By Brian Nelson, CFA
Valuentum’s investment research covers a lot of ground. Not only do we assess fundamental components such as revenue and earnings growth and technical considerations such as relative pricing strength in our 16-page stock reports, but our supplemental dividend reports showcase each firm’s dividend yield, strength and track record.
We rely on the weight and depth of our research and analysis, which goes well beyond historical data, to arrive at a pertinent and relevant fundamental free cash flow measure of dividend health, the Valuentum Dividend Cushion. The Valuentum Dividend Cushion ratio is based on the firm’s future fundamental cash-flow generation and the health of its balance sheet, helping investors avoid the two major factors that cause dividend cuts (click here). The ratio is forward-looking and meaningful. For example, in the case where one of your dividend-growth holdings has a ratio of 2, you might say the following:
Company XYZ is estimated to cover its future expected cash dividends and embedded growth rate in them (as shown in the dividend report) with traditional free cash flow (cash flow from operations less capital expenditures) and after considering the obligations of its balance sheet by 2 times during the next 5 years, on the basis of Valuentum’s estimates.
Though the board will always have discretion over any dividend payment, we think this is a meaningful statement about your dividend-growth holding. You can also see that the Valuentum Dividend Cushion ratio can easily be compared to those of other firms. In finding a great dividend growth stock, we look for firms that have an excellent combination of a high dividend yield and a Valuentum Dividend Cushion ratio comfortably above 1 (preferably above 1.25).
You should also check the firm’s valuation and Valuentum Buying Index ratings, too, to make sure it may be an excellent idea for consideration. Our very best dividend growth ideas are found in our Dividend Growth Newsletter portfolio (click here). The Valuentum Dividend Cushion ratio is updated frequently (in conjunction with the firms’ quarterly/half-year earnings release), so please check back at least on a quarterly basis (every 3-4 months). Use the download below to uncover stocks that may have strong Dividend Cushion ratios and highly-rated Economic Castles.
Just having access to this valuable metric alone could save your income portfolio thousands of dollars! And you can’t find it anywhere else.
How to filter data in Excel? Click here.
Download the screener or build your own screener here (xls).
Important Note: The data and rankings are updated frequently and are current as of the date of this download. Valuentum may have updated the stock and dividend reports of companies after the published date of this download. Members should view the rankings in this download as a starting point for further research and always access the individual stock page of each desired company on our website for its most recent ratings, metrics, and valuation information. If you have any questions about our services, please contact us at info@valuentum.com.
Note on Recent Improvements to the Website
In everything we do, from combining value and momentum into a process at the stock-selection level, to developing the forward-looking Dividend Cushion ratio, which has helped income investors, to expanding upon the concept of the economic moat to establish the Economic Castle rating, everything we do puts INVESTORS FIRST — and frankly, these three metrics barely scratch the surface of what we do and the research and analysis that we continue to incorporate into our work. In the spirit of making our data as useful as possible, we wanted to let you know we’ve made a couple improvements to the website.
The first improvement is that now all generalized stock screens on the website (on the left column, as in this article) will be a downloadable Excel file, instead of an archived article with a list of stocks. The descriptions of the screens will be the same, but you’ll be able to use that downloadable file to come up with your own screen with the data provided. The information in the downloadable Excel file and the information on our stock pages will be updated at the end of each week such that readers can access the most up-to-date information in either a screen Excel download or on the stock page. Please be sure to access the stock price chart on each stock page for the most recent stock price information, and the valuation analysis behind our fair value estimates can always be found in the 16-page report (please note each stock and dividend report has an ‘as of’ date on them).
The second improvement is related to enhancing website functionality. We’ve invested resources to improve our stock pages, where up-to-date information can be found, so we no longer need lists of company reports on the website, per se. Specifically, we are now doing away with the list of Dividend Reports (on the right column of the website) because we think it makes sense for members to access that information on each company’s stock page, where the most recent stock price chart, company commentary, press releases, its stock report (with valuation analysis), and the dividend report (with Dividend Cushion ratio), among other considerations, reside. There is a tremendous amount of analysis for each company on each stock page. Here is one on General Mills (GIS), for example: