Dividend Growth Stocks: What The Pros Are Holding

Every once in a while I like to do a dividend growth stock related exercise.  Sometimes it is a stock screen, sometimes I do a little back testing and occasionally I will run a survey to see what the DGI community is up to.  This time I thought it would be interesting to see what stocks are held in some of the top dividend growth stock funds.

I do these exercises to try and generate ideas for my watch / buy list.  My main basket of stocks comes from my monthly CCC list screen but I’m constantly looking for other sources.  Digging into the portfolios of several professionally run funds seemed like a good place to look.

As usual I am not recommending the purchase of any stocks listed in this post so please do your own due diligence.  All I can say is that if the pros are holding these stocks then they are probably worth researching.

 

Screening Method:

I looked at the top 25 holdings by weight in 6 different dividend growth stock funds:

  • Vanguard Dividend Growth Fund
  • Fidelity Dividend Growth
  • T Rowe Price Dividend Growth
  • iShares Core Dividend Growth
  • Oppenheimer Rising Dividend Fund
  • WisdonTree U.S. Dividend Growth Fund

The largest holding in each fund received 25 points, the second largest received 24 points, and so on down to the 25th largest holding which received 1 point.  I then added up the points for each stock across all 6 funds.  This is the final score that I will report below.

 

Results:

Before listing the top scoring stocks, here is the largest holding in each of the 6 funds:

Largest Holdings In Dividend Growth Stock Funds

 

Now let’s see the results after adding up all of the points from the six funds (you can click the image for better resolution):

Best Holdings in Dividend Growth Stock Funds

Click me for higher resolution

The top stock by a wide margin is Microsoft (MSFT) with a total score of 138.  Beyond that the scores tighten up a bit with XOM, PEP, AAPL and JNJ rounding out the top 5.

Another thing I looked for was the frequency in which each stock appeared in the top 25 (by weight) of the 6 funds.  MSFT was in the top 25 holdings of all 6 dividend growth stock funds.  XOM was in 5 of the 6 funds.  Finally, ORCL, PEP and UNH were in the top 25 of 4 out of 6 funds.

So there you have it.  Another basket of stocks for me to research.  I have many of the stocks that made this list which is quite comforting.  It looks like I’m thinking along the same lines as some managed funds that focus on dividend growth investing.  As for the ones I don’t own, I am interested in buying or at least researching PEP, GE, NKE, CVS, V, and MDT.

Full disclosure: Long MSFT, XOM, AAPL, JNJ, KO, WFC, MCD, HD, UPS, QCOM, CVX and MO

 

What do you think of this list?  Any surprises?  Do you hold a lot of these companies or at least have them on your buy list?  Let me know in the comments section below!

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6 Responses

  1. Hi Ken,

    I like the way you think! I’ve done something similar in the past and pretty much came to the same conclusions. We all own a lot of the aristocrats, and scratch our heads about the companies you don’t typically think about as dividend growth plays. Eg, Nike.

    Thanks for laying this out so nicely! Once again, great job!

    • Dividend Empire Dividend Empire says:

      Thanks Blake! I really enjoy doing these exercises and they always reveal some surprises. For example I definitely consider MSFT a high quality dividend growth stock and it was one of the first stocks I bought but I wasn’t expecting it to top this list – especially by such a wide margin. Thanks for stopping by and commenting!

      Ken

  2. I just bought JNJ last week, and it’s good to see them on your list. I wonder if XOM is going to maintain dividends, and if CVX will slide down the list now that they didn’t raise dividends yet this year.
    Also fun would be to bump these up against the dividend aristocrats.
    Thanks for the post, interesting read!

    • Dividend Empire Dividend Empire says:

      Glad you enjoyed the post AP. Congrats on your JNJ purchase – I think you made a good move there. It will be interesting to repeat this exercise in a few months to see which stocks fall in and out of favor.

      Take care,

      Ken

  3. DE,
    Thanks for sharing your list! Great work…I think the list is a great one. I would have expected to see Clorox and Emerson Electric since they have dividend growth of over 50 years consecutively. I really like JNJ and PG and need to buy in while the prices are still low. Talk soon.
    LOMD

    • Dividend Empire Dividend Empire says:

      Thanks LOMD. Ya I was a bit surprised by the results as well. I forgot to mention this in the article but one of the dividend growth stock funds actually held Google! I’m considering picking up some more JNJ after the recent market rout as well. Congrats on your AT&T purchase by the way – I think that was a great buy.

      Take care,

      Ken

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