Dividend Champions: List Expands to 100 as of April

by: David Fish

The Dividend Champions spreadsheet and PDF have been updated through 3/31/11 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.

During the past month, I have focused on updating the listings for dividend increases and other announcements. Following is a discussion of my latest efforts.

100 Champions and Growing

During March, Raven Industries (NASDAQ:RAVN) declared its 25th straight annual dividend increase, raising the number of Champions to an even 100 for the first time since last October, when four companies were deleted because their 2010 payments equaled what they paid in 2009. That pushed the Champions roster down to 97 companies, but the graduations of McCormick & Company (NYSE:MKC) in November and HCP Inc. (NYSE:HCP) in January, along with Raven, have restored the total to triple digits. I am fairly confident that the number of Champions will remain at or above 100 for the foreseeable future, despite a couple of possible deletions due to takeovers. The first is the proposed acquisition of Wesco Financial (NYSEMKT:WSC) by Berkshire Hathaway (NYSE:BRK.A), which appears likely (though Warren Buffett said that the deal would only proceed if approved by a majority of the non-Berkshire shareholders, who own just 19.9% of the stock). The second deal involves a hostile bid by a private equity firm for Family Dollar Stores (NYSE:FDO), which has adopted a “poison pill” to fend off the attempt, making that takeover less likely.

Offsetting the two possible deletions are the approaching graduations of companies with 24-year streaks of dividend increases from Contender to Champion status. Those include Tompkins Financial (NYSEMKT:TMP) in May, Harleysville Group (NASDAQ:HGIC) in September, and Donaldson Company (NYSE:DCI) and Mercury General (NYSE:MCY) in December, followed by T. Rowe Price (NASDAQ:TROW) next March. There should also be plenty of companies graduating from Challenger to Contender status with their 10th straight year of higher dividends, beginning with Watsco Inc. (NYSE:WSO) and Southern Company (NYSE:SO) in April, followed by as many as 16 other companies by year-end. An equal number of companies (16) are listed in the Appendix with four years of dividend increases that are likely to become Challengers by the end of 2011. So the ranks of CCC companies should continue to expand, fueled by the renewed trend toward dividend increases.

Positive Trends Continue

Corporations are continuing to be more generous with their increases now that the worst of the recent financial problems have passed and recovery seems to be well under way. The average increase by the 100 Champions rose from 6.09% at the end of February to 6.37% at the end of March, its highest since January 2010 (after which it plunged from 7.11% to 5.10%). The average yield slipped from 2.85% to 2.82%, while the average share price increased from $53.67 to $54.12, a new high since I began compiling the listing in December 2007. Meanwhile, the Contenders' average increase rose from 7.60% to 8.33%, while the average yield stayed at 2.95%, even though the average price was $48.34, up from $46.96 at the end of February. The Challengers remained fairly consistent while dropping from 207 to 205 companies. Their average dividend increase dipped from 9.52% to 9.50%, although the average price and yield went from $45.81 and 2.91%, respectively, to $46.12 and 2.92%.

I've added combined totals on the Contenders and Challengers tabs to reflect Champions and Contenders figures (on the Contenders tab) and Contenders and Challengers figures (on the Challengers tab), as well as the totals and averages for all CCC companies (on the Challengers tab). The average yield for the 447 companies is 2.91%, more than a full percentage point above the S&P 500's yield, while the latest dividend increases average a healthy 8.47%, a figure that I think will continue to grow, along with the CCC “universe.” As always, I welcome suggestions in the Comment section below.

Disclosure: I am long MKC.