The 20 Fastest Growing Dividend Aristocrats

Despite a slow-growing U.S. economy and a so-called earnings recession, many companies are increasing sales rapidly, and some of them even have stocks trading at relatively low valuations.

We’ll share a list of those stocks in a moment. One of the top 10 fastest growing Dividend Aristocrats combines both growth and value. AFLAC (AFL) has a 10 year per share growth rate of 8.53%, and a P/E ratio less than 10. It is rare to find businesses trading for cheap with a long history of dividend increases and strong growth.

It is particularly impressive to see businesses that are ‘in decline’ such as Coca-Cola and Pepsi on the list. US based soda sales may be slowly declining, but the beverage (and snack for Pepsi) business continues to expand as consumer tastes slowly shift from soda to juices and teas.

The 20 Dividend Aristocrats with the highest expected 5-year per share growth rates are below...

20 Dividend Aristocrats That Outperformed The Market In 2016

Dividend investors love the dividend aristocrats because they have a long track record of sustained increases in their regular payouts.

To become a dividend aristocrat, a company has to boost its dividend each year for 25 straight years, and that demonstrates an ability to weather the ups and downs of the economy and produce lasting growth. 2016 was a good year for dividend stocks generally, but some did better than others.

Let's take a closer look at these stocks that outperformed the market.

Here are the 20 best performing Dividend Aristocrats in 2016....

Dogs of the Dividend Aristocrats

Some of you may have heard of the "Dogs of the Dow" strategy. Investment manager Michael O'Higgins originally brought the strategy to the forefront in his 1991 book, "Beating the Dow."

The concept was simple. O'Higgins purchased the 10 laggards in the Dow Jones Industrial Average at the beginning of each year. Because dividend yields move in the opposite direction of stock price, he simply invested equal amounts of money in the 10 Dow stocks with the highest yields.

The Dogs of the Dow investing strategy has been popular since it was first introduced in 1991. The strategy is very simple: buy the 10 highest yielding dividend stocks in the Dow Jones Industrial average, and hold them for 1 year. Repeat every year.

Since he knew all of the stocks that were included in the Dow were inherently good companies, they were likely to bounce back quickly once investors realized they were undervalued.

His strategy worked. Backtesting showed that since the 1920s, this "Dogs of the Dow" strategy outperformed the market every year. And from 1992 to 2011 , the stocks averaged a return of 10.8% per year -- beating the S&P 500's 9.6% annual return over the same time period.

With that as inspiration, I've created my own custom "Dogs of the Dividend Aristocrats" strategy to find the absolute best Dividend Aristocrat stocks to purchase this year.

I've kept it simple -- picking the 10 highest-yielding Dividend Aristocrats out of the list of 54 companies that are part of the index.

Here is a great list of the "Dogs of the Dividend Aristocrats" (ranked by highest dividend yield to lowest):

5 Value Dividend Stocks With Yields Over 5%

The search for dividends, however, is more involved than picking a Chance card on the Monopoly board.

Bigger isn't always better, and just because a stock has a high dividend yield -- annual dividend divided by share price -- that doesn't necessarily mean that it is a better investment than one with a lower yield.

For example, the dividend yield could increase if a stock price drops, which could be a red flag for financial struggles in the underlying business.

A company's payout ratio, which is the relationship between what it pays to shareholders and how much profit it generates, is another key metric. Too high a payout ratio could limit a company's ability to buy back shares, build the underlying operation or raise dividends.

A healthy dividend is one that will grow over time and provide a solid stream of income for the investor.

Here are five picks with dividend yields exceeding 5%. All the stocks on the below not only carry high yields but also have price appreciation potential, so investors could get a double benefit from being selective and thinking like a value stock picker when looking at these names.

These are the results....

6 Bargain Dividend Champions

With the election in the rear-view—and Inauguration Day just a few weeks off—plenty of investors have asked me what they should do with their portfolios now.

I’ll name a few bargain dividend growers that should be on your buy list in a moment. Each of the stocks is a Dividend Champion who raised dividends for more than 25 consecutive years. In addition, the forward price multipes or forward P/E is under 15.

These are the results...