Analysts are constantly using quantitative screens to search the stock universe for what is the best-performing category. In a new report from Merrill Lynch’s Savita Subramanian, the superb strategist at the firm gives readers a quantitative gold mine of data, and there is one sector that has not only outperformed, but could continue to going forward.
The Merrill Lynch team cite high-dividend growth as the firm’s preferred exposure in a rising interest rate scenario. The stocks outperformed in the second quarter, and fell just slightly below the overall index, down 0.3 year to date. The group did outperform the high-dividend yield segment in both periods.
The Merrill Lynch analysts define high-dividend growth as the growth between trailing four-quarter total common dividends and the year-ago trailing four-quarter total. Here are the five companies with the highest percentage of dividend growth over that time
KLA-Tencor Corp. (NASDAQ: KLAC) comes in with the highest growth based on the Merrill Lynch parameters. The company posted an outstanding 932.5% dividend growth percentage number. The company is the world’s self-proclaimed leading provider of process control and yield management solutions, and it partners with customers around the world to develop state-of-the-art inspection and metrology technologies. These technologies serve the semiconductor, LED and other related nanoelectronics industries.
KLA-Tencor investors are paid a solid 3.80% dividend. Merrill Lynch has the stock rated at Buy with a $75 price target. The Thomson/First Call consensus target is lower at $65.30. Shares closed Thursday at $52.58, down almost 4%.