Screening For Elite Dividend Payers In Financials

Core Insights - The article discusses a screening process for identifying high-quality dividend-paying companies in the Financials sector, highlighting Mastercard (MA) as an elite performer and East West Bancorp (EWBC) as an elite value [2][9]. Dividend Growth Investment - Dividend growth investors seek companies with a history of consistent and increasing payouts, which provide a growing income stream while minimizing the need to sell shares [3]. - The compounding effect of reinvesting dividends can significantly accelerate portfolio growth, especially when combined with long-term capital appreciation [3]. - Three options for dividend growth investors include buying ETFs, building a selective portfolio, or blending both strategies [3]. Screening Process for Financials - The Financials sector comprises 682 companies, with 465 paying dividends, ranking just behind Utilities and REITs [4]. - Eight screening criteria are applied to identify high-quality long-term compounders, including a minimum of five years of increasing dividends and a minimum five-year revenue growth rate of 5% [4]. - This screening process narrows down the pool of dividend payers to 23 companies [4]. Elite Performer: Mastercard (MA) - Mastercard has a strong competitive position, benefiting from a highly efficient business model and significant investments in emerging technologies [7]. - The company has shown impressive growth metrics, including a 5-year revenue CAGR of 11.0% and a 3-year EPS CAGR of 24.5% [8]. - Despite a Quant Rating of F for valuation, Mastercard is considered reasonably priced relative to its historical averages, with a current share price target around $440 [7]. Elite Value: East West Bancorp (EWBC) - East West Bancorp is the sixth largest regional bank in the U.S., with a market cap of $10 billion and a strong position in China-U.S. business relations [9]. - The bank ranks first in several key metrics, including Tier 1 Capital Ratio (12.87) and EPS (3-year CAGR of 21.6%) [9]. - The average price target among Wall Street analysts is $88.60, with a recommendation to initiate or add to a position up to $76 [10]. ETF Considerations - Financials are heavily weighted in major dividend-focused ETFs, with significant holdings in companies like JPMorgan Chase (JPM), Visa (V), and Mastercard (MA) [11]. - Investors should be aware of the companies they are invested in through these ETFs and consider adjusting their positions accordingly [11].