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Summary

  • Philip Morris, Verizon offer yields over 4%.
  • 7 Near-Challengers also expected to boost payments.
  • Will double-digit increases continue?

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 separated 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. Note that "CCC" refers to the combination of Champions, Contenders, and Challengers.

Seasonal Transition

The pace of dividend increases picked up in August, reversing the usual Summer slowdown, and should maintain a steadier pace for the remainder of the year. Please note that I'm excluding foreign stocks that trade as ADRs (American Depository Receipts), unless they declare dividends in US$, for two reasons. First, the declarations may only estimate the US$ amount prior to the Ex-Dividend Date and the exact amount won't be known until after payment, which can be as much as two months later. Second, it appears that many foreign companies are on the "wrong" side of currency exchange rates this year, so I expect some foreign listings to require deletion, even if the firms have raised their dividend rate in their "home" currency. Bottom line: It would be wrong to list these companies as "expected" to raise their dividend when the true outcome...at least in US$...is so uncertain.

The table below coincides with the usual "forward look" of about 11 weeks for this article. 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.

7/31

Div.

MR%

LY

Ann.

DGR

Name

Symbol

Yrs

Price

Yield

Inc.

Ex-Div

Div.

5-yr

Delta Natural Gas

(NASDAQ:DGAS)

9

19.60

3.88

5.56

8/28/13

0.76

3.3

Orange County Bancorp

(OTCQB:OCBI)

6

39.85

3.91

2.63

8/29/13

1.56

3.1

Bob Evans Farms

(NASDAQ:BOBE)

8

47.51

2.61

12.73

8/29/13

1.24

15.1

McKesson Corp.

(NYSE:MCK)

6

191.86

0.50

20.00

8/29/13

0.96

15.9

Solera Holdings Inc.

(NYSE:SLH)

5

64.00

1.06

36.00

9/3/13

0.68

n/a

Brinker International

(NYSE:EAT)

9

44.84

2.14

20.00

9/4/13

0.96

14.9

G&K Services Inc.

(NASDAQ:GK)

8

48.09

2.25

38.46

9/10/13

1.08

31.1

Frisch's Restaurants

(NYSEMKT:FRS)

7

23.91

3.01

12.50

9/24/13

0.72

6.6

Philip Morris Int'l

(NYSE:PM)

6

82.01

4.58

10.59

9/24/13

3.76

28.4

Accenture plc

(NYSE:ACN)

9

79.28

2.35

14.81

10/4/13

1.86

28.3

Verizon

(NYSE:VZ)

9

50.42

4.20

2.91

10/8/13

2.12

3.5

Smith & Nephew plc

(NYSE:SNN)

8

86.07

1.55

28.50

10/9/13

1.33

16.6

American Financial Gp

(NYSE:AFG)

8

55.99

1.57

12.82

10/10/13

0.88

10.0

Pall Corp.

(NYSE:PLL)

9

77.47

1.42

10.00

10/16/13

1.10

15.0

A. Schulman Inc.

(NASDAQ:SHLM)

6

39.74

2.01

2.56

10/24/13

0.80

5.7

PetSmart Inc.

(NASDAQ:PETM)

5

68.14

1.14

18.18

10/30/13

0.78

41.9

MR=Most Recent; LY=Last Year; DGR=Dividend Growth Rate through 2013

In addition, there are a number of Near-Challengers that are on schedule to record their fifth year of increases during this period:

Company

Ticker

No.

LY

Name

Symbol

Yrs

Ex-Div

Group 1 Automotive Inc.

(NYSE:GPI)

4

8/28/13

Escalade Inc.

(NASDAQ:ESCA)

4

9/11/13

N. American University

(NASDAQ:NAUH)

4

9/26/13

Linn Energy LLC

(NASDAQ:LINE)

4

10/8/13

Thor Industries Inc.

(NYSE:THO)

4

10/16/13

LTC Properties Inc.

(NYSE:LTC)

4

10/21/13

KKR

(NYSE:KKR)

4

10/31/13

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'm inserting one of Chuck Carnevale's F.A.S.T. Graphs below, highlighting one of the companies listed above. When the stock's price line has moved into the green area, it indicates that the stock is undervalued in relation to its earnings.

Disclosure: The author is long PM. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

Source: Dividend Challengers: 16 Increases Expected By October 31