8 Undervalued Dividend Champions With Good Corporate Governance

One important consideration for stocks is the corporate governance policies of the company, such as its board composition and shareholder rights, which have important implications to the company’s performance.

RiskMetrics Group gives ratings for four areas of corporate governance, on risks related to: the board, the audit committee, the compensation committee, and shareholder rights.

We ran a screen on dividend champions, those that have consistently raised their dividend per share over the last 25 years. We first screened these stocks for those that appear undervalued to earnings growth, with PEG under 1. Then, we screened for companies that received “low risk” ratings on at least three of the four corporate governance areas covered by RiskMetrics Group.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

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We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

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Do you think these companies are being run well? Use this list as a starting-off point for your own analysis.

List sorted by market cap:

Target Corp. (TGT): Discount, Variety Stores Industry. Market cap of $32.58B. PEG at 0.99. Dividend yield at 2.54%, payout ratio at 24.0%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories. The stock has lost 7% over the last year.

Walgreen Co. (WAG): Drug Stores Industry. Market cap of $31.45B. PEG at 0.98. Dividend yield at 2.59%, payout ratio at 26.94%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories except for 'medium risk' in Compensation Risk. It's been a rough couple of days for the stock, losing 6.23% over the last week.

Lowe's Companies Inc. (LOW): Home Improvement Stores Industry. Market cap of $24.86B. PEG at 0.93. Dividend yield at 2.93%, payout ratio at 30.72%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories except for 'medium risk' in Compensation Risk. It's been a rough couple of days for the stock, losing 5.59% over the last week.

AFLAC Inc. (AFL): Accident & Health Insurance Industry. Market cap of $17.74B. PEG at 0.83. Dividend yield at 3.16%, payout ratio at 30.70%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories except for 'medium risk' in Compensation Risk. It's been a rough couple of days for the stock, losing 10.25% over the last week.

Dover Corp. (DOV): Diversified Machinery Industry. Market cap of $10.16B. PEG at 0.99. Dividend yield at 2.31%, payout ratio at 24.26%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories except for 'medium risk' in Compensation Risk. The stock has performed poorly over the last month, losing 17.64%.

Stepan Company (SCL): Cleaning Products Industry. Market cap of $741.38M. PEG at 0.97. Dividend yield at 1.43%, payout ratio at 15.49%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories except for 'medium risk' in Shareholder Rights Risk. The stock is a short squeeze candidate, with a short float at 6.62% (equivalent to 12.5 days of average volume). The stock has gained 25.51% over the last year.

Nacco Industries Inc. (NC): Farm & Construction Machinery Industry. Market cap of $636.13M. PEG at 0.08. Dividend yield at 2.81%, payout ratio at 13.22%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories except for 'medium risk' in Board Risk. This is a risky stock that is significantly more volatile than the overall market (beta = 2.33). The stock has performed poorly over the last month, losing 24.23%.

Gorman-Rupp Co. (GRC): Diversified Machinery Industry. Market cap of $586.04M. PEG at 0.95. Dividend yield at 1.29%, payout ratio at 22.50%. According to RiskMetrics, the company has 'low risk' in all corporate governance categories. It's been a rough couple of days for the stock, losing 5.55% over the last week.

*RiskMetrics data sourced from Yahoo Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.