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NEW YORK (Scott's Investments) -- Recently I summarized a study showing the performance of high yield, high dividend growth stocks. The study showed that stocks with relatively high yields and relatively high three-year dividend growth rates have historically outperformed stocks with lower yields and lower dividend growth rates.

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    I used data provided by DRIP Investing to filter for stocks with high yields and high dividend growth rates. The data is as of the beginning of December and includes all Dividend Champions, Contenders and Challengers. Dividend Champions are stocks that have increased dividends for at least 25 years, Contenders have raised dividends for 10 to 24 years, and Challengers have raised dividends for five to nine years. In other words, I started with a list of stocks that have raised dividends for at least 5 years straight. The rational is to start with a list of stocks that have a relatively long history of raising dividends and a consistent dividend policy.

    Using this list of 449 stocks, I then sorted the stocks into quintiles based on dividend yield and three-year dividend growth. Stocks which were in the top quintile in both yield and three-year dividend growth are listed below. The list contains only 15 stocks out of a possible 449 and should serve as starting point for further investigation.

    It should be noted that the study referenced also showed that those stocks in the second-highest-yield quintile and highest-dividend-growth quintile actually performed better than those in the highest-yield/highest-dividend-growth quintiles. My hypothesis is that the highest yielding stocks have yields reflecting expectations of an uncertain earnings future or unsustainable dividend. Therefore, those stocks with marginally lower yields may have more certain futures while still having the added value of a relatively high yield compared to the entire universe of stocks.

    The stocks in the second highest yield quintile and the highest three-year dividend growth rate quintile are listed below:

    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 Stocktwits Twitter.