Dividend Champions: Graduations and Eliminations

by: David Fish

The Dividend Champions spreadsheet has been updated through 8/31/10

To download the latest version of the U.S. Dividend Champions spreadsheet or PDF, go here:

The Dividend Champions “universe” is constantly changing, hopefully for the better. The changes discussed below will be reflected in the next update, scheduled to be posted after the market closes on September 30:

The Newest Champion

When it announced an increase to its payout on September 9, Brady Corp. (NYSE:BRC) graduated from the Contenders listing to the Champions roster, notching its 25th consecutive year of higher dividends. Although the boost from 17.5¢ to 18¢ per share was a modest 2.86% increase, the business services company made sure to highlight the milestone in its announcement. In case you're not familiar with Brady, here is an excerpt from the Google Description:

Brady Corp. is an international manufacturer and marketer of identification solutions and specialty materials, which identify and protect premises, products and people. Brady's core capacities in manufacturing, channel management, printing systems, precision engineering and materials expertise make it a supplier to customers in general manufacturing, maintenance and safety, process industries, construction, electrical, telecommunications, electronics, laboratory/healthcare, airline/transportation, security/brand education, governmental, public utility, and a variety of other industries. As of July 31, 2009, Brady operated 59 manufacturing or distribution facilities.

Brady's graduation leaves a half dozen companies with 24-year streaks at the top of the Contenders list. The next company expected to make the move to the Champions roster is McCormick & Company (NYSE:MKC), the country's leading marketer of spices, herbs, and seasonings, which typically announces a dividend increase in December, with a Pay Date in January. Following in February would be HCP Inc. (NYSE:HCP), a real estate investment trust ((REIT0) that primarily serves the healthcare industry. Raven Industries (NASDAQ:RAVN) would be expected to pay an increased dividend in April, followed by Tompkins Financial (NYSEMKT:TMP) in May and Harleysville Group (NASDAQ:HGIC) in September. One other company has a 24-year streak: Donaldson Company (NYSE:DCI), which raised its payout twice this year, in March and September. Because of the second increase, it might not be expected to increase again until next September, but I think there's a good chance that it may do so on the early anniversary.

Contenders in Flux

At the same time that Brady exited the Contenders list, I added a company that I uncovered while searching for additional Challengers. UniSource Energy (NYSE:UNS), an Arizona utility, has an 11-year streak of higher dividends after having boosted its quarterly payout by more than 34%, from 29¢ to 39¢ per share back in March, giving it a yield of 4.7%. However, the list has started to shrink because of attrition, with companies whose streaks are on the “death watch” announcing unchanged fourth-quarter dividends, meaning that the total payouts in 2010 will equal those of 2009. Already, five companies whose Pay Date falls in early October, have been deleted. Those include First Financial Bankshares (NASDAQ:FFIN), H&R Block (NYSE:HRB), Holly Corp. (HOC), S.Y. Bancorp (NASDAQ:SYBT), and Wolverine World Wide (NYSE:WWW). In addition, there are 12 more Contenders whose continued inclusion is in jeopardy, with expected announcement dates (for the fourth-quarter payment) ranging from next week until late November. Note that I am not expecting any of these companies to cut or eliminate their dividends; they simply will need to be deleted if they fail to extend their streaks.

While I'm on the topic of the “death watch,” there are six Champions at risk, all of which are expected to announce their fourth-quarter payouts in the last half of October: BancorpSouth (NYSE:BXS), Bank of Hawaii (NYSE:BOH), Eli Lilly & Co. (NYSE:LLY), Integrys Energy Group (NYSE:TEG), Teleflex Inc. (NYSE:TFX), and Washington REIT (NYSE:WRE). The streaks range from 25 (BXS) to 51 years (TEG). Meanwhile, there are no less than 36 Challengers (out of 214 companies) at risk, including a couple that have been added since the August 31 update. Those are too numerous to list here, so I'll just point out that the dates in Red are colored that way as an obvious way to highlight increases that are considered overdue. Any of those dates prior to April 1, 2009 suggest that the 2009 total payments might end up equaling the 2010 payments, subjecting those companies to deletion.

Potential Challenger Graduations

On a more positive note, there are 20 companies that have 9-year streaks of higher dividends, so the Contenders list should be replenished in the coming months. One of these, NB&T Financial Group (NASDAQ:NBTF) is in doubt, since its last increase came in 2008, so it may be deleted. Of the rest, the next anticipated graduates are NuStar Energy LP (NYSE:NS) and Shenandoah Telecommunications (NASDAQ:SHEN) in November, followed by Landmark Bancorp (NASDAQ:LARK) in February. Potential March 2011 promotions are dominated by foreign companies, including Novartis AG (NYSE:NVS), BHP Billiton Limited (NYSE:BHP), and Novo Nordisk A/S (NYSE:NVO). Also anticipated in March will be 10th-year increases from Thomson Reuters (NYSE:TRI) and Auburn National Bancorp (NASDAQ:AUBN), followed by Watsco Inc. (NYSE:WSO) and Southern Company (NYSE:SO) in April. June should be graduation time for FedEx Corp. (NYSE:FDX), Flowers Foods (NYSE:FLO), and Valmont Industries (NYSE:VMI), while August should see the promotions of Norfolk Southern (NYSE:NSC), Sunoco Logistics Partners (NYSE:SXL), Bunge Limited (NYSE:BG), Microchip Technology Inc. (NASDAQ:MCHP), and Maxim Integrated Products (NASDAQ:MXIM). Harris Corp. (NYSE:HRS) is likely to improve on its 9th increase, which went Ex-Dividend on September 6.

As mentioned earlier, I've added a handful of Challengers since the August 31 update. Having gone through several dividend listings, I now believe that I've included most companies that have increased their dividends for at least five straight years. But I'll keep looking through other listings and, of course, will investigate any announcements of dividend increases, as I already do in order to update the Champions and Contenders. Feel free to let me know of any that I might have missed.

Disclosure: Author owns HRB