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In compiling the Dividend Champions list (found here) I get to see which companies are nearing the anniversaries of their previous dividend increases. Most of these firms raise their payout about the same time every year, but some companies go longer before boosting their dividends, and this can raise concerns about their streaks of increases.

Dividend Doubt Series

This is the fourth in a monthly series listing companies whose latest dividend increase might be considered “overdue” because these companies have gone more than a year since their previous increase, a possible sign that the dividend (or at least the streak of increases) is in danger. Some firms regularly go more than a year between increases, so this is only an “early warning” sign that some of them may warrant concern. This series is intended to augment David Van Knapp's series about possible “Dividends in Danger?” As we get closer to year-end, some of the listing will act as a dividend streak “death watch,” since it will include companies that will be deleted if they fail to increase the dividend in 2011 (making the payout unchanged from that of 2010).

In fact, this month, I'm again presenting the list a bit differently. Rather than break it down into champions, contenders, and challengers, I'm including all companies. But breaking the listing into two groups, which I've labeled “Red Flag” and “Yellow Flag.” The first are companies that face deletion if they do not increased their dividend this year, since their 2011 total dividends paid will equal the amount paid in 2010. The second group last increased their dividend late enough in 2010 to insure that this year's payout will be higher (barring an actual decrease).

"Red Flag"


No.

6/30


%

Pay

Payout

TTM

Company

Symbol

Yrs

Price

Yield

Inc.

Date

Ratio

P/E

*

Gas Natural Inc.

EGAS

5

11.55

4.68

12.50

4/30/09

58.06

12.42

1

Natural Resource Partn

NRP

8

33.17

6.51

0.93

5/14/09

127.81

19.63

1

Royal Dutch Shell plc A

RDS.A

5

71.13

4.72

5.00

6/10/09

44.04

9.32

1

Royal Dutch Shell plc B

RDS.B

5

71.75

4.68

5.00

6/10/09

44.04

9.40

1

Harleysville Savings

OTCQX:HARL

22

15.25

4.98

5.56

8/19/09

57.14

11.47

2

Comfort Systems USA

FIX

6

10.61

1.89

11.11

9/21/09

100.00

53.05

2

Consolidated Water Co.

CWCO

13

9.29

3.23

15.38

10/31/09

83.33

25.81

3

Allied World Assurance

AWH

5

57.58

1.39

11.11

12/10/09

6.93

4.99

1

Universal Forest Products

UFPI

16

23.96

1.67

233.33

12/15/09

61.54

36.86

0

United Bankshares Inc.

UBSI

37

24.48

4.90

3.45

1/4/10

72.29

14.75

2

Ohio Valley Banc Corp.

OVBC

15

17.46

4.81

5.00

2/10/10

64.12

13.33

0

Meridian Bioscience Inc.

VIVO

19

24.11

3.15

11.76

2/11/10

124.59

39.52

0

Westamerica Bancorp

WABC

19

49.25

2.92

2.86

2/13/10

45.28

15.49

1

Harsco Corp.

HSC

16

32.60

2.52

2.50

2/16/10

683.33

271.67

0

CenturyLink Inc.

CTL

37

40.43

7.17

3.57

3/22/10

97.32

13.57

1

Public Service Enterprise

PEG

7

32.64

4.20

3.01

3/31/10

43.63

10.39

0

"Yellow Flag"


No.

6/30


%

Pay

Payout

TTM

Company

Symbol

Yrs

Price

Yield

Inc.

Date

Ratio

P/E

*

ITT Corp.

ITT

8

58.93

1.70

17.65

4/1/10

23.98

14.13

0

PPL Corp.

PPL

9

27.83

5.03

1.45

4/1/10

59.32

11.79

0

Astro-Med Inc.

ALOT

7

8.19

3.42

16.67

4/2/10

100.00

29.25

3

PG&E Corp.

PCG

6

42.03

4.33

8.33

4/15/10

68.68

15.86

0

Tompkins Financial Corp.

TMP

24

39.24

3.47

10.00

5/14/10

43.45

12.54

3

United Community Banc

UCBA

5

6.25

7.04

10.00

5/28/10

-366.67

-52.08

0

Knight Transportation Inc.

KNX

7

16.99

1.41

20.00

6/25/10

35.82

25.36

0

Pharmaceutical Product

PPDI

6

26.84

2.24

5.71

6/29/10

49.59

22.18

0

Universal Health Realty Tr

UHT

22

39.98

6.05

0.83

6/30/10

187.60

30.99

0

Communications Systems

JCS

8

17.93

3.35

7.14

7/1/10

46.51

13.90

1

Greif Inc. A

GEF

7

65.03

2.58

10.53

7/1/10

33.94

13.14

1

Weyco Group Inc.

WEYS

29

24.60

2.60

6.67

7/1/10

55.65

21.39

0

Community Bank System

CBU

17

24.79

3.87

9.09

7/9/10

49.23

12.71

2

MSC Industrial Direct Co.

MSM

8

66.31

1.33

10.00

7/27/10

30.14

22.71

1

*Number of years with no increase (1999-2010), except Challengers, which shows number of years with no increase since streak began.

There will be other companies that join this listing during the year as they pass the anniversary of their previous increase without hiking the dividend. Since the determinant for inclusion revolves around the actual dividend payment, that date is listed above, along with the payout ratio and the price/earnings ratio, two key indicators of a company's ability to increase the payout. (Because of space limitations, I'm limiting the columns shown.)

Some Companies at Greater Risk Than Others

So which dividends might be in danger? Some companies, such as REITs (Real Estate Investment Trusts) and MLPs (Master Limited Partnerships), have a tendency to pay out much more than earnings per share, simply because of their legal structure, so we can't tell much from seemingly high payout ratios or P/Es in such cases. Some alarming payout ratios and/or P/Es, like those at Harsco (NYSE:HSC) and Meridian Bioscience (NASDAQ:VIVO) may suggest great risk, but a look ahead at the estimated earnings per share for this year and next might provide a bit of comfort. As always, comments and suggestions are welcome below.

Source: 30 'Overdue' Dividend Increases: Streaks in Doubt?