We used the CPMS engine to screen three companies based on strong capital management, dividend stability, and growth. Stocks had to rank in the top 15th percentile by expected Yield, 10Y & 5Y Std. dev. of dividend growth, 10 dividend growth. Then it was further ranked based on the lowest standard deviation of 10Y Dividend growth in the S&P 500 stock universe. Additional criteria included a market cap above $2 billion, 10Y & 5Y dividend growth standard deviation below 5 per cent, 10Y dividend growth above 3 per cent and expected dividend yield to be above 1.5 per cent.
The three stocks that met these criteria were Colgate-Palmolive (CL-N), Kimberly-Clark Corp (KMB-N) and Pfizer Inc.
Colgate-Palmolive has a Quality score of 83 and a volatility score of 65, indicating its stability and strong ranking compared to its sector and the overall market. CPMS helps determine the most suitable strategy for a stock, and Colgate’s strong scores in Quality and strength in dividend stability make it an ideal fit for the Income strategy.
The Income strategy is designed for income-oriented investors. This strategy selects large cap stocks with high dividend yields compared to their peers and with high return on assets and equity whose expectations of future earnings are increasing. Colgate’s expected yield of 2.65 per cent suggests it to be suitable for income seeking investors. However, the stock’s low momentum score of 46 suggests stability in stock price so it might not be for Investors seeking price appreciation and it is advisable to consider this fact when considering the stock.
A review of Colgate’s key metrics highlights why the company fits well within our screen for quality companies. In CPMS’s Factors Detail section, Colgate ranks above the 90th percentile for nearly all quality measures, both within its sector and across the broader market. Notably, the company demonstrates a ROC stability (5Y) of 1.39 per cent and an ROC (5Y) of 15.99 per cent, underlining its sustainable earnings and profit generation. Additionally, an Economic Performance Index of 3.38 reflects Colgate’s ability to create economic value, achieving a return on capital that is 3.38x times its cost of capital.
KMB stands out in quality, with a score of 79 in that category. Furthermore, it has a great score in Earning growth strategy. The CPMS US Earnings Growth Strategy is suited for investors seeking high growth rates. It is designed to select stocks with strong reported returns on equity. The strategy emphasizes stocks with high current profitability to equity ratios. Importance is also placed on stocks with high earnings estimate revisions and earnings surprise.
A review of Kimberly’s key metrics highlights why the company seems to be an all-rounder in our screen as mentioned in our previous Number Cruncher. In CPMS’s Factors Detail section, Kimberly ranks above the 80th percentile for nearly all quality measures, both within its sector and across the broader market. Kiberly demonstrated an impressive free cash flow growth (3Y) of 23.97 per cent, EVA growth (3Y) of 14.46 per cent and a PEG ratio of 1.62x.
These figures highlight that the stock is a quality company with cashflow growth, stable earnings and a dividend stability (5Y) of 1.21per cent with reasonable value.
Pfizer Inc (PFE)
Pfizer has a value score of 72 and a yield score of 61. The company has an impressive dividend yield of 6.9%. Additionally, it scores 94 in the Dividend Growth strategy. CPMS US Dividend Growers Strategy is suited for income-oriented investors seeking to invest in financially stable companies that are consistently growing their dividends. Stocks must have increased their dividend for at least five consecutive years.
CPMS’s Factor Tilt tool provides a compelling view of the company’s strengths, highlighting its solid positioning in value, yield, and quality factors. Diving into individual metrics, we see that PFE has consistently ranked in the 72nd to 87th percentile for Average ROC (5Y), indicating strong and sustained return on capital. For the Economic Performance Index (EPI), it scored to be 84th percentile, reflecting solid value creation.
Additionally, in terms of Price to Earnings, Pfizer scored to be 81st percentile and for Dividend yield (3Y), the company has remained between the 85th and 89th percentile over the past year. These insights from the CPMS engine reveal the company’s resilience and strength, not just at the factor level, but also across key individual metrics giving an opportunity to investors seeking quality investments at cheaper valuations.
Conclusion
By leveraging the CPMS engine, investors can screen and identify stocks that align with specific investment criteria. In this analysis, we focused on stocks that exhibit strong quality, dividend growth and stability. Colgate-Palmolive, Kimberly-Clark Corp, and Pfizer Inc. all demonstrated these key metrics, emphasizing income along with quality.
In conclusion, the CPMS engine provides a valuable tool for identifying high-potential stocks that align with specific investment strategies. However, it is essential to consider individual risk tolerance and investment objectives before making any commitments. A well-balanced approach that incorporates both fundamental analysis and strategic insights from CPMS can help investors navigate market uncertainties and optimize portfolio performance.
