101 Dividend Champions for June 2011

by: David Fish

The Dividend Champions spreadsheet and PDF have been updated through 5/31/11 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.

What's New

During May, there was one new Champion, Donaldson Company (NYSE:DCI), which declared its third dividend increase since the start of 2010. A long-time Champion also recorded its 49th year of higher payouts when Lowe's Companies (NYSE:LOW) raised its quarterly dividend from 11¢ to 14¢ per share. The month also saw companies graduating from Challenger to Contender status with their 10th straight year of higher dividends, including Bunge Limited (NYSE:BG), Flowers Foods (NYSE:FLO), and W.R. Berkley (NYSE:WRB). And the ranks of CCC companies expanded to 449 with the 5th year of higher dividends by insurance company Tower Group (NASDAQ:TWGP). In general, though, we appear to be entering a period of fewer expected increases, based on anniversaries of last year's dividend hikes. My recent article of expected increases pegged just 20 companies likely to increase their payouts by the end of July. So far, two of those (H.J. Heinz Co. (HNZ) and Lowe's) have announced increases, whereas one (Community Bank System (NYSE:CBU)) declared the same payout for a fifth straight quarter, placing it in the “overdue” category.

Trends Moderate

Companies continue to be generous with their recent increases. The average increase by the 101 Champions rose from 6.56% at the end of April to 6.63% at the end of May. The average yield edged up from 2.79% to 2.80%, while the average share price dipped from $54.85 to $54.39, the first decrease since January. Meanwhile, the Contenders' average increase rose from 8.07% to 8.13%, while the average yield rose from 2.88% to 2.93%, largely because the average price was $49.32, down from $50.31 at the end of April. The Challengers' average dividend increase jumped from 9.52% to 9.77%, while the average price and yield went from $47.17 and 2.90%, respectively, to $46.09 and 3.00%.

The average yield for the 449 companies rose from 2.87% to 2.93%, still more than a full percentage point above the S&P 500's yield, while the latest dividend increases have averaged a healthy 8.58%. More companies are increasing their dividends for the second time this year, indicated in the Note column by the '&' symbol, especially the MLPs (Master Limited Partnerships), which feature low-percentage recent increases, but many of which increase the rate each quarter. As always, I welcome suggestions in the Comment section below.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.