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By Robert Gordon

It is one thing to pay a dividend, and quite another to pay a generous dividend. But the best scenario of all for income seekers is to acquire companies that pay both a generous and a growing dividend.

I have scoured to find four companies that pay a dividend rate of at least 150% of the 10 year Treasury yield, and have at least a 50 year history of annual dividend increases. Finally, I have looked for companies that do not have the wide institutional appeal of Proctor & Gamble Co. (NYSE:PG) or Johnson & Johnson (NYSE:JNJ). In the following article, I will analyze four often overlooked companies that have shown strong dividend growth in the past, and make recommendations based on their current positions in the market.

Cincinnati Financial Corp. (CINF)

Cincinnati is a holding company for a large property/casualty insurer, with smaller life, health and disability insurance, and financial planning arms. Its stock was trading recently at about $34 per share, very near the high end of its 52 week range of from $34.33 to $23.65. It is trading at a price to earnings ratio of 35, and has a market capitalization of $5.56 billion. Its dividend, which in 2011 was increased for the 51st consecutive year, now stands at an annual rate of $1.61, for a yield of 4.8%.

Property/casualty insurers focus on operating profits, which takes into account underwriting but excludes investment income or losses. Cincinnati's operating earnings for the fourth quarter of 2011 far surpassed expectations, and came in at $134 million, or $0.83 per share. Analysts had expected $0.59 in operating earnings. For the year, which included an unusual amount of catastrophic losses, earnings came to $166 million, or $1.02 per share.

I do not expect the dismal 2011 results, Cincinnati's worst since 2000, to disrupt dividends. Unusual, catastrophic losses in 2011 totaled $402 million, compared to $148 million in 2010. No one can predict natural events, yet historically it is reasonable to expect 2012 catastrophic losses to be no more than $200 million.

Analysts are not optimistic on Cincinnati, and give it a rating of 3.1. My concern is that the stock has run up by 50% since August. I loved this company at $24 per share. I am less thrilled with it at current levels, and encourage you to await a price pullback before investing.

Vectren Corp. (VVC)

Vectren is a combined cycle, gas and electric utility that was created by the 2000 merger of Indiana Energy with SIGCORP. The resulting company's footprint covers about two thirds of Indiana. Its stock was trading recently at a little over $29 per share, near the high end of its 52 week range of from $30.69 to $23.65. It has a price to earnings ratio of 17, and a market capitalization of $2.4 billion. It raised its dividend in December, 2011, making the 52nd consecutive year it has done so. The yield now stands at a quarterly $0.35, for an annual yield of 4.7%

As a utility, Vectren has a lot going for it. Its generating capacity is already in compliance with the current EPA air improvements under consideration. Much of its coal comes from its own service area in southwest Indiana, helping to hold down its fuel costs. Financially, Vectren has limited debt by utility standards, with long term debt of about 50% of capital each of the past ten years.

Analysts see gently rising earnings each of the next two years. I see Vectren as a near perfect choice for utility investors seeking stability, safety, and rising income.

Emerson Electric Company (EMR)

Emerson designs, manufacturers, and sells electronic equipment worldwide to industrial and retail consumers and offers engineering solutions as well. Emerson stock was trading recently at about $52 per share. Its 52 week range is from $62.24 to $39.50, and it is trading at a price to earnings ratio of 16.5. It has a market capitalization of $38.4 billion, and it raised its dividend in 2011 for the 55th consecutive year, