13 Consistent Dividend-Raising Companies Currently on Freeze

As summer turns to fall and the heat begins to moderate, winter and its freezing temperatures are just around the corner. However, some companies have been frozen in place for the last year; more specifically, their dividends have been frozen at the same rate for more than a year.

A lot of press is given to companies cutting their dividends. In this spot we normally look at dividend increases. However, this week there were none. So let’s look at some companies that have opted to neither raise nor cut their dividends, but instead freeze them at the current rate. Here are 13 select companies with 25 or more years of consecutive dividend increases that have not raised their dividends in the last 12 months:

American States Water (AWR)
This utility primarily serves water customers in California, as well as in Arizona. It also provides electric service to a small section of San Bernardino County.
Last Increase: 11/7/2007 – Years of Consecutive Increases: 54

Parker-Hannifin Corp. (PH)
This company is a global maker of industrial pumps, valves, and hydraulics. Its products are used in everything from jet engines to trucks and autos and utility turbines.
Last Increase: 8/21/2008 – Years of Consecutive Increases: 52

Illinois Tool Works (ITW)
This diversified manufacturer operates a portfolio of about 750 industrial and consumer businesses located throughout the world.
Last Increase: 9/26/2008 – Years of Consecutive Increases: 45

Tennant Company (TNC)
This company designs, manufactures, and markets cleaning solutions.
Last Increase: 2/27/2008 – Years of Consecutive Increases: 37

Mine Safety Appliances (MSA)
This company develops, manufactures and supplies products that protect people’s health and safety. Products include self-contained breathing apparatus and gas masks.
Last Increase: 5/21/2008 – Years of Consecutive Increases: 37

Helmerich & Payne Inc. (HP)
This company offers contract drilling services for oil and gas wells in the United States and internationally.
Last Increase: 8/13/2008 – Years of Consecutive Increases: 37

United Bankshares Inc. (UBSI)
This multi-bank holding company operates 114 full service offices in West Virginia, Virginia, Maryland, Ohio and Washington, DC.
Last Increase: 12/12/2007 – Years of Consecutive Increases: 35

CenturyLink Inc. (CTL)
This telecom company has operations concentrated in rural markets in Alabama, Arkansas, Louisiana, Missouri, and Wisconsin. CTL acquired larger peer Embarq in a stock deal in July 2009.
Last Increase: 9/5/2008 – Years of Consecutive Increases: 35

Gorman-Rupp Company (GRC)
This company manufactures pumps and related equipment for water, wastewater, construction, industrial, petroleum, fire protection, military and other liquid-handling applications.
Last Increase: 2/13/2008 – Years of Consecutive Increases: 34

Chemical Financial (CHFC)
This holding company owns Chemical Bank, which provides commercial banking products and services through 129 banking offices, 141 ATMs and 2 loan production offices in Michigan.
Last Increase: 2/27/2008 – Years of Consecutive Increases: 34

Hershey Company (HSY)
Hershey is a major producer of chocolate or confectionery products.
Last Increase: 8/22/2007 – Years of Consecutive Increases: 33

Johnson Controls Inc. (JCI)
This company supplies building controls and energy management systems, automotive seating, and batteries.
Last Increase: 12/12/2007 – Years of Consecutive Increases: 33

M&T Bank Corp. (MTB)
This bank holding company for M&T Bank has offices in New York, Pennsylvania, Maryland, Virginia, West Virginia, New Jersey, Delaware, and Washington, DC.
Last Increase: 8/30/2007 – Years of Consecutive Increases: 27

Needless to say, each of the above companies’ string of consecutive dividend increases is in jeopardy, and none of the stocks are on my current buy list. To the contrary, the ones I own are being closely monitored for a potential sell. Though this list might seem long, here is a much longer list of companies that have kept their streak alive.

Full Disclosure: Long CTL, ITW. See a list of all my income holdings here.

Comments

[whisperonthewind]

I agree - not necessarily time to sell yet, but definitely time to watch closely.

2009 Sep 11 09:03 AM

[Asquared]

Not that this changes your conclusion, but companies that last raised dividends in 2007 (like JCI, HSY above) have ended their streak as it is now 2009 and thus, no increases throughout 2008.

2009 Sep 11 01:34 PM

[mbkelly75]

It is an interesting list, worth keeping an eye on. Some have insider buying, some have good P/S ratios, some have good dividends (3%+). Thanks

2009 Sep 11 03:45 PM

[David Van Knapp]

This is semantic but important. A company can increase its dividend (that is, declare an increased payout over the previous payout) every other year, and it will still have a higher dividend EACH year.

