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Income-oriented investors might find the following list interesting. Here is a list of “dividend champions,” identified by the DrIP Investing Resource Center as companies that have increased dividends for more than 25 consecutive years. Among the entire list of dividend champions, we found only those that have conservative accounting practices, according to the ratings developed by forensic accounting firm Audit Integrity.

Audit Integrity reports the Accounting and Governance Risk (AGR) rating – it is a forensic measure of the transparency and reliability of a corporation’s financial reporting and governance practices. The closer the score is to 100, the more conservative the company's accounting practices, according to Audit Integrity.

Considering that these companies have a good track record of raising dividends, do you think they can continue to deliver? Full details below.

AGR ratings sourced from Audit Integrity, short float and performance data sourced from Finviz.



The list has been sorted by the AGR score.

1. Cincinnati Financial Corp. (NASDAQ:CINF):
Property & Casualty Insurance Industry. Market cap of $5.47B. Dividend yield at 4.76%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 100.

Other Sentiment Data: Short float at 10.32%, which implies a short ratio of 15.93 days. The stock has gained 31.73% over the last year.

Other Highlights:

- When compared to industry competitors, the company reported better than average profit margins during the most recent quarter. Gross margins came in at 20.09%, higher than the industry average at 18.24% (most recent quarter, annualized). Operating margin came in at 20.09%, higher than the industry average at 17.08%, while net profit margin came in at 20.09% vs. the industry average at 17.08%.

- Insiders appear to be optimistic on the outlook for the company. On a net basis, they've purchased an average of 12,171 shares per year (over last 2 years).

2. Cintas Corporation (NASDAQ:CTAS):

Business Services Industry. Market cap of $4.B. Dividend yield at 1.78%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 99.

Other Sentiment Data: Short float at 3.54%, which implies a short ratio of 3.94 days. The stock has gained 13.79% over the last year.

Recent developments: Announced FY11 guidance in line with analysts’ estimates (Dec. 2010).

3. Stepan Company (NYSE:SCL):

Cleaning Products Industry. Market cap of $701.09M. Dividend yield at 1.49%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 97.

Other Sentiment Data: Short float at 7.26%, which implies a short ratio of 16.03 days. The stock has gained 43.54% over the last year.

Other Highlights:


- The company has demonstrated rapid cash flow growth over the last five years, which may lower their risk going forward. Five year average cash flow growth at 15.15%, much higher than the industry average at 10.04%.

- The company seems to be doing a good job managing its inventory and receivables, which provides more evidence of a solid management team. Trailing twelve month Inventory Turnover ratio came in at 12.82, higher than the industry average at 6.05, while trailing twelve month receivables turnover came in at 6.87 vs. the industry average at 6.56.

4. Community Trust Bancorp Inc. (NASDAQ:CTBI):
Regional Bank. Market cap of $438.44M. Dividend yield at 4.24%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 92.

Other Sentiment Data: Short float at 3.44%, which implies a short ratio of 21.11 days. The stock has gained 14.63% over the last year.

Other Highlights:

- The company outperformed analyst earnings estimates during the most recent quarter, suggesting that the analyst community is underestimating the stock. The company reported earnings per share of $0.60 per share, and exceeded the First Call Consensus of $0.49 (Q4 Earnings on 01/19/11). The company also outperformed analyst estimates over the last year, reporting earnings per share at $2.16, beating the consensus view at $2.05 (based on the estimates of 4 analysts).

5. United Bankshares Inc. (NASDAQ:UBSI):
Regional Bank. Market cap of $1.2B. Dividend yield at 4.37%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 91.

Other Sentiment Data: Short float at 14.14%, which implies a short ratio of 31.32 days. The stock has gained 14.38% over the last year.

6. Telephone & Data Systems Inc. (NYSE:TDS):
Wireless Communications Industry. Market cap of $3.41B. Dividend yield at 1.38%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 89.

Other Sentiment Data: Short float at 2.31%, which implies a short ratio of 9.44 days. The stock has gained 5.49% over the last year.

Other Highlights:

- Judging by the company's cash holdings, shares look to offer good value at current levels. Price / Cashflow per Share, based on the most recent quarter's cash flow numbers, came in at 3.68, lower than the industry average of 6.7. It's also worth pointing out that the company's trailing twelve month Price / Cashflow per Share came in at 3.79, lower than the industry average of 8.85.

- The company appears to be undervalued relative to book value. Price/Book ratio at 0.9, much lower than the industry average of 2.77.

- The company has low debt and great liquidity, which significantly reduces its risk over the coming months. During the most recent quarter, the total Debt/Assets ratio stood at 19.42% vs. the industry average at 23.4%. Total Debt/Equity came in at 39.06%, lower than the industry average at 66.74%. The company also appears to be more liquid than its competitors. The TTM Current Ratio stands at 2.13, higher than the industry average at 1.47. (Note: All ratios based on the most recent quarter, annualized)

- Institutional and mutual fund investors have been net purchasers of the company's shares over the last two quarters, suggesting that the smart money thinks there's more upside to the stock. Institutional investors have been net buyers of 421.3K shares during the most recent quarter, vs. 298.4K net shares purchased in the previous quarter. Mutual fund investors have also been optimistic on the stock. They were net buyers of 1.6M shares during the most recent quarter, vs. 92.5K net shares purchased in the previous quarter.

7. RLI Corp. (NYSE:RLI):
Property & Casualty Insurance Industry. Market cap of $1.2B. Dividend yield at 2.03%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 88.

Other Sentiment Data: Short float at 7.13%, which implies a short ratio of 7.41 days. The stock has gained 22.25% over the last year.

Other Highlights:

- When compared to industry competitors, the company reported better than average profit margins during the most recent quarter. Gross margins came in at 34.42%, higher than the industry average at 18.24% (most recent quarter, annualized). Operating margin came in at 34.42%, higher than the industry average at 17.08%, while net profit margin came in at 34.42% vs. the industry average at 17.08%.

- Insiders appear to be optimistic on the outlook for the company. On a net basis, they've purchased an average of 38,533 shares per year
(over last 2 years).

8. Nacco Industries Inc. (NYSE:NC):

Farm & Construction Machinery Industry. Market cap of $990.6M. Dividend yield at 1.76%.

Accounting Risk: According to Audit Integrity, the company has Conservative accounting practices, with an AGR score of 87.

Other Sentiment Data: Short float at 2.24%, which implies a short ratio of 5.43 days. The stock has gained 145.96% over the last year.

Other Highlights:

- Judging by the company's cash holdings, shares look to offer good value at current levels. Price / Cashflow per Share, based on the most recent quarter's cash flow numbers, came in at 9.56, lower than the industry average of 11.16. It's also worth pointing out that the company's trailing twelve month Price / Cashflow per Share came in at 8.67, lower than the industry average of 13.84.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Top 8 Dividend Champions With Conservative Accounting Practices