Dividend Champions: Focus on Resources

The Dividend Champions spreadsheet and PDF have been updated through 2/28/11 and 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 sixth in a series of articles focusing on specific industries and isolating the CCC companies within those industries. The first five can be found under my articles page, beginning on March 2.

More than Oil

The extraction of materials from nature has been important for many years, even centuries, if not millennia. The heaviest degree of media attention focuses on oil and natural gas, but mining companies and those involved in agriculture also fall into this category.

In addition, I'm including chemical companies because most of their products are derived from petroleum during or after the refining process. In fact, many of the major oil companies either still have or once included petrochemical divisions. With almost daily headlines speculating about the price of a barrel of oil, it's clear that this is a commodity that has extreme importance around the world.

Political unrest in places like Libya has the potential for panic trading, even when the supply in question only represents about 2% of the world's output. Even natural gas, which is a byproduct of the drilling and extraction process, has become a vitally important commodity, of which many people have high hopes as the fuel of the future. Note that the pipeline companies that often process, store, or transport oil and gas are often Master Limited Partnerships (or MLPs), which were featured in the first article in this series.

Mining companies provide the raw material that goes into the making of steel, aluminum, and other metals, including copper, gold, and other precious metals, as well as uranium and coal for the production of electricity. Note that multinational company BHP Billiton (BHP), which has dual headquarters in Australia and the United Kingdom, also has oil and gas operations, as well as being one of the world's largest mining companies. They are one of many Large Caps among the Resource companies, which average three times the size of the typical CCC company. Chemicals represent another important industry and at least three of the firms in that category specialize in industrial gases, which are used in the manufacturing process by industrial users. The Agriculture category obviously represents an important part of the food chain, and is largely dominated by a few companies.

The Companies

Resource companies don't make up a large segment of the CCC universe, with 35 firms. But some of these stand out with long histories of dividend increases and above average yields, in contrast to the below average yield of the segment as a whole.

There are a number of foreign firms represented, but most of the American companies included also have substantial foreign operations. Investors should consider the role of foreign withholding taxes, which can be recovered through tax credit at filing time, unless the security is held in a retirement account. Note that Royal Dutch Shell's (RDS.A, RDS.B) streak is listed at 5 years, but its last increase came almost two years ago, so further research is definitely warranted before investment funds are committed.

Once again, 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
Andersons Inc. (The)	ANDE	Agriculture	9	48.04	0.92	22.22	12.64	13.80	6.49	886	16.7	11.5
Archer Daniels Midland	ADM	Agriculture	36	37.18	1.72	6.67	21.12	12.27	4.19	23,690	12.0	12.6
Bunge Limited	BG	Agriculture	9	72.17	1.27	9.52	6.11	4.79	12.87	11,140	9.5	n/a
Monsanto Company	MON	Agriculture	10	71.89	1.56	5.66	54.37	34.90	18.31	38,580	25.9	n/a
Averages for	4	Agriculture	16.0	57.32	1.37	11.02	23.56	16.44	10.47	18,574	16.0	12.1
Air Products & Chem.	APD	Chemical	28	92.00	2.13	8.89	40.75	19.13	11.46	19,770	9.0	10.0
Airgas Inc.	ARG	Chemical	9	62.58	1.85	16.00	43.61	23.53	15.11	5,270	33.1	n/a
Albemarle Corp.	ALB	Chemical	17	57.56	1.15	17.86	18.80	16.40	11.55	5,270	12.6	9.3
H.B. Fuller Company	FUL	Chemical	41	21.55	1.30	2.94	19.58	15.07	12.71	1,060	2.8	2.9
Hawkins Inc.	HWKN	Chemical	6	38.27	1.57	7.14	25.86	16.50	n/a	395	12.3	7.8
NewMarket Corp.	NEU	Chemical	6	128.11	1.37	17.33	14.56	10.60	5.41	1,780	n/a	n/a
Oil-Dri Corp. of Amer.	ODC	Chemical	8	20.31	3.15	6.67	47.41	15.04	n/a	145	11.5	8.0
Praxair Inc.	PX	Chemical	18	99.38	2.01	11.11	52.08	25.88	13.33	30,140	20.1	19.2
RPM International	RPM	Chemical	37	22.97	3.66	2.44	64.62	17.67	14.49	2,990	6.2	5.3
Sigma-Aldrich Corp.	SIAL	Chemical	35	63.89	1.13	12.50	23.08	20.48	9.58	7,790	11.0	15.2
Westlake Chemical	WLK	Chemical	7	47.81	0.53	10.43	7.60	14.31	2.92	3,170	20.1	n/a
Averages for	11	Chemical	19.3	59.49	1.80	10.30	32.54	17.69	10.73	7,071	13.9	9.7
Arch Coal Inc.	ACI	Mining	7	33.53	1.19	11.11	41.24	34.57	54.37	5,450	19.5	12.9
BHP Billiton Ltd.	BHP	Mining	8	94.60	1.84	6.10	28.38	15.43	21.36	263,130	25.5	15.3
BHP Billiton plc	BBL	Mining	8	79.31	2.19	6.10	28.38	12.94	-4.48	220,600	25.5	n/a
Compass Minerals	CMP	Mining	8	93.47	1.93	15.38	39.91	20.73	17.20	3,070	7.2	n/a
Royal Gold Inc.	RGLD	Mining	10	49.62	0.89	22.22	63.77	71.91	38.76	2,750	12.5	21.8
Averages for	5	Mining	8.2	70.11	1.61	12.18	40.34	31.12	25.44	99,000	18.0	16.7
Canadian Natural Res.	CNQ	Oil & Gas	10	50.30	0.60	2.74	12.40	20.79	14.11	54,730	23.0	n/a
CARBO Ceramics	CRR	Oil & Gas	10	123.97	0.65	11.11	23.53	36.46	27.78	2,850	16.1	14.3
Chevron Corp.	CVX	Oil & Gas	23	103.75	2.78	5.88	30.38	10.94	8.89	208,790	10.2	8.1
CNOOC Ltd.	CEO	Oil & Gas	5	228.34	2.31	2.23	32.37	14.01	21.63	102,000	25.9	n/a
ConocoPhillips	COP	Oil & Gas	11	77.87	3.39	20.00	34.65	10.22	15.88	111,330	12.7	12.2
Enbridge Inc.	ENB	Oil & Gas	16	59.90	3.27	15.29	74.52	22.78	8.04	23,080	11.8	9.8
ExxonMobil Corp.	XOM	Oil & Gas	28	85.53	2.06	4.76	28.30	13.75	13.01	425,850	8.8	7.1
Helmerich & Payne	HP	Oil & Gas	38	64.99	0.37	20.00	13.11	35.51	8.02	6,910	5.8	4.3
Imperial Oil Ltd.	IMO	Oil & Gas	18	51.94	0.84	14.74	16.45	19.60	-3.65	44,020	5.9	4.9
Murphy Oil Corp.	MUR	Oil & Gas	15	73.53	1.50	10.00	26.63	17.80	25.00	14,160	18.5	11.2
Noble Corp.	NE	Oil & Gas	7	44.71	1.21	2.51	17.84	14.80	67.39	11,210	43.9	n/a
Occidental Petroleum	OXY	Oil & Gas	9	101.97	1.80	21.05	33.09	18.34	19.73	82,880	17.9	11.4
Royal Dutch Shell plc A	[[RDS-A]]	Oil & Gas	5	72.25	4.65	5.00	51.22	11.01	n/a	N/A	24.8	n/a
Royal Dutch Shell plc B	[[RDS-B]]	Oil & Gas	5	72.12	4.66	5.00	51.22	10.99	n/a	N/A	24.8	n/a
Suncor Energy Inc.	SU	Oil & Gas	5	47.02	0.84	6.45	17.07	20.27	22.27	73,610	29.7	16.3
Averages for	15	Oil & Gas	13.7	83.88	2.06	9.78	30.85	18.49	19.08	89,340	18.7	9.9
Averages for	35	Resources	14.9	71.21	1.84	10.43	31.90	19.81	16.57	54,803	16.8	10.9
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

Summary

The Resources industries include companies 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% (or lower) rate until at least the end of 2012. I expect that to be the case with future installments in this series that will focus on other industry/sector groups. As always, I welcome feedback in the Comments section below.

Next Up: Food, Beverage and Tobacco

Disclosure: I am long PX, RPM, ACI, XOM.