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This article introduces the only five companies across all the major U.S. exchanges which each have approximately 20 years of consecutive annual dividend increases AND 10 year compound annual growth rates above 14%.

Additionally, each of the five companies identified below exceeds the initial yield and dividend growth rate profiles discussed in my first article on Seeking Alpha, 4 Opportunities Using Dividend Growth Rate And Yield On Cost, which introduced four S&P Dividend Aristocrats that may provide excellent compounded returns for income investors based on their current yield and dividend growth rates.

S&P Dividend Aristocrats are a well-known, widely publicized list of companies that have increased their annual dividend payment each and every year for 25 years or more. Many investors even choose to limit their investments to these select companies. As a result, these investors may be unaware of compelling investment opportunities that are not quite yet S&P Dividend Aristocrats.

I have identified five companies below in Table 1 that will all become S&P Dividend Aristocrats with the next two to eight years should they continue to increase their dividend payments annually. Additionally, they all have a 10-year dividend compound annual growth rate (OTCPK:CAGR) above 14%. Consecutive years and CAGR include 2013 and assume all of the companies simply maintain their current dividend per share payment(s).

Table 1. The Five Candidates

Company Name

Symbol

Dividend Yield

Consecutive Years Increasing Dividend

10 Year Dividend CAGR

C.H. Robinson Worldwide Inc.

(NASDAQ:CHRW)

2.3%

17

22.8%

International Business Machines Corporation

(NYSE:IBM)

1.9%

18

19.4%

Novo Nordisk A/S

(NYSE:NVO)

1.4%

17

28.4%

T. Rowe Price Group, Inc.

(NASDAQ:TROW)

1.9%

23

15.8%

United Technologies

(NYSE:UTX)

2.1%

20

14.2%

THE UP AND COMING

C.H. ROBINSON WORLDWIDE INC.

C.H. Robinson is one of the world's largest third party logistics providers, supplying freight transportation and logistics, outsource solutions, produce sourcing and information services to over 42,000 customers worldwide. Founded in 1905, C.H. Robinson has grown to employ more than 10,000 employees, managing the largest network of motor carrier capacity in North America along with more than 56,000 global contract transportation providers. C.H. Robinson is on track to pay a per share dividend of $1.40 this year, up 4.5% from 2012 when it paid shareholders $1.34.

INTERNATIONAL BUSINESS MACHINES CORPORATION

International Business Machines Corporation provides information technology products and services worldwide. Originally founded as a punch card equipment manufacturer, IBM now focuses on global technology, business, software, systems and financing services. It is worth mentioning that Warren Buffett originally purchased approximately 57 million shares of IBM during the third quarter of 2011 and has purchased an additional 10 million shares or so since. IBM in on pace to pay shareholders $3.70 per share, up more than 12% from 2012 when it paid $3.30.

NOVO NORDISK A/S

Founded in 1925, Novo Nordisk is a global healthcare company engaged in the discovery, development, manufacture, and marketing of diabetes and biopharmaceutical products. What began more than 90 years ago as a singular desire to produce insulin has grown into a global operation marketing products in more than 180 countries. Headquartered in Denmark, Novo Nordisk trades as an ADR on the New York Stock Exchange. Novo pays shareholders an annual dividend, and increased its 2013 dividend by 27.5% from 2012, paying a per share dividend of $3.18 and $2.50, respectively.

T. ROWE PRICE

T. Rowe Price Group, Inc. is a publicly owned asset management holding company providing a full range of services to financial intermediaries and individual and institutional investors. T. Rowe employs more than 5,300 associates across North America, Europe and Asia. In 2010, T. Rowe opened an institutional client office in Dubai and added equity investment management and research capabilities in their Sydney office. Should T. Rowe continue its quarterly payment of $0.38 per share shareholders will receive a per share dividend of $1.52 in 2013, up nearly 12% from 2012 when T. Rowe's paid $1.36 per share.

UNITED TECHNOLOGIES

Founded in 1943, United Technologies has grown to be a global provider of high-technology products and services to the global aerospace and building systems industries. United Technologies employs nearly 220,000 people across 71 countries and does business in just under 180 countries worldwide. It is worth mentioning that close to 18 percent of United Technology's 2012 approximate $60 billion USD of Revenue were Sales to the U.S. Government. United could continue to pay a quarterly per share dividend of $0.535 for a 2013 annual dividend of $2.14, up more than 5% from its 2012 dividend of $2.03.

CONCLUSION

With the S&P 500 Index up more than 13% this year and approximately 50% in the last decade it may be wise to pay attention to the current valuation of potential investments now more than ever. A common phrase in the real estate industry, is in fact applicable to all investments, "Money is made when you buy, not when you sell." And it is with this mentality that I approach all potential investments.

Table 2. Metric Comparison

Company Name

Symbol

P/R

P/E

P/B

C/R

C.H. Robinson Worldwide Inc.

 

37%

16.5

6.5

1.4

International Business Machines Corporation

 

25%

13.8

12.0

1.2

Novo Nordisk A/S

 

31%

22.7

15.1

1.4

T. Rowe Price

 

68%

22.7

5.0

4.9

United Technologies

 

40%

15.3

3.6

1.3

Table 2 above provides some insight into the current valuation and financial capacity of the five candidates. T. Rowe Price is the only company from this list with a Payout Ratio (P/R) above 40%; the other four companies have plenty of flexibility to increase their annual dividend payments based upon their lower payout ratio. Although none of the companies have a rock bottom, left for dead P/E ratio of 8 or 9, none are wildly overvalued (Amazon (NASDAQ:AMZN) or Facebook (NASDAQ:FB) anyone?).

I often place significant weight on a security's Price-to-Book (P/B) ratio and Current Ratio (C/R). The P/B ratio of IBM and Novo are two, three and five times that of the other securities, each at 12 and 15.1, respectively. This P/B valuation is not particularly high their respective industries, but is significantly higher than the other three companies.

Have reason to believe any of these potential S&P Dividend Aristocrats will fall flat on their face or there are better potential candidates with a shorter consecutive increase streak or lower 10 year dividend CAGR? Let us know in the comments below.

Source: 5 Upcoming Dividend Aristocrats You May Be Looking Past