The bitterness of poor quality remains long after low pricing is forgotten!     

Leon M. Cautillo

The quote implies that, to get high quality, you have to pay a little more, and that it is worth it. I have found it to be true with furniture, food, shoes, and stocks.

Out of 745 stocks, only 25 were deemed to be “SELECT High Quality.” Yes, they are a bit pricier with an average Price/Earnings ratio of 36.0. On average, over the past five years, these 25 stocks have delivered a total average return of 24.2% per year. That may be paying a little more for!

The stocks below were selected from a pool of 745 stocks that have paid continually increasing dividends for at least 5 years in a row, are in the top 30 percent in terms of free cash flow growth, and have passed a battery of standards and tests, placing them in the top 3.4% overall.

Enjoy the picks — and we would enjoy your comments!

BASIC MATERIALS
Sector Averages | Yield: .9 | Reliability: 3.8 | DivSys5 Score: 30.2

» (SHW) Sherwin-Williams Co ~ Chemicals [ 31.3 | 28.2 ] Q 3 +
» (UFPI) UFP Industries Inc ~ Forest Products [ 29.1 | 16.2 ] Q 2 +

CONSUMER CYCLICAL
Sector Averages | Average Yield: 2 | Reliability: 3.8 | Average FCF Growth Rate: 16.1

» (PKG) Packaging Corp of America ~ Packaging & Containers [ 31.7 | 49.4 ] Q 1
» (POOL) Pool Corp ~ Travel & Leisure [ 33.6 | 25.9 ] Q 2 +

CONSUMER DEFENSIVE
Sector Averages | Average Yield: 1.1 | Reliability: 4.5 | Average FCF Growth Rate: 16.1

» (COST) Costco Wholesale Corp ~ Retail – Defensive [ 30.3 | 22.9 ] Q 1 + ♥
» (MKC) McCormick & Co Inc ~ Consumer Packaged Goods [ 23.6 | 20 ] Q 2 +

FINANCIAL SERVICES
Sector Averages | Average Yield: 1.3 | Reliability: 3.7 | Average FCF Growth Rate: 23.7

» (V) Visa Inc ~ Credit Services [ 39.5 | 60.7 ] Q 1
» (MKTX) MarketAxess Holdings Inc ~ Capital Markets [ 47.1 | 48.4 ] Q 1
» (SPGI) S&P Global Inc ~ Capital Markets [ 54.7 | 24 ] Q 1 +
» (FDS) FactSet Research Systems Inc ~ Capital Markets [ 23.3 | 23.8 ] Q 1
» (EV) Eaton Vance Corp ~ Asset Management [ 36.6 | 21 ] Q 3 +

HEALTHCARE
Sector Averages | Average Yield: .8 | Reliability: 4.2 | Average FCF Growth Rate: 28

» (UNH) UnitedHealth Group Inc ~ Healthcare Plans [ 44.1 | 59 ] Q 1
» (CHE) Chemed Corp ~ Healthcare Providers & Services [ 37.1 | 22.3 ] Q 1 +
» (ZTS) Zoetis Inc ~ Drug Manufacturers [ 51.3 | 0 ] Q 2

INDUSTRIALS
Sector Averages | Average Yield: .7 | Reliability: 3.9 | Average FCF Growth Rate: 17.8

» (HEI) Heico Corp ~ Aerospace & Defense [ 34 | 35.4 ] Q 2
» (BMI) Badger Meter Inc ~ Industrial Products [ 40.6 | 31.8 ] Q 1 +
» (ROP) Roper Technologies Inc ~ Industrial Products [ 24.4 | 31.5 ] Q 1
» (CTAS) Cintas Corp ~ Business Services [ 42.3 | 28.4 ] Q 2 +
» (WCN) Waste Connections Inc ~ Waste Management [ 27.4 | 12.6 ] Q 1
» (LSTR) Landstar System Inc ~ Transportation [ 46 | 12 ] Q 1
» (EXPO) Exponent Inc ~ Business Services [ 34.6 | 11.8 ] Q 1

TECHNOLOGY
Sector Averages | Average Yield: 1.1 | Reliability: 4.5 | Average FCF Growth Rate: 19.4

» (ACN) Accenture PLC ~ Software [ 24.1 | 25.5 ] Q 1
» (NVDA) NVIDIA Corp ~ Semiconductors [ 53.5 | 24.2 ] Q 2
» (CSVI) Computer Services Inc ~ Software [ 23 | 21.6 ] Q 1 +
» (OTEX) Open Text Corp ~ Software [ 34.4 | 17.9 ] Q 2


Please Note: This information is not an offer to buy stocks, but just a list that has been narrowed down as starting point for your further research. We always recommend further due diligence before making your decision to invest or not.

‘+’ indicates upward direction of DivSys™ score for stocks with positive 10 year dividend growth rates, basically giving us enough years of performance to mathematically determine if they are doing better or doing worse over time.

‘♥’ indicates an all-time, reliable favorite well-suited for most portfolios.