10 Dividend Growth Stocks for May 2022 (2023)

my monthly series10 Dividend Growth Stocksfeatures ten Dividend Radar picks for further analysis and possible investments. To highlight different aspects of Dividend Growth (DG) investing, I'll use different screen stocks each month.

This month I evaluated the high qualitydiscounted stocks with a total return over 5 years of at least 10%. I used three different rating screens. Each share is discounted based on my fair value (FV) estimate, trades below my lower risk-adjusted purchase price, and has a forward return that exceeds the share's 5-year average return.

As always, I rank candidates by ranking them in descending order by quality score and using tie-breaking metrics where appropriate. My quality scoring system uses commonly used quality indicators from independent sources to assess the quality of dividend growth stocks.

Screening and Classification

For this month's article, I used the following screens:

• Stocks on the dividend radar
• High-quality actions (quality scores: 21-30)
• Stocks with a 5-year total return of at least 10%
• Stocks are trading below my FV estimate
• Stocks are trading below my risk-adjusted "Buy Below" prices (see below)
• Stocks whose future dividend yield is greater than the 5-year average dividend yield

My risk-adjusted "Buy Below" price allows premium valuations for the highest quality stocks, but requires discount valuations for the lowest quality stocks:

To estimate fair value (FV), I refer to fair value estimates and price targets from a variety of sources, including Portfolio Insight, Morningstar, and Finbox. Besides mefair value estimateusing the five-year average dividend yield of each stock. With up to 11 estimates and targets available, I ignore outliers (the lowest and highest values) and use the mean of the median and the mean of the remaining values ​​as my FV estimate.

The latest Dividend Radar (from May 12, 2023) contains 729 shares. Of these, 235 stocks have high quality scores (21-30), 281 have 5-year total returns of 10% or more, and 452 pass all of my rating screens. Only 63 Dividend Radar stocks make it through all of these screens.

I ranked these candidates by ranking their Quality Scores in descending order and breaking ties with the following metrics in order:

• Sure dividends onlyDividend Security Scores
• S&P globalcredit ratings
• Future Dividend Yield

The top ten ranked candidates are listed below.

Top 10 Dividend Growth Stocks for May

Here are the top ten ranked DG stocks this month:

I own all actions marked on myDivGro Portfolio.

The following company descriptions are my summary of company descriptions obtained from Finviz.

1. Ver (V)

Headquartered in San Francisco, California, V operates globally as a payment technology company. The company facilitates commerce through the transfer of value and information between consumers, merchants, financial institutions, corporations, strategic partners and government agencies. V provides its services under the Visa, Visa Electron, Interlink, V PAY and PLUS brands.

2. NIKE (VAN)

Founded in 1964 and headquartered in Beaverton, Oregon, NKE designs, develops, markets and sells athletic footwear, apparel, equipment and accessories. The company's portfolio brands include NIKE, Jordan, Hurley and Converse. NKE sells its products to retail accounts, through NIKE-owned stores and websites, and through independent distributors and licensees.

3. Automatic data processing (ADP)

ADP offers technology-enabled human capital management and business process outsourcing solutions. These offerings include payroll, benefits administration, talent management, human resource management, time management, insurance services, retirement services, and tax and compliance services. ADP was founded in 1949 and is headquartered in Roseland, New Jersey.

4. Canadian National Railways (CNI)

CNI was founded in 1922 and is headquartered in Montreal, Canada. The company operates Canada's largest rail line and the only coast-to-coast rail line in North America. CNI offers transportation services including rail, intermodal container and trucking services. It also includes storage and distribution, logistics parks, freight forwarders, customs brokers, industrial development and maritime services.

5. Accenture plc (ACN)

Founded in 1989 and headquartered in Dublin, Ireland, ACN provides technology and management advisory services to clients in all industries and geographies, including North America, Europe and emerging markets. ACN's operating segments are Communications, Media and Technology; Financial services; Health and Public Services; products; and sources

6. US State Water (AWR)

Founded in 1929 and headquartered in San Dimas, California, AWR provides electric and water services to residential and industrial customers in California through a holding company, Golden State Water Company. AWR provides water and sewer services to military installations in the United States through American States Utility Services, another holding company.

7. Thuisdepot (High Definition)

Founded in 1978 and headquartered in Atlanta, Georgia, HD is a home improvement retailer that sells a variety of building materials, home improvement products, and lawn and garden products. HD offers installation programs, home maintenance and professional service for do-it-yourselfers, DIYers and professionals.

8. Mastercard (MOTHER)

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.

9. NextEra-Energy (MAIDEN)

NEE generates, ships, distributes and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, coal and natural gas facilities. It also develops, builds and operates assets focused on the generation of renewable energy. Founded in 1925, NEE is headquartered in Juno Beach, Florida.

10. intuitive (INTU)

INTU provides financial management and compliance products and services to consumers, small businesses, the self-employed, and accountants in the United States, Canada, and internationally. The company operates in three segments: small businesses and freelancers, consumers, and strategic partners. INTU was founded in 1983 and is headquartered in Mountain View, California.

Note that GD's top ten stocks are candidates for further analysis, not recommendations.

