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The Dividend Champions spreadsheet and PDF have been updated through 2/28/11 both are available here. Note that all references to Champions mean companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. Together, all of these companies may be referred to using the abbreviation “CCC.”

This is the fourth in a series of articles focusing on specific industries and isolating the CCC companies within those industries. The first covered Master Limited Partnerships (or MLPs) and can be found here; The second covered Real Estate Investment Trusts (or REITs) and can be found here; The third covered Utilities and can be found here.


What are Financials?

I'm starting again with what may seem like a facetious question so that I can spell out what is (and what is not) included in this article. Of course, the term immediately suggests banking institutions, and that is the largest group shown below. But it also includes what are loosely categorized as “Financial Services” firms and Insurance companies.

The Global Industry Classification Standard (or GICS) also includes Real Estate Investment Trusts (or REITs) in the financial sector, but I covered those in the second article in this series, so they won't be included below. (Likewise, Master Limited Partnerships, or MLPs, were covered in the first article, but might otherwise be included in the Energy sector, which I will include in a subsequent article.)

While much of the media attention is focused on the large banks (and particularly on whether they will soon be allowed to start increasing their dividends), the CCC listings include many of the local and regional banks that were able to avoid cutting their dividends during the recent financial crisis. In fact, those 41 Banking companies have an average market capitalization of only $853 million, which falls in the Small Cap category (from $100 million to $2 billion).

Also included in this article are 10 Financial Services firms, which run the gamut from mutual fund companies like Franklin Resources and T. Rowe Price to real estate and business development firms. The 30 Insurance companies included offer strong evidence that that industry was not as severely impacted by the recession as were the banks. Here again, the companies range from Micro Caps (under $100 million) to Large Caps like AFLAC and Travelers. It should be noted, of course, that many large industrial companies (or conglomerates) also run financing divisions, usually as a means of helping their customers to purchase their products over time. The best known example of that is General Electric (NYSE:GE), which was deleted from the Champions listing after cutting its dividend in 2009. For the investor doing further research, information (or coverage) can be a little harder to find for the smaller companies listed, but the potential for higher yields and/or dividend growth may be worth the effort.

The Companies

Financials again make up one of the largest segments of the CCC universe, with 41 banks, 10 financial services firms, and 30 insurance companies. These 81 companies (compared with 74 in the Utilities article) have an average yield of 2.92%, almost exactly the 2.91% average for the 447-company CCC list. The Banks lead the way, with average yields of 3.47%. The trade-off is a lower rate of dividend growth (6.03%, on average), although there is a wide range of DGRs to consider. For an investor looking to add one or more financials to his or her portfolio, the table below should provide plenty of good choices. In considering these companies, it's a good idea to think about the role of any non-regulated activities that a company conducts. I'm including as many columns of data as is practical, from a perspective of width and significance.

No.

2/28

%

Payout

TTM

NY%

MktCap

DGR

DGR

Company

Symbol

Industry

Yrs

Price

Yield

Inc.

%Ratio

P/E

Growth

($Mil)

5-yr

10-yr

1st Source Corp.

SRCE

Banking

21

19.57

3.27

6.67

52.89

16.17

n/a

473

6.5

7.2

Alliance Financial Corp.

ALNC

Banking

5

31.73

3.78

7.14

48.39

12.79

3.57

150

6.3

5.3

Arrow Financial Corp.

AROW

Banking

17

25.04

3.99

3.00

51.55

12.91

1.11

282

3.7

7.2

Auburn National Banc

AUBN

Banking

10

19.71

4.06

2.56

54.42

13.41

n/a

72

6.1

6.9

BancFirst Corp. OK

BANF

Banking

17

42.04

2.38

8.70

37.04

15.57

7.27

646

10.1

11.4

Bank of Marin Bancorp

BMRC

Banking

6

36.25

1.77

6.67

25.10

14.22

8.93

192

26.2

n/a

Bank of the Ozarks Inc.

OZRK

Banking

13

43.05

1.58

6.25

18.13

11.48

10.14

734

10.2

19.0

Bar Harbor Bankshares

BHB

Banking

8

29.05

3.72

1.89

41.38

11.13

8.77

111

4.5

3.2

BOK Financial Corp.

BOKF

Banking

6

51.35

1.95

4.17

27.70

14.22

11.56

3,500

27.0

n/a

Chesapeake Financial

OTCQB:CPKF

Banking

18

14.65

3.00

4.76

20.75

6.91

7.14

40

7.2

9.9

Cheviot Financial Corp.

CHEV

Banking

8

8.50

5.65

9.09

208.70

36.96

n/a

74

12.9

n/a

Citizens Financial Svcs.

OTCPK:CZFS

Banking

12

38.99

2.67

1.96

n/a

n/a

n/a

N/A

5.5

6.5

Citizens Holding Co.

CIZN

Banking

11

20.26

4.34

4.76

59.46

13.69

n/a

98

5.5

11.0

Commerce Bancshares

CBSH

Banking

43

40.16

2.29

2.77

36.51

15.94

7.38

3,480

4.6

9.5

Community Bank System

CBU

Banking

17

25.16

3.82

9.09

50.79

13.31

5.58

838

4.7

6.1

Community Trust Banc.

CTBI

Banking

30

28.61

4.26

1.67

56.48

13.25

4.93

437

4.7

8.0

Cullen/Frost Bankers

CFR

Banking

17

58.56

3.07

4.65

52.33

17.02

11.93

3,580

8.8

8.9

Eagle Financial Services

OTCQB:EFSI

Banking

7

16.80

4.29

5.88

64.86

15.14

n/a

55

6.7

n/a

Enterprise Bancorp Inc.

EBTC

Banking

7

14.70

2.86

5.00

36.52

12.78

n/a

137

10.8

n/a

First Capital Inc.

FCAP

Banking

10

16.00

4.75

5.56

54.68

11.51

n/a

45

5.6

7.1

First Financial Corp.

THFF

Banking

22

32.41

2.84

2.22

42.99

15.14

3.21

426

2.3

5.5

Harleysville Savings

OTCQX:HARL

Banking

22

15.24

4.99

5.56

55.88

11.21

n/a

56

4.5

10.9

Hingham Inst. for Saving

HIFS

Banking

15

51.51

1.86

4.35

19.96

10.71

n/a

109

3.3

6.0

Hudson City Bancorp

HCBK

Banking

12

11.50

5.22

7.14

55.05

10.55

11.69

5,680

17.5

30.4

Lake Shore Bancorp

LSBK

Banking

6

10.00

2.80

16.67

52.83

18.87

n/a

56

n/a

n/a

Landmark Bancorp Inc.

LARK

Banking

10

16.90

4.50

5.00

97.44

21.67

n/a

45

7.4

7.0

National Bankshares

NKSH

Banking

11

29.00

3.24

6.82

41.96

12.95

n/a

201

5.1

7.9

Norwood Financial

NWFL

Banking

13

27.10

4.28

3.57

43.94

10.27

n/a

75

10.3

10.0

Ohio Valley Banc Corp.

OVBC

Banking

15

20.12

4.17

5.00

65.63

15.72

n/a

80

6.1

6.1

Orrstown Financial Svc

ORRF

Banking

11

27.50

3.35

2.22

42.40

12.67

8.27

220

11.3

31.5

People's United Financial

PBCT

Banking

17

13.18

4.70

6.90

258.33

54.92

38.60

4,610

8.7

9.3

Prosperity Bancshares

PRSP

Banking

13

40.82

1.71

12.90

25.64

14.95

7.67

1,910

13.4

14.5

Republic Bancorp KY

RBCAA

Banking

12

17.14

3.34

8.33

18.51

5.55

4.17

359

12.9

16.3

Somerset Hills Bancorp

SOMH

Banking

6

9.05

2.65

20.00

52.17

19.67

n/a

49

44.9

n/a

Southside Bancshares

SBSI

Banking

16

22.81

2.98

5.00

27.09

9.09

8.61

356

14.3

19.0

Teche Holding Co.

