NEW YORK (Scott's Investments) -- I have written extensively on the U.S. Dividend Champions list maintained and updated by DRIP Investing. The list is comprised of stocks that have increased their dividend payouts for at least 25 consecutive years.

My recent Dividend Champions articles on Scott's Investments have focused on one or two company metrics, such as payout ratio, yield or past performance. However, for this article I created a simple quantitative system that combines multiple metrics to give an "overall" rank of the stocks within the U.S. Dividend Champions December list.

This ranking system combines dividend yield, payout ratio, PEG and price momentum. For those interested in creating a system of their own for free using Finviz and Excel, Open Office or Google Docs, please see a recent article providing step by step instructions.

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    Historical tests have shown that stocks with higher yields and lower payout ratios as well as those with higher yields and higher price momentum have tended to outperform other stocks. History very well may not repeat itself; however, I believe it provides a basic foundation for research and further due diligence.

     

    Starting with the 98 stocks on December's Dividend Champions list, the top 10 stocks based dividend yield, payout ratio, PEG and price momentum are below. Equal weight was given to yield (the higher the better), payout (the lower the better), PEG (the lower the better), and price momentum (the higher the better).

    These certainly are not the only company metrics of importance nor is providing equal weight to each metric the only method for establishing overall ranks. For example, an investor seeking higher yields and willing to accept higher payout ratios could create a system in which yield is given more weight.

    I look forward to any feedback and would be willing to create different systems upon request.

     

    Data source: Finviz


    At the time of publication, author had no positions in stocks mentioned.
    Scott's Investments, focuses on consolidating and tracking free online investment resources for the public with an emphasis on ETFs, portfolio/trading strategies and macroeconomics. Follow Scott's Investments on Twitter.