Key Statistics and Fair Value Estimates

Here are key metrics of interest to dividend growth investors, along with quality indicators and fair value estimates:

• year: years of successive dividend increases

• Which: Quality score of 30

• forward performance: future dividend yield of a recent stockprecio

• 5-average produce: Average dividend yield over 5 years

• 5-DGR: 5-year compound annual dividend growth rate

• 5-EGR: EPS 5-year compound annual growth rate

  (Video) 💰 7 Best Dividend Stocks to Buy Now May 2023 (Dividend Growth Stocks)

• 5-RGR: compound annual sales growth for 5 years

• 5 years old: the expected cost return after five years of investment

• ACN:Custom Fish Soup quantity

• 5-TTR: Composite total return over 5 years

• PD NAV: Value lineprice stability

• VLFS: Value Line Financial Strength Ratings

• EM EM: Morning Stareconomic foso

• SP CR: S&P Global Credit Ratings

• SS-DS: Only safe dividendsDividend Security Scores

• Director General de IP: Portfolio overviewDividend Quality Figures

• VF: my estimate of fair value

• -Disk + Primary: discount or premium of the recent actionpreciofor meVFEstimation

• Precio: recent share price

Created by the author from a personal spreadsheet. Key statistics and fair value estimates for GD's top ten stocks for May.

Comment

Here's a comparative analysis of an equally weighted portfolio of this month's top ten DG stocks, courtesy of Finbox.com:

From a price-performance perspective, the portfolio would have outperformed the S&P 500 (represented by SPDR S&P 500 ETF Trust (espion)) over the past five years, with a return of 75% vs. 52% for SPY.VAN,MAIDEN, InHigh Definitionhave the highest profits according to analysts' price targets.

High Definition(3.00%) offers the highest forward returns, whileV(17.6%) inMOTHER(17.5%) have higher 5-year DGRs.

INTU(18),MOTHER(17), inHigh Definition(16) have the highest ACNs, andINTU(21.7%) has the highest total return in 5 years.

Only one of the actions (High Definition) goes through the five minesstock selection criteriafor adding new positions to my DivGro portfolio:

1. Stock Quality: quality scores ≥ 21 (Extraordinary,Great, ofPrimaratings)
2. stock valuation: Price ≤ Buy Below Price (trade below my risk-adjusted below buy price)
3. growth outlook: Green ACN (likely to generate an annualized return of 8%)
4. income outlook: 5-year YoC ≥ 4.00% (probably high YoCs after 5 years of ownership)
5. dividend security: Dividend security scores > 60 (dividends consideredVery sureofSafe)

high definition is onedividend contenderwith a series of increasing dividends for 14 consecutive years.

HD's track record of earnings and dividend growth is impressive, and stock earnings and free cash flow payout ratios are "low for most companies" (according toSure dividends only).

based on my preferencetarget portfolio weights, my HD position is overweight about 31 stocks, which means I won't be adding any stocks to my HD position for the foreseeable future. However, HD is undervalued, trading 19% below my lower risk-adjusted purchase price. This is confirmed by the following valuation tables:

Portfolio InformationMixed fair valuecombines up to five PV estimates, two based on P/E and three estimates based on dividend yield. The estimates that are used depend on the growth characteristics of a stock, whether it is a hyper-growth, growth, or slow-growth stock. In the case of HD, a slow-growing stock, the five FV estimates are weighted equally to determine HD's mixed fair value ($347.07). Analyst consensus estimates are used to determine the two P/E-based FV estimates.

INTUit's the only stock in this month's top-ranked stocks that I don't own. Many dividend growth investors would balk at the idea of ​​investing in underperforming stocks like INTU, especially given the current high rate of inflation. With its 5-JK of 1.6%, INTU has poor earnings prospects, but is the best performing stock based on its 5-year lagged total returns.

make use of oneTotal Stock Return and Reinvestment of DividendsCalculator, a $10,000 investment in INTU ten years ago, with dividends reinvested, would be worth $77,160 today, for an annual return of 22.67%:

Those are remarkable total returns!

closing words

In this article, I ranked 63 high-quality discount Dividend Radar stocks with a total return of at least 10% over 5 years and presented the top ten ranked candidates.

I own all but one of the stocks in the top 10 this month. The exception is INTU, a low-yielding stock with high dividend growth and an impressive lagged total return.

HD looks like a solid pick this month, with INTU an interesting candidate for dividend growth investors looking for high total return prospects.

Depending on your investing style, you may want to focus on the following stocks first:

• Forincomeinvestors:High Definition
• Forvalorinvestors:High DefinitionInV
• Forfocused on dividend growthinvestors:V,MOTHER,High Definition, InINTU
• Forvery suredividends:V,VAN, InMAIDEN

As always, I encourage readers to do their due diligence before buying any stock I cover.

Thanks for reading and take care, everyone!

FerdiS invests in dividend stocks and writes options to increase dividend income. He manages DivGro, a primarily dividend growth stock portfolio created in January 2013. With nearly 20 years of investing and trading experience, FerdiS enjoys writing articles on dividend growth investing, options trading, stock selection, asset management, portfolios and generation of passive income. His DivGro blog features over 1,000 posts and a live public spreadsheet with all the details of his DivGro portfolio, allowing readers to follow his investment journey. FerdiS collaborates with the founders of Portfolio Insight, an online platform for portfolio management and investment analysis. Together we maintain and publish weekly Dividend Radar, a free dividend growth stock spreadsheet.