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Dividends and dividend growth are a continuing point of interest, especially as so many fixed income investors are avoiding the bond markets, fearing bond value depreciation. As I have recently stated, some investors are supplementing or replacing the fixed income portion of a portfolio with equities that yield above average dividends and/or that have a strong history of raising their dividends over time.
I received some feedback on a list of mid-cap consumer product makers with above average dividends, as to the dividend growth rates of the companies. Individuals are, sensibly, more interested in a company that will rapidly raise their dividends than one that may presently be slightly higher, yet not grow it, or even eventually lower it. I wanted to supplement that mid-cap list with some additional research before I continued onto another mid-cap sector with yield and/or another subject entirely.
As a result, I have now provided additional information on the set of high yielding American mid-cap consumer goods corporations, including compiling each company’s dividend growth over the last decade. The results are interesting and the difference in dividend growth between the 8 companies is significant, with one growing its dividend as much as 1560% since 2001, while another has a lower dividend today than it did in 2001. Only one of the 8 had negative dividend growth (a shrinking dividend). I also included the cash and debt held by each company, for your consideration in relation to the market capitalization.
  1. Clorox Corporation (CLX)
    • Yield: 3.2%
    • Industry: Housewares & Accessories
    • Market Capitalization: $9.53 Billion
    • 10 Year Dividend Growth: 153% ($0.83 to $2.10)
    • Cash: $385 Million
    • Debt: $2.43 Billion
  1. ConAgra Foods, Inc. (CAG)
    • Yield: 3.8%
    • Industry: Processed & Packaged Foods
    • Market Capitalization: $9.96 Billion
    • 10 Year Dividend Growth: -2.3% ($0.88 to $0.86): CAG’s dividend peaked in 2005 at 1.08, and is currently about 20% below that peak. This is the worst growing dividend within this group. In fact, it did not grow at all, but instead shrunk over both the 5 and 10-year time frames.
    • Cash: $885 Million
    • Debt: $3.23 Billion
  1. Diebold, Incorporated (DBD)
    • Yield: 3.21%
    • Industry: Business Equipment
    • Market Capitalization: $2.41 Billion
    • 10 Year Dividend Growth: 68.75% ($0.64 to $1.08)
    • Cash: $601.7 Million
    • Debt: $567.8 Million
  1. Leggett & Platt, Incorporated (LEG)
    • Yield: 4.62%
    • Industry: Home Furnishings & Fixtures
    • Market Capitalization: $3.43 Billion
    • 10 Year Dividend Growth: 122.9% ($0.48 to $1.07)
    • Cash: $244.5 Million
    • Debt: $782.8 Million
  1. Mattel Inc. (MAT)
    • Yield: 3.5%
    • Industry: Toys & Games
    • Market Capitalization: $9.4 Billion
    • 10 Year Dividend Growth: 1560% ($0.05 to 0.83): This was by far the highest rate of dividend growth. It should be noted, though, that this dividend did start off especially small, at 5 cents, and that about half of the total growth occurred in between 2002 and 2003, when the annual dividend was raised from 5 cents to 40 cents (a 700% increase). The growth rate is far less singular when you exclude or start after that one extraordinary change (107.5% subsequent growth).
    • Cash: $1.05 Billion
    • Debt: $1.2 Billion
  1. MeadWestvaco Corporation (MWV)
    • Yield: 3.2%
    • Industry: Packaging & Containers
    • Market Capitalization: $5.47 Billion
    • 10 Year Dividend Growth: 6.8% ($0.88 to $0.94)
    • Cash: $790 Million
    • Debt: $2.39 Billion
  1. Pitney Bowes Inc. (PBI)
    • Yield: 5.9%
    • Industry: Business Equipment
    • Market Capitalization: $5.23 Billion
    • 10 Year Dividend Growth: 25.86% ($1.16 to $1.46)
    • Cash: $515 Million
    • Debt: $4.29 Billion: This represents the highest level of debt on this list, compared to both market capitalization and/or corporate cash held.
  1. Sonoco Products Co. (SON)
    • Yield: 3.18%
    • Industry: Paper Products
    • Market Capitalization: $3.56 Billion
    • 10 Year Dividend Growth: 38.75% ($0.80 to $1.11)
    • Cash: $158.25 Million
    • Debt: $621 Million
This group’s average dividend growth is far less consistent than the 10 Dow Components Currently Yielding Over 3%. Since 2001, the average total dividend growth for this mid-cap group is 246.72%, but if we remove that one dramatic 700% growth year by MAT, the average growth rate drops to 159.22% (still respectable). This group’s average yield is approximately 3.83%, which is similar yet slightly below to the 3.94% average for the above-mentioned 10 DJIA stocks, which averaged 245.67% total dividend growth since 2001.
Source: 8 Mid-Cap Goods Producers Yielding Over 3%: 10-Year Dividend Growth Rate Analysis