TSH

Banking

10

36.57

3.94

1.41

42.11

10.69

4.79

76

7.7

11.0

Tompkins Financial

TMP

Banking

24

41.00

3.32

10.00

43.73

13.18

7.57

447

6.5

6.1

UMB Financial Corp.

UMBF

Banking

20

39.88

1.96

5.41

34.51

17.65

11.11

1,610

11.0

7.1

United Bankshares Inc.

UBSI

Banking

37

28.64

4.19

3.45

72.73

17.36

13.77

1,250

2.9

3.6

United Community Banc

UCBA

Banking

5

7.50

5.87

10.00

293.33

50.00

n/a

57

n/a

n/a

Westamerica Bancorp

WABC

Banking

19

51.58

2.79

2.86

44.86

16.07

4.33

1,500

3.4

6.9

Averages for

41

Banking

14.6

27.55

3.47

6.03

60.72

16.18

8.84

853

9.5

10.2

Ameriprise Financial Inc.

AMP

FinSvcs

6

63.32

1.14

5.88

16.82

14.79

13.60

15,620

45.2

n/a

AmTrust Financial Svcs.

AFSI

FinSvcs

5

19.23

1.66

14.29

13.56

8.15

11.98

1,150

n/a

n/a

Eaton Vance Corp.

EV

FinSvcs

30

31.30

2.30

12.50

54.14

23.53

21.11

3,730

14.2

20.6

Epoch Holding Corp.

EPHC

FinSvcs

5

15.73

1.53

20.00

28.92

18.95

n/a

359

n/a

n/a

Factset Research Sys.

FDS

FinSvcs

12

104.88

0.88

15.00

28.13

32.07

13.45

4,860

34.8

29.0

Franklin Resources

BEN

FinSvcs

30

125.62

0.80

13.64

14.25

17.89

11.31

28,020

17.1

13.9

PennantPark Investment

PNNT

FinSvcs

5

12.70

8.50

3.85

103.85

12.21

3.33

461

n/a

n/a

SEI Investments Co.

SEIC

FinSvcs

18

23.01

0.87

11.11

16.39

18.86

14.62

4,290

12.6

17.9

T. Rowe Price Group

TROW

FinSvcs

24

66.98

1.85

14.81

49.01

26.47

17.65

17,350

18.6

15.3

W.P. Carey & Co. LLC

WPC

FinSvcs

14

33.92

6.01

0.49

104.62

17.39

-28.57

1,340

2.6

1.8

Averages for

10

FinSvcs

14.9

49.67

2.55

11.16

42.97

19.03

8.72

7,718

20.7

16.4

ACE Limited

ACE

Insurance

18

63.25

2.09

6.45

14.49

6.94

-0.27

21,190

7.8

10.3

AFLAC Inc.

AFL

Insurance

28

58.86

2.04

7.14

24.24

11.89

9.22

27,640

21.0

21.3

Allied World Assurance

AWH

Insurance

5

61.71

1.30

11.11

6.01

4.63

-10.70

2,350

n/a

n/a

Alterra Capital Holdings

ALTE

Insurance

10

21.63

2.22

20.00

15.14

6.82

0.81

2,400

18.5

n/a

American Financial Grp

AFG

Insurance

5

34.63

1.88

18.18

15.01

8.00

0.86

3,640

11.5

-1.5

Assurant Inc.

AIZ

Insurance

7

40.63

1.58

6.67

25.60

16.25

8.00

4,060

15.2

n/a

Axis Capital Holdings

AXS

Insurance

9

36.32

2.53

9.52

15.28

6.03

3.67

4,260

7.9

n/a

Brown & Brown Inc.

BRO

Insurance

17

26.14

1.22

3.23

28.57

23.34

11.48

3,730

12.9

16.6

Chubb Corp.

