100 Dividend Champions: No New Names in June and Just 7 Payout Increases

Includes: BRK.A, CSX, FDX, GOLD
by: David Fish

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.

Quiet Time

During June, there were no new Champions and the number of dividend increases was fairly small, with just seven CCC companies boosting their payouts. In fact, one Champion was deleted when Wesco Financial reported that its shareholders had agreed to the company's acquisition by Berkshire Hathaway (NYSE:BRK.A) on June 24. The month saw one company graduate from Challenger to Contender status when FedEx Corp. (NYSE:FDX) declared its 10th straight year of higher dividends. The ranks of CCC companies remained at 449 with the 5th year of higher dividends by mining company Randgold Resources Ltd. (NASDAQ:GOLD). The slowdown in announcements didn't come as a surprise, however. My recent article about the seasonality of dividend increases by the CCC companies showed that roughly 62% of them increase their dividend in the first half of the year and that July is typically the lightest month of the year by Ex-Dividend Dates, so it follows that June has the fewest announcements. I believe that we'll see another couple of weeks of sparse activity before a pickup in declarations of higher payouts in the second half of the month. That should be augmented by roughly two dozen MLPs (Master Limited Partnerships) that tend to increase their dividends each quarter, paying at the new rate in early August.

Prices Dip

In addition to the deletion of Wesco Financial, which was priced at $385 per share, stock prices were down for much of June before a late surge. Add in the effect of a handful of stock splits, led by a 3-for-1 split by Challenger CSX Corp. (NYSE:CSX), and you have a certain amount of downward pressure on the average price. The average increase by the 100 Champions dipped from 6.63% at the end of May to 6.57% at the end of June. The average yield rose from 2.80% to 2.89%, while the average share price dropped from $54.39 to $50.42. Meanwhile, the Contenders' average increase fell from 8.13% to 7.98%, while the average yield rose from 2.93% to 2.97%, largely because the average price was $48.23, down from $49.32 at the end of May. The Challengers' average dividend increase rose from 9.77% to 9.80%, while the average price and yield went from $46.09 and 3.00%, respectively, to $45.51 and 3.04%.

The average yield for the 449 companies rose from 2.93% to 2.98%, more than a full percentage point above the S&P 500's yield, while the latest dividend increases have averaged a healthy 8.54%. As mentioned above, several MLPs will be increasing their dividends for the third time this year, and those will be low-percentage increases, which will keep the overall average down to some extent. As always, I welcome suggestions in the Comment section below.

The Dividend Champions spreadsheet and PDF have been updated through 6/30/11 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. “CCC” refers to the universe of Champions, Contenders, and Challengers.

Disclosure: I am long CSX.