I write extensively on the U.S. Dividend Champion list maintained and updated by DRIP Investing. The list is comprised of stocks that have increased their dividend payout for at least 25 consecutive years.
My initial Dividend Champion articles focused on just the Dividend Champions. However, DRIP Investing also maintains a Dividend Contenders list which is comprised of stocks with a history of raising dividends for the past 10-24 years.
Combining April's Dividend Champions and Dividend Contenders into one list gives us a strong starting point of 242 stocks with long histories of raising dividends. Historical tests have also shown that stocks with higher yields and lower payout ratios have tended to outperform other stocks.
With this information in tow, I ranked the yields and payout ratios of the 242 stocks with histories of 10+ years of dividend increases. The yield and payout ratio ranks were added to create an average overall rank for each stock.
We are left with a list of stocks for further research. The top 15 stocks based on yield and payout rank are listed below. In addition, the bottom five stocks (those with the lowest combined yield and payout rank) are listed.
This list is valuable to investors seeking companies with a commitment to paying dividends, high yield, and dividend sustainability/margin of safety. Universal (UVV) tops the list with its healthy 4.59% yield and low payout ratio of 32%. UVV is also currently trading below its book value at a price/book ratio of 0.84. However, earnings growth is projected to decline next year and the stock is currently being sold by institutions and has a relatively high short float of 11.98%.
Note: Data Source DRIP Investing, MSN, and Finviz. Always conduct your own research as statistical anomalies can exist, especially in instances of short-term earnings fluctuations skewing payout ratio.
|Top 15||4/1/11 Champions & Contenders|
|Company||Symbol||Yield||Payout Ratio||Yield / Payout Rank|
|Republic Bancorp KY||RBCAA||2.95%||18%||2|
|Chesapeake Financial Shares||CPKF||3.11%||21%||3|
|Sunoco Logistics Partners LP||SXL||5.50%||48%||6|
|Hudson City Bancorp||HCBK||6.28%||55%||10|
|Citizens Financial Services||CZFS||2.86%||27%||12|
|Teche Holding Co.||TSH||4.00%||41%||14|
|Alterra Capital Holdings Ltd.||ALTE||2.22%||116%||238|
|Royal Gold Inc.||RGLD||0.78%||55%||241|
|EOG Resources Inc.||EOG||0.58%||98%||242|
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.