Top Dividend Growth Stocks — #11 Brunswick

It’s Dividend Top Twenty and we’re counting down the top Dividend Growth Stocks — coming in at #11 is Brunswick Corporation (BC). Brunswick makes recreation products worldwide for marine (boating), specialty vehicle, and non-marine markets; supplies parts and accessories, and dealer services to the marine industry through dealers and distributors. Founded in 1845, Brunswick is headquartered in Mettawa, Illinois.

Brunswick Corp (BC) is ‘First Class,’ failing only 1 of 5 Dividend System criteria. It has ‘Premier’ status being in the upper percentiles of this month’s stock universe. The company increased dividends for 13 years, making it a Dividend Contender 10+. We consider BC to be a Growth stock.

GROWTH:  BC’s 5-year average dividend growth rate is 13.2%, slightly above the dividend universe average of 12.4%. Free cash flow has grown at an average rate of 16.7% per year for the last 5 years versus the dividend universe at 8.3%, so BC is performing very well.

INCOME: BC’s current dividend yield is 1.1%, less than half of the average at 2.65%. 

SAFETY: We use the Dividend Coverage Ratio to measure the dividend’s safety – higher is better. BC has a DCR of 9.3 which is excellent, well above the minimum of 2. 

VALUATION: The price at time of analysis was $89.65, which we consider Undervalued. A fair price based on historical PE ratio and earnings would be around $95.36. The S&P500’s average PE ratio is 38.42, versus BC’s PE ratio of 19.14,  less than half of S&P 500 average PE, indicating great value; yet caution is indicated as there may be a reason the PE is so low. Our ‘Value Rating’ for Brunswick Corp is 3.5 out of 5.0, meaning that  both PS and PE moderately indicate value, compared to other dividend stocks available.

TIMING: Historical Yield and PE tell us that BC has ‘Marginal Signal currently’ Don’t eliminate a stock based on one factor (or lack thereof). 

QUALITY: Our quality formula gives BC a ‘Quality Rating’ of 4.1 (out of 5), versus the average of 2.7 for this month’s dividend universe.

TOTAL RETURN: Over the last 15 years, the compound annual growth rate for an investment in Brunswick Corp was 7.10% per year with dividends reinvested, versus the S&P500 Total Return of around 11% per year for the same time period. As you can see, BC is not performing as well as the S&P500 with dividends reinvested.

Compared to all dividend stocks paying 7 years or more of increasing dividends, we rate Brunswick Corp a ‘A+.’

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