9 Dividend Champs For Tough Times Ahead

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 |  Includes: DBD, DOV, EMR, JNJ, KO, MMM, PG, PH
by: Avi Morris

The investment world has become unusually challenging. The US, European and Asian countries are supposed to be recovering from a very brutal recession 3 years ago. Last December, just about all analysts were upgrading their forecasts for 2011. Now those forecast are being cut back. By all definitions, the US recovery is sputtering at best. There is an urgency to reduce the massive federal deficits which will be a setback for the economic recovery. Consumer confidence is low. European sovereign debts are various degrees of shaky and austerity plans will limit their economic recoveries. Asian countries will be less affected directly but are worried about weaker demand from their primary customers, the US and Europe. As a result stock markets around the world have sold off, especially in recent weeks.

It is challenging to recommend stocks when lower prices are looming ahead. At times like these, dividend champs shine. Recent studies show that dividends accounted for 40% of investment gains over the last 2 decades. Dividend Aristocrats have records of increasing annual dividends for a minimum of the last 25 years. Those records are impressive, even more meaningful after extending streaks through the last recession when some highly regarded Dividend Aristocrats failed to increase dividends. A more elite list is Dividend Aristocrats which have increased their dividends for a minimum of the last 50 years. I call them Dividend Champs. Excluding 3 utilities, there are only 7 companies that qualify plus 2 I've added - Coca Cola (NYSE:KO) will increase its dividend in February and Johnson & Johnson (NYSE:JNJ) will increase its dividend next April - allowing them to become Dividend Champs.


Dividend Champs

Price Yield PE
Johnson & Johnson (JNJ) $64.55 3.5% 13X
Coca-Cola (KO) $67.97 2.8% 18X
3M (NYSE:MMM) $78.19 2.8% 13X
Emerson Electric (NYSE:EMR) $44.46 3.1% 14X
Procter & Gamble (NYSE:PG) $62.53 3.4% 15X
Parker Hannifin (NYSE:PH) $65.79 2.2% 9X
Genuine Parts (NYSE:GPC) $51.61 3.5% 15X
Dover Corporation (NYSE:DOV) $52.84 2.4% 12X
Diebold (NYSE:DBD) $26.33 4.3% 13X
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  • Johnson & Johnson is one of the largest healthcare companies in the world which still has a AAA credit rating. Popular brand names include: Tylenol, Motrin, Pepcid, Splenda and Listerine.
  • Coca-Cola has the world's most valuable brand. 1.7 billion servings of KO beverages are consumed daily in more countries than are in the UN.
  • MMM is a diversified worldwide technology company with businesses in: industrial and transportation, health care, display and graphics, consumer and office, protection services and communications. In addition to Scotch Tape, it recertified the netbook I'm using to write this article.
  • Emerson Electric is a diversified global manufacturing and technology company offering products and services in network power, process management, industrial automation, climate technologies and storage businesses.
  • Parker Hannifin is the world's leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of commercial, mobile, industrial and aerospace markets.
  • Procter & Gamble provides popular consumer goods (typically #1 or #2 in their lines) around the world. Their brands include: Head & Shoulders, Olay, Braun, Gillette, Crest, Oral-B, Iams, Pringles, Dawn, Downy, Duracell, Tide, Bounty, Charmin and Pampers.
  • Genuine Parts distributes automotive replacement parts, industrial replacement parts, office products and electrical/electronic materials across the US, Canada and Mexico.
  • Dover Corporation is a diversified global manufacturer of products for markets in: energy, product identification, material handling, electronic components and equipment, mobile equipment, fluid solutions and engineered products.
  • Diebold is a leader in the ATM machine business along with security systems and services around the world. DBD had its 58th consecutive annual dividend increase (the longest streak for any company) 6 months ago.


While these companies represent different business, they share a common theme. Each has been increasing annual dividends for more than half a century (giving JNJ and KO the benefit of the doubt). In all fairness, past trends do not guarantee the future. Masco (NYSE:MAS), a supplier of building products, had a 50 year streak come to an end 2 years ago. Research always needs to be done before investing any money. But these survived all recessions since 1960 and are still extending their dividend streaks. Their P/Es are low with yields around 3%. These companies should survive whatever difficulties lie ahead. Rising dividends will feel good during difficult times and are more meaningful when the income is reinvested in more shares, whether in personal or retirement accounts.

Disclosure: I am long KO.