CB

Insurance

46

60.68

2.57

5.41

23.08

8.98

1.23

18,040

11.7

8.3

Cincinnati Financial

CINF

Insurance

50

34.05

4.70

1.27

69.26

14.74

-3.40

5,520

6.4

9.0

Delphi Financial Group

DFG

Insurance

10

30.96

1.42

10.00

14.15

9.95

9.46

1,720

11.8

n/a

Donegal Group Inc. A

DGICA

Insurance

8

12.76

3.61

2.22

82.14

22.79

140.00

326

9.4

n/a

Donegal Group Inc. B

DGICB

Insurance

8

18.50

2.22

2.50

73.21

33.04

n/a

473

10.2

7.2

Erie Indemnity Company

ERIE

Insurance

21

69.84

2.95

7.29

66.45

22.53

4.12

3,930

8.1

13.5

Hanover Insurance Gp

THG

Insurance

6

46.47

2.15

33.33

30.86

14.34

2.35

2,100

32.0

14.9

Harleysville Group

HGIC

Insurance

24

36.55

3.94

10.77

59.50

15.10

4.56

988

14.7

9.6

HCC Insurance Holdings

HCC

Insurance

14

31.14

1.86

7.41

19.40

10.41

4.39

3,550

15.9

14.7

Infinity Prop. & Casualty

IPCC

Insurance

9

60.71

1.19

28.57

10.36

8.74

-0.44

759

18.5

n/a

Mercury General Corp.

MCY

Insurance

24

41.14

5.83

1.69

86.33

14.80

1.95

2,250

6.6

9.5

National Interstate Corp.

NATL

Insurance

6

20.84

1.54

14.29

15.24

9.92

14.67

405

32.0

n/a

Old Republic Int'l

ORI

Insurance

30

12.50

5.60

1.45

538.46

96.15

101.59

3,190

6.1

8.9

PartnerRe Limited

PRE

Insurance

17

79.30

2.77

10.00

21.03

7.58

4.53

5,550

6.2

7.0

RenaissanceRe Holding

RNR

Insurance

16

67.02

1.55

4.00

8.45

5.44

3.71

3,630

4.6

7.2

RLI Corp.

RLI

Insurance

35

57.41

2.02

3.57

19.33

9.57

1.02

1,200

13.7

14.7

StanCorp Financial Gp

SFG

Insurance

13

46.00

1.87

7.50

21.39

11.44

9.78

2,120

6.6

20.3

Torchmark Corp.

TMK

Insurance

5

65.25

0.98

6.67

10.16

10.36

10.69

5,220

6.8

5.4

Transatlantic Holdings

TRH

Insurance

20

50.93

1.65

5.00

13.57

8.23

7.57

3,170

14.3

11.5

Travelers Companies

TRV

Insurance

6

59.93

2.40

9.09

21.75

9.05

-0.96

25,830

9.2

2.7

W.R. Berkley Corp.

WRB

Insurance

9

29.95

0.93

16.67

9.66

10.33

-2.33

4,220

15.2

10.1

Wesco Financial Corp.

WSC

Insurance

39

391.16

0.43

2.44

16.47

38.35

n/a

2,780

2.9

3.0

Averages for

30

Insurance

17.2

55.54

2.30

9.11

45.82

15.86

12.06

5,541

12.3

10.2

Averages for

81

Financials

15.6

40.65

2.92

7.80

52.91

16.42

10.30

3,469

11.6

10.8

Averages for

447

CCC Co's

16.7

47.91

2.91

8.20

68.18

21.94

12.39

16,745

12.5

10.3

Note that Wesco Financial has agreed to be acquired by Berkshire Hathaway (NYSE:BRK.A). Also, the list of 4-year streaks includes Bancorp Rhode Island (NASDAQ:BARI) and Broadridge Financial Solutions (NYSE:BR).

Summary

The Financial industry is a traditional source of average to above average yields and there are clearly many that have established long histories of annual increases. Unlike the subjects of the first two articles in this series (MLPs and REITs), the taxation on these dividends is fairly straightforward, at the 15% rate until at least the end of 2012. I expect that to be the case with subsequent installments in this series that will focus on other industry/sector groups. As always, I welcome feedback in the Comments section below.

Next Up: Healthcare

Disclosure: I am long AFL, GE, BEN, TRV.

Source: Dividend Champions: Focus on Financials