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For a look into a company's sales trends, one idea is to consider growth in inventory over time. Comparing this to growth in revenue could show some interesting results.

We ran a screen on "dividend champions," or stocks that have consistently raised their dividend over the past 25 years, for those with positive trends in inventory: Growth in quarterly revenue outpacing growth in quarterly inventory year-over-year. We also screened for companies with quarterly inventory decreasing as a percent of current assets.

To understand why these trends are positive, think of why the opposite trends would be negative. If revenue were growing slower than inventory, it may indicate that the company is having trouble selling its inventory - although this could just indicate inventory building or a change in sales policies.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬


We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these companies have strong sales trends to continue supporting their dividends? Use this list as a starting point for your own analysis.

List sorted by difference between growth in revenue and inventory.

1. Lancaster Colony Corporation (NASDAQ:LANC): Engages in the manufacture and marketing of consumer products focusing primarily on specialty foods for the retail and food service markets in the United States. Market cap of $1.91B. Dividend yield at 2.06%, payout ratio at 34.58%. MRQ revenue has increased 3.57% ($274.52M vs. $265.05M y/y) while MRQ inventory has decreased 16.01% ($110.25M vs. $131.26M y/y). Inventory/current assets has decreased from 40.09% to 32.08%, comparing three months ending 2011-09-30 to three months ending 2010-09-30. The stock is a short squeeze candidate, with a short float at 13.64% (equivalent to 22. days of average volume). The stock has gained 35.44% over the last year.

2. Emerson Electric Co. (NYSE:EMR): Operates as a diversified manufacturing and technology company. Market cap of $35.81B. Dividend yield at 3.29%, payout ratio at 42.34%. MRQ revenue has increased 12.05% ($6,545M vs. $5,841M y/y) while MRQ inventory has decreased 0.24% ($2,100M vs. $2,105M y/y). Inventory/current assets has decreased from 25.17% to 22.47%, comparing three months ending 2011-09-30 to three months ending 2010-09-30. The stock has lost 12.46% over the last year.

3. Archer Daniels Midland Company (NYSE:ADM): Procures, transports, stores, processes and merchandises agricultural commodities and products in the United States and internationally. Market cap of $19.22B. Dividend yield at 2.43%, payout ratio at 18.87%. MRQ revenue has increased 30.38% ($21,902M vs. $16,799M y/y) while MRQ inventory has increased 23.25% ($11,122M vs. $9,024M y/y). Inventory/current assets has decreased from 40.86% to 40.77%, comparing three months ending 2011-09-30 to three months ending 2010-09-30. The stock has lost 8.4% over the last year.

4. Colgate-Palmolive Co. (NYSE:CL): Manufactures and markets consumer products worldwide. Market cap of $43.29B. Dividend yield at 2.59%, payout ratio at 44.15%. MRQ revenue has increased 11.16% ($4,383M vs. $3,943M y/y) while MRQ inventory has increased 4.54% ($1,336M vs. $1,278M y/y). Inventory/current assets has decreased from 31.24% to 30.07%, comparing three months ending 2011-09-30 to three months ending 2010-09-30. The stock has gained 17.96% over the last year.

5. PPG Industries Inc. (NYSE:PPG): Manufactures and supplies protective and decorative coatings. Market cap of $13.30B. Dividend yield at 2.65%, payout ratio at 33.03%. MRQ revenue has increased 11.24% ($3,849M vs. $3,460M y/y) while MRQ inventory has increased 6.04% ($1,737M vs. $1,638M y/y). Inventory/current assets has decreased from 25.98% to 25.03%, comparing three months ending 2011-09-30 to three months ending 2010-09-30. The stock has gained 7.1% over the last year.

*Dividend champions sourced from DRiP Investing, accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: Top 5 Dividend Champions With Encouraging Inventory Trends