I know this is non-intuitive, but if you don't believe it, consider this example of a company that pays out dividends 4x per year:
Year 1: 0.10+0.10+0.10+0.10 = 0.40 dividend total during year
Year 2: 0.10+0.10+0.11+0.11= 0.42, with increase declared in Q3
Year 3: 0.11+0.11+0.11+0.11 = 0.44, with no increase declared
Year 4: 0.11+0.11+0.12+0.12 = 0.46, with increase declared in Q3
etc.

As you can see, the dividend paid out increases every year, while the dividend has a declared increase only every other year. Obviously, this series can be extended out indefinitely. That's why a company can go for more than a year without "raising" its dividend, yet still have an "increased" dividend every year.

2009 Sep 11 04:44 PM

[SafisKusai]

you listed CTL incorrectly as CenturyLink when it is actually called CenturyTel. Just a heads up.

2009 Sep 11 09:40 PM

[Dividends4Life]

CenturyTel is changing its name to CenturyLink after its merger with Embarq.

www.centurylink.com/


On Sep 11 09:40 PM SafisKusai wrote:

> you listed CTL incorrectly as CenturyLink when it is actually called
> CenturyTel. Just a heads up.

2009 Sep 11 11:29 PM

[jarco]

How does one justify owning CTL especially now that it has taken over (or been taken) Embarq? A $2.80 dividend = 90% payout.

Yield stocks must have some positive fundamentals.

Your owned list is impressive but look too much like most stodgy Mutual Funds.

2009 Sep 13 12:56 AM

[Dividends4Life]

Jarco: A straight payout calculation may not be representative of the company's financial position after such a large acquisition due to the write-up of assets and the associated higher depreciation. I use a TTM Free Cash Flow Payout instead. CTL is at 46% with this metric. Somewhat more concerning to me is its Debt to Total Capital. I generally, like to see this less than 45%. CTL is currently at 48%. Not bad, but a little higher than I like.

CTL is a hold for me at this point. I will continue to watch it closely.

D4L

On Sep 13 12:56 AM jarco wrote:

> How does one justify owning CTL especially now that it has taken
> over (or been taken) Embarq? A $2.80 dividend = 90% payout.
>
> Yield stocks must have some positive fundamentals.
>
> Your owned list is impressive but look too much like most stodgy
> Mutual Funds.

2009 Sep 13 04:21 PM

[gjg49]

itw raised their dividend sept 26, 2008; that is less than 1 year ago. they also raised their dividend in late sept of 2007, so they apparently consider dividend increases at this time of the year.

why do you include them on a list of firms that have not raised their dividend in a year when they actually have and when they very probably will again this year?

i estimate that itw paid out just under 30% of their available free cash flow in dividends over the latest 12 months. further, itw could pay off all their debt in less than two years excess free cash flow (cash flow from ops minus cap exp minus divdiends) if they maintained free cash flow at the rate of the past 12 months. unless they see something very bothersome in the economy, they probably will again raise the dividend in late september.

2009 Sep 14 05:10 PM

[Ricard]

Mr. Van Knapp,

Excellent point.

D4L,

I read a good amount of your primer on your website and bookmarked it. Despite having over 10 years of investing experience, I have not looked closely at established US dividend players, and have instead opted for value stocks in emerging markets (much better fundamentals). However, these stocks seem to be at a high-end of their volatile prices, and I am now looking for stabler alternatives. Coincidentally, many US blue chip stocks have barely budged throughout this one year mess.

At this point, I am noticing that the companies I am gravitating towards just happen to be the ones you regularly analyse. My question for you is precisely Mr. Van Knapp's point - does your definition of a 'dividend freeze' entail a lack of increases over the course of a year, or a lack of the overall annual dividend freezing for two consecutive years (yoy)?

I ask because I noticed that your recommendation to sell after a dividend freeze merits a lot of attention. Exactly what the definition of a freeze would then become paramount to selling one year before, or one year after, a probable eventual disaster.

Thanks.

On Sep 11 04:44 PM David Van Knapp wrote:

> This is semantic but important. A company can increase its dividend
> (that is, declare an increased payout over the previous payout) every
> other year, and it will still have a higher dividend EACH year.

2009 Sep 22 01:43 PM