31 Dividend Stocks Poised To Beat The Market
By: Jonathan Wolfgram,
31 dividend stocks poised to beat the market are identified by their free cash flow, explosive earnings per share (EPS) growth and “the magic formula.”
To outperform the S&P 500 — or, as they say, to beat the market — is the goal of fund managers and investors across the United States. But among active fund managers, those generally considered to be the elites of the investing world, 78% failed to outperform the market over the trailing five-year period.
Enter Barry Moore, who used the work of Joel Greenblatt and William O’Neil to develop a so-called “magic formula.” The stocks identified by this formula have beaten the market seven of the eight years since its development (underperforming in 2018), and are likely to do so again.
We selected only those stocks identified by the formula that pay a regular dividend and found 31 dividend stocks poised to beat the market. Since 2013, the S&P 500 has returned 214%. Our review of Moore’s magic formula during that time showed a return of 558%.
Listed below are the returns for the trailing eight-year period, where the blue line represents our selection of stocks from Moore’s formula and the red line shows the S&P 500 benchmark.
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And here are the returns in the trailing one-year period, where the 31 dividend stocks poised to beat the market have risen 134.1% and the S&P 500 has climbed 41.8%.
Data provided by StockRover.
The original set of stocks identified by Moore averaged a 25.4% increase year-over-year, compared to the S&P 500’s 13.8%.
The formula works by combining high free cash flows alongside explosive EPS (earnings per share) growth to return a baseline of quality stocks. From there, the list is narrowed down using a unique return on capital (ROC) formula and a modified earnings yield equation, both developed by Greenblatt. Our version then chops this list down further to include only those stocks that pay a regular dividend.
Using this formula, we identified 31 dividend stocks poised to beat the market. They are ranked in ascending order of quality in the table below.
| Ticker | Sector | Consecutive Annual Dividend Hikes | Market Cap | Latest Close Price | Projected 12 Month Dividend Yield | Trailing 12 Month Dividend Yield |
|---|---|---|---|---|---|---|
| VVV | Services | 0 | $4.92B | $38.36 | 1.30% | N/A |
| BGFV | Services | 0 | $36.55M | $1.61 | 12.42% | 29.50% |
| STC | Financials | 3 | $2.07B | $74.60 | 2.68% | 2.58% |
| DKS | Services | 1 | $12.94B | $223.39 | 1.97% | 1.97% |
| BKE | Services | 1 | $2.65B | $52.18 | 2.68% | 7.47% |
| BCC | Materials | 1 | $5.23B | $136.26 | 0.62% | 4.27% |
| GPI | Services | 3 | $5.69B | $427.10 | 0.44% | 0.44% |
| TGT | Services | 52 | $61.64B | $134.52 | 3.33% | 3.30% |
| SEM | Health Care | 0 | $2.52B | $19.48 | 2.57% | 2.57% |
| WSM | Services | 17 | $24.08B | $195.63 | 1.17% | 1.39% |
| MLM | Materials | 8 | $33.67B | $550.92 | 0.57% | 0.56% |
| MCY | Financials | 0 | $4.05B | $73.16 | 1.74% | 1.74% |
| FIX | Industrials | 11 | $16.46B | $462.33 | 0.30% | 0.26% |
| COKE | Consumer Products | 1 | $9.85B | $1,269.74 | 0.79% | 1.58% |
| VCTR | Financials | 4 | $4.18B | $64.30 | 2.55% | 2.23% |
| UI | IT & Communications | 0 | $20.86B | $344.89 | 0.70% | 0.70% |
| FBHS | Consumer Products | 0 | $7.39B | $57.62 | 0.00% | N/A |
| PRIM | Industrials | 0 | $4.26B | $79.40 | 0.40% | 0.30% |
| LOGI | IT & Communications | 0 | $12.79B | $84.39 | 1.62% | 1.62% |
| BIG | Services | 0 | $14.75M | $0.50 | 0.00% | N/A |
| RCKY | Consumer Products | 0 | $178.23M | $23.91 | 2.59% | 2.59% |
| PHM | Services | 5 | $24.29B | $118.42 | 0.74% | 0.68% |
| ENSG | Health Care | 10 | $8.16B | $142.42 | 0.17% | 0.17% |
| TPX | Consumer Products | 2 | $10.05B | $57.86 | 0.90% | 0.90% |
| LEN__B | Services | 0 | $4.79B | $147.64 | 1.35% | 1.35% |
| LEN | Services | 0 | $36.87B | $154.39 | 1.30% | 1.30% |
| DHI | Services | 9 | $48.13B | $149.87 | 1.07% | 0.87% |
| CCS | Industrials | 2 | $2.59B | $82.74 | 1.26% | 1.26% |
| SBSW | Materials | 0 | $3.11B | $4.01 | 7.48% | N/A |
| RILY | Financials | 0 | $152.69M | $5.04 | 39.68% | 59.52% |
| LOMA | IT & Communications | 0 | $0 | $13.22 | 11.95% | N/A |
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