Dividend Challengers: 11 Increases Expected By The End Of January

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 |  Includes: AEL, CLB, ENSG, HI, JJSF, OCBI, OGE, SU, THG, TPL, WU
by: David Fish

In compiling the Dividend Champions list I get to see which companies are nearing the anniversaries of their previous dividend increases. Since most of these firms raise their payout about the same time every year, I can say with some confidence that they are likely to do so again. I have modified the Expected Increase series to reflect a more SA-friendly format by separating the Champions (25 or more years of higher dividends), Contenders (10-24 years), and Challengers (5-9 years) into distinct groupings, so please look for the other articles, which I hope will be published about the same time.

Accelerated Dividends in the Spotlight

Again this month, we see some December anniversaries that represent "accelerated" payments - prompted by last year's tax-hike fears - that may appear as "delays," but will actually represent a return to a more normal schedule. The table below, which coincides with the usual "forward look" of about 11 weeks for this article, includes a special notation for those raises, the # symbol. For some of those companies, a "worst case" scenario would simply be that they move to the "overdue" list - temporarily - while they return to their normal first-quarter increase pattern. November has been a fairly active month for increase announcements, as indicated by the changing number of companies. Compared with last month's total of 79, the current group of 48 Champions, Contenders, and Challengers reflects the relatively small group of increases scheduled in January.

Based on last year's announcements, I'm expecting the following companies to announce dividend increases between now and the anniversary of the Ex-Dividend Date of their previous increase:

Dividend Challengers (5-9 years):

Company

Ticker

No.

10/31

Div.

MR%

LY

Ann.

Name

Symbol

Yrs

Price

Yield

Inc.

Ex-Div

Div.

American Equity Invest.

(NYSE:AEL)

9

20.84

0.72

25.00

11/29/12

0.15

Orange County Banc #

(OTCPK:OCBI)

5

39.40

3.86

5.56

11/29/12

1.52

Suncor Energy Inc.

(NYSE:SU)

7

36.35

1.38

14.68

11/29/12

0.50

J&J Snack Foods #

(NASDAQ:JJSF)

9

85.57

0.75

23.08

12/7/12

0.64

Texas Pacific Land Tr #

(NYSE:TPL)

9

89.60

0.28

8.70

12/12/12

0.25

Ensign Group Inc. #

(NASDAQ:ENSG)

5

42.58

0.61

8.33

12/13/12

0.26

Hanover Insurance

(NYSE:THG)

8

58.54

2.25

10.00

12/13/12

1.32

Hillenbrand Inc.

(NYSE:HI)

6

28.22

2.76

1.30

12/13/12

0.78

Western Union Co.

(NYSE:WU)

5

17.21

2.91

25.00

12/13/12

0.50

OGE Energy Corp.

(NYSE:OGE)

7

36.90

4.53

6.37

1/8/13

1.67

Core Laboratories NV

(NYSE:CLB)

6

187.22

0.68

14.29

1/17/13

1.28

Click to enlarge

MR=Most Recent; LY=Last Year; #=Accelerated Payment in 2012

Note that I have "jumped the gun" on Western Union, which being added as the newest Challenger because 2013 represents the fifth straight year of higher dividends, whether or not it raises the payout in December. (I think it will do so, but it would "back into" Challenger status - and immediately become "overdue" - if it keeps the rate unchanged, since it paid less in 2012.) Not all of the above companies will meet the strict standards of every investor, but some may be appropriate for portfolio diversification. Potential investors should do more research before committing funds.

Every Picture Tells a Story

As a bonus, I usually insert one of Chuck Carnevale's F.A.S.T. Graphs below, highlighting one of the companies listed above. But I'm omitting that step this month due to a scarcity of stocks whose price line has moved into the green area, which indicates that the stock is undervalued in relation to its earnings.

Disclosure: I am long WU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.