected yield on cost after five years of investment 5-TTR: 5-year compound trailing total returns Buy Below: my risk-adjusted buy below price –Disc +Prem: discount or premium of the recent share Price to my Buy Below price Price: recent share price The Fwd Yield column is colored green if Fwd Yield ≥ 5-Avg Yield. Next, let's look at each stock in turn. All data and charts are courtesy of Portfolio-Insight.com. Microsoft (MSFT) Founded in 1975 and based in Redmond, Washington, MSFT is a technology company with worldwide operations. The company’s products include operating systems, cross-device productivity applications, server applications, productivity and business solutions applications, software development tools, video games, and online advertising. MSFT also designs, manufactures, and sells several hardware devices. MSFT is rated Exceptional (quality score: 25), and Portfolio Insight believes the stock has a 1-year upside of 19% with a 1-year target price of $303. MSFT has the highest 5-year TTR of this month’s candidates (38.1%). MSFT’s 5-year dividend growth rate [DGR] is attractive at 9.5%. According to Simply Safe Dividends, the company has ample room to continue paying and raising its dividend, given a payout ratio considered to be “very low for most companies,” according to Simply Safe Dividends. Costco Wholesale (COST) Founded in 1976 and based in Issaquah, Washington, COST operates more than 700 membership warehouses in the United States and internationally. The company offers branded and private-label products in a range of merchandise categories. COST also operates gas stations, pharmacies, food courts, optical dispensing centers, photo processing centers, and hearing-aid centers; and engages in the travel business. COST is rated Excellent (quality score: 24), and Portfolio Insight indicates a 1-year upside of 18% is likely, given a 1-year target price of $508. COST is a Dividend Contender with an 18-year streak of dividend increases. COST has a solid 5-year DGR of 11.9%. With a payout ratio considered “Very low for most companies,” investors can look forward to more great dividend increases in the future. Mastercard (MA) MA, a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. The company offers payment solutions and services under the MasterCard, Maestro, and Cirrus brands. MA was founded in 1966 and is headquartered in Purchase, New York. MA is rated Excellent (quality score: 24), and Portfolio Insight shows a 1-year upside of 47% with a target price of $495. The stock has the lowest yield (0.51%) but the highest 5-year DGR (19.0%) of this month’s selections. MA’s dividend growth is a model of consistency, and Simply Safe Dividends considers its payout ratio to be “very low for most companies.” The stock has an attractive total return outlook! UnitedHealth (UNH) Founded in 1974 and based in Minnetonka, Minnesota, UNH is a diversified health and well-being company with core capabilities in clinical expertise, advanced technology, and data and health information. The company provides medical benefits to customers in the United States and more than 125 countries. UNH is rated Excellent (quality score: 23), and the stock has a 1-year upside of 11% (target price $524) according to Portfolio Insight. UNH has the highest yield (1.23%) of this month’s selections. UNH has an impressive dividend growth history and a payout ratio deemed “low for most companies,” according to Simply Safe Dividends. Accordingly, the company has plenty of room to continue paying and increasing its dividend. Intuit (INTU) INTU provides financial management and compliance products and services for consumers, small businesses, self-employed, and accounting professionals in the United States, Canada, and internationally. The company operates in three segments: Small Business & Self-Employed, Consumer, and Strategic Partner. INTU was founded in 1983 and is headquartered in Mountain View, California. INTU is rated Fine (quality score: 22), and according to Portfolio Insight, the stock has a 1-year upside of 34% with a target price of $474. According to Simply Safe Dividends, INTU’s payout ratio is “very low for most companies,” meaning the company has plenty of room for generous dividend increases in the future. Brown & Brown (BRO) BRO markets and sells a range of insurance and reinsurance products and services, risk management, third-party administration, managed health care, and Medicare set-aside services and programs. Customers include businesses, public entities, individuals, trade, and professional associations. BRO was founded in 1939 and is headquartered in Daytona Beach, Florida. BRO is rated Fine (quality score: 21), and Portfolio Insight believes the stock has a 1-year upside of 18% with a 1-year target price of $65. BRO is the only Dividend Champion in this month’s selections, with a dividend increase streak of 28 years. According to Simply Safe Dividends, BRO’s payout ratio is “very low for most companies.” Applied Materials (AMAT) AMAT provides manufacturing equipment, services, and software to the semiconductor, display, and related industries. It operates through three segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. The company operates in the United States, China, Korea, Taiwan, Japan, Southeast Asia, and Europe. AMAT was incorporated in 1967 and is headquartered in Santa Clara, California. AMAT is rated Fine (quality score: 21), and Portfolio Insight shows a 1-year upside of 43% (target price: $159). The stock has a modest 0.93% forward yield, but its 5-year DGR of 18.8% more than makes up for the low yield! The company’s payout ratio is “Low for semiconductor firms,” and its dividend is deemed Very Safe. AMAT will likely continue to increase its dividend at a double-digit growth rate. Concluding Remarks This month, I screened for investment-grade stocks with a 5-year trailing total return [TTR] of at least 26%, which is the rate that would double an investment every three years. All the stocks trade below my risk-adjusted Buy Below price. Dividend investors focusing on growth and total return will find some high-quality candidates worth consideration. As always, I advise readers to do their due diligence before investing. Thanks for reading, and take care, everybody! Please follow me here: Twitter: @div_gro Facebook: @FerdiS.DivGro I’d be happy to answer any questions you may have! Note: Interested in getting periodic e-mail notifications when articles are published here? Drop your e-mail in the box below!

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue