Top 10 Dividend Champions: Price-to-Book

I consider several factors when selecting an investment for the Dividend Farm. It’s not just a function of building a Top 10 list and grabbing something from it. Dividend Yield affects my portfolio’s cash stream so it’s one of many variables I review. Sector or industry is important for diversification and risk mitigation. Dividend Growth Rate is a factor I consider, but it doesn’t carry as much weight as others.

One variable I pay attention to is the Price-to-Book (P/B) ratio. If price is what you pay and value is what you get, how is value determined? 

Finding the book value of a company is one way to go about it.  Book value is a firm’s total assets less its intangible assets and liabilities per Investopedia. Dividing this figure by the number of shares outstanding results in book value per share. Comparing book value per share to the current price per share of the stock results in the Price-to-Book ratio indicating to me how much value I may receive for the money paid out. 

Am I paying more or less per share for a company than I might receive if it were liquidated and the net proceeds distributed?  I’ll hesitate to buy a stock if the P/B is in excess of 2:1 in most cases. I don’t like to pay more than $2 for every $1 I receive in value unless there are other favorable factors that can mitigate the risk associated with a high P/B ratio.

Below are the Top 10 Dividend Champions based on the Price-to-Book ratio as of December 2, 2019.  If you’re interested in any of these firms you can find updated P/B figures through your broker or in many cases via Yahoo! Finance.

Dividend Champion	P/B
Telephone & Data Sys.	0.59
People's United Financial	0.94
Universal Corp.	1.01
First Financial Corp.	1.04
Helmerich & Payne Inc.	1.07
United Bankshares Inc.	1.15
NACCO Industries	1.16
Old Republic International	1.17
Weyco Group Inc.	1.17
Chubb Limited	1.26

Do not select a stock based on the P/B value of a firm alone any more than picking a stock based solely on one of the other Top 10 lists.  As discussed above, many factors should be included in your analysis to mitigate risk and ensure you’re investing rather than speculating.  This is why it’s important to keep learning.  If you do that while compounding your dividends you can expect your investing savvy, portfolio size, and dividend cash flow to flourish.

Thoughts presented are those of the author, who is not a financial professional. Perspectives are not investment advice, but offered for the purpose of discussion and information. For specific investment advice or assistance, please contact a registered investment advisor, licensed broker, or other financial professional.