Best Of The Best: Dividend Champions With Outstanding Records Of Consecutive Dividend Increases, Part IV

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 |  Includes: HRL, ITW, MO, PFE, TR, TSM
by: Tactical Investor

This is part IV of the dividend champion series. In part III we looked at five companies that consecutively increased their dividends for 48-50 years. The single most important criterion was for each company on this list to have consecutively increased its dividends for at least 40 years. All but a very select few companies can lay claim to such a title.

The following filters were also applied. .

1) Market cap of $1 billion or higher.

2) Paying dividends for 50 or more years.

3) Consecutive dividend increases for 40 or more years.

4) Operating cash flow of $ 60 million or more. OCF is generally a better metric than earnings per share because a company can show positive net earnings and still not be able to properly service its debt; the cash flow is what pays the bills. .

We also listed the free levered cash flow rates for each of the dividend champions. Levered free cash flow is the amount of cash available to stock holders after interest payments on debt are made. A company with a small amount of debt will only have to spend a modest amount of money on interest payments, which in turn means that there is more money to send to shareholders in the form of dividends and vice versa. Value investors might also find our latest article titled 4 Magnificent Value Plays With Dividends where we examine 4 stocks trading significantly below book value interesting.

Our top picks from the list are ITW and CB. They both have decent quarterly revenue growth (yoy) rates of 16.2% and 4.7% respectively, and both have been paying dividends for decades. ITW and CB also have decent 5 year dividend growth rates of 14.8% and 9.8% respectively. Two other interesting plays are Taiwan Semiconductor Manufacturing Co. Ltd. (NYSE:TSM) and Pfizer Inc. (NYSE:PFE) which have yields of 3.2% and 3.9% respectively.

TSM has been paying dividends since 2004, has a five-year dividend growth rate of 7.96%, ROE of 25.18%, a five-year dividend average of 5.7%, and a total return for the past three years of 82%. On the flip side, it has only consecutively increased its dividend once since 2004, and it does not have as long of a dividend history as the other stocks on this list. Out of a possible five stars we would it assign 3.5. PFE has been paying dividends since 1901, has a ROE of 11.45%, and it sports a hefty quarterly earning's growth rate of (yoy) 331%, a levered free cash flow rate of $17 billion, and a total 3 year return of 35.2%. Out of a possible five stars we would assign PFE 3.5 stars

Stock

Yield

Mkt
cap

Fwd PE

EBITDA (ttm)

Quarterly revenue growth

Operating margins

Revenue

Cash flow

Consec.
Dividend
Increases

MO

5.7%

59.b

13

6.76B

-3.00%

39.6%

16.4b

3.6b

46

ITW

3.1%

22.4

11

3.25B

16.20%

14.9%

17.8b

1.67b

48

CB

2.3%

18.64b

11

2.76B

4.7%

13.38%

13.6b

2.16B

46

HRL

1.7%

7.6b

14

839.6M

2%

9.0%

7.9b

490M

44

TR

1.3%

1.36b

34

74.7M

-2.2%

10.69%

522m

60.2M

47

Click to enlarge

Altria Group Inc (NYSE:MO)

MO has enterprise value of $ 69 billion and price/sales value of 3.61. It has a very strong ROE of 72%, a payout ratio of 92%, a quarterly earnings growth rate (yoy) of 3.7%, a total return of 116% for the past three years, and has been paying dividends since 1928. It has a levered free cash flow rate of $ 4.66 billion.

· ROE 72.12%

· Return on assets 10.9%

· Total debt $ 13.6B

· 200 day moving average $ 26.94

· Book value $2.15

· Dividend yield 5 year Average 8.9%

· Dividend rate $1.64

· Payout ratio 92%

· Dividend growth rate 5 year average -11.26%

· Paying dividends since 1928

· Total return last 3 years 116%

· Total return last 5 year 78%

Illinois Tool Works Inc. (NYSE:ITW)

ITW has enterprise value of $ 25.84 billion and price/sales value of 1.25. It has a revenue growth (yoy) of 16.2% and a ROE of 21.16%. It has a payout ratio of 34%, a strong 5 year dividend growth rate of 14.87%, a quarterly earning's growth rate (yoy) of 20.3%, a total return of 62% for the past three years, and has been paying dividends since 1933. It has a levered free cash flow rate of $ 534 million.

· ROE 21.16%

· Return on assets 9.62%

· Total debt $ 4.56B

· 200 day moving average $ 48.50

· Book value $20.36

· Dividend yield 5 year Average 2.7%

· Dividend rate $1.44

· Payout ratio 34%

· Dividend growth rate 5 year average 14.87%

· Paying dividends since 1933

· Total return last 3 years 62%

· Total return last 5 year 13%

The Chubb Corp. (NYSE:CB)

CB has enterprise value of $ 20.49 billion and price/sales value of 1.39. It has a revenue growth (yoy) of 4.7% and a ROE of 11.68%. It has a very manageable payout ratio of 25%, a five year dividend growth rate of 9.8%, a total return of 47% for the past three years, and has been paying dividends since 1902. It has a levered free cash flow rate of $ 1.44 billion.

· ROE 11.68%

· Return on assets 3.29%

· Total debt $ 3.98B

· 200 day moving average $ 62.94

· Book value $56.24

· Dividend yield 5 year Average 2.4%

· Dividend rate $1.56

· Payout ratio 25%

· Dividend growth rate 5 year average 9.8%

· Paying dividends since 1902

· Total return last 3 years 47%

· Total return last 5 year 42%

Hormel Foods Corp (NYSE:HRL)

HRL has enterprise value of $ 7.4 billion and price/sales value of 1.4. It has a revenue growth (yoy) of 2%, and a ROE of 18.9%. It has a very manageable payout ratio of 28%, a strong five year dividend growth rate of 13% a total return of 107% for the past three years, and has been paying dividends since 1928. It has a levered free cash flow rate of $372 million.

· ROE 18.92%

· Return on assets 10.78%

· Total debt $250M

· 200 day moving average $ 28.65

· Book value $10.04

· Dividend yield 5 year Average 1.9%

· Dividend rate $0.60

· Payout ratio 28%

· Dividend growth rate 5 year average 13%

· Paying dividends since 1928

· Total return last 3 years 107%

· Total return last 5 year 61%

Tootsie Roll Industries Inc (NYSE:TR)

TR has enterprise value of $1.36 billion and price/sales value of 2.66. It has a revenue growth (yoy) of -2.2%, and a ROE of 6.2%. TR, has a five-year dividend growth rate of 3%, a total return of 11.38% for the past three years, and has been paying dividends since 1943. It has a levered free cash flow rate of $31.63 million.

· ROE 6.27%

· Return on assets 3.98%

· Total debt $7.5M

· 200 day moving average $ 25.88

· Book value $11.62

· Dividend yield 5 year Average 1.32%

· Dividend rate $0.32

· Payout ratio 44%

· Dividend growth rate 5 year average 3%

· Paying dividends since 1943

· Total return last 3 years 11.38%

· Total return last 5 year -9.3%

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

Additional disclosure: DisclaimerDo not treat this as a buying list. It is very important that you check the finer details in each of the mentioned plays before investing any capital in them.