Stock screening for dividend growth stocks is an arduous and meandering process, and it is both art and science. Here, in this piece of work, we have chosen the FTSE AllShare Index as our universe for the search of dividend growth stocks.
Universe – FTSE All-Share
Historical 5-year Average Price/Earnings multiple > TTM Price/Earnings multiples
LTM Dividend Yield > 4.4% or FTSE 100 Index dividend yield
YTD Price % change > 1%
- International Personal Finance PLC: United Kingdom-headquartered LON: IPF is engaged in consumer lending business. Its outstanding market-capitalisation of £402.18m ranks it among the constituents of FTSE small-index. On a YTD basis, its shares have traded ~11.7% higher to GBX 179.80 (closing price as on Feb 12th, 2020); however, on a YoY basis, its shares sported a negative price return of ~9.1%.At the last traded level, the stock’s trailing twelve months PE multiple of 5.95x was approximately 40% lower against its past 5-years historical average PE multiple of 9.8x. Also, the stock is sporting an LTM dividend yield of 6.9%, which is considerably above the FTSE 100 index’s dividend yield of 4.4%. Despite, a lower P/E ratio against the historical average and lucrative dividend yield, its shares traded significantly above its long-term support levels of a 200-day simple moving average of GBX 135, which implies a Price/200-day SMA of 1.34, which depicts a positive prevailing price trend in the stock.
- Chesnara PLC: The £501.21m market-cap LON: CSN is a UK-headquartered life insurance company. Its market capitalisation ranks it in the category of FTSE small caps. So far since the beginning of 2020, the stock has delivered a price return of ~5.7% (YTD to Feb 12th, 2020 closing), however, on a YoY basis, it handed a marginally negative return of less than 1%. At the last traded level, its shares traded at a TTM P/E multiple of 8.84x, which was approximately 25% discount against its historical 5-year average P/E multiple of 11.86x. Together with decent price return on a YTD basis and commanding lower TTM P/E valuation against the historical average, its shares are offering an eye-popping dividend yield of 6.2%, which is significantly above the UK’s broader benchmark dividend yield and 10-year Government Bond yield. Also, at the last traded level, its shares closed above its long-term support level of 200-day SMA of GBX 312.0, which implies a Price/200-day SMA ratio of 1.07x, a favourable current price trend in the stock.
- SSE PLC: UK’s premium market listed and traded LON: SSE is a conventional electricity company. Also, the £16.7bn market-cap company is a key constituent of the UK’s FTSE 100 index. Shares of SSE have recorded a price return of ~12.9% on a YTD basis and surged above 36% on a YoY basis. At its last closing price of GBX 1,624.5 (Feb 12th 2020), its TTM P/E multiple stood at 10.51x, which was a discount of ~27% against its historical 5-year average P/E multiple of 14.45x. SSE shares are offering an alluring dividend yield of 6%, which is above its benchmark index dividend and multi times to the 10-year Government Bond Yield. Also, at the last traded level, its shares traded substantially above its crucial long-term support level of 200-day SMA of GBX 1245.0. A Price/200-day SMA ratio stood at 1.30x, which reflects a positive trend in the stock.
- Phoenix Group Holdings PLC: London Stock Exchange-traded LON: PHNX is a Life Insurance business with an outstanding market capitalisation of £5.7bn, which ranks it among the FTSE 100 constituents. On a YTD basis to Feb 12th, 2020, its shares have delivered a price return of 6.4% and leapt up more than 23% on a YoY basis, respectively. At the last closing price (Feb 12th, 2020), its shares traded at TTM P/E multiple of 12.12x, which was a discount of approximately 24% against its historical 5-year average PE multiple of 15.86x. Together with decent price return on a YoY and YTD basis and relatively lower P/E multiple valuation against the historical average, its shares are offering a dividend yield of 5.8%, which is higher against its benchmark index dividend. Also, at the most recent closing price of GBX 796.8, the difference between Price and its 200-day SMA was positive, which reflects that the stock is oscillating above its long-term support level, which is typically considered as a favourable trend in the stock. Also, Price/200-day SMA ratio stood at 1.13x, which again a positive technical measure.
- Investec PLC: UK-based LON: INVP is a diversified financial services company with an outstanding market-capitalisation of £3.145bn. Its market-cap ranks it among the mid-caps listed and traded on the London Stock Exchange and key constituent of the UK’s broader mid-cap index FTSE 250. On a YTD basis, its shares have delivered ~ 2.0%; however, on a YoY basis, its shares have given up ~7%. At the LTM P/E multiple of 8.86x, its shares traded at a discounted valuation of ~ 29% against its historical 5-year average P/E multiple of 12.47x. Shares of INVP offering a dividend yield of 5.4%, which is relatively higher against the UK’s benchmark index dividend yield of ~4.4% and multiple times of the 10-year Government Bond Yield. Also, at the last traded price of GBX 451.9 (Feb 12th, 2020), its shares oscillated near its 200-day SMA level of GBX 452.69.
However, one has to further dig down into these above-mentioned stocks to build any position.
*All data have been drafted from Thomson Reuters.
*Note: The above-mentioned stocks do not constitute a recommendation from our side in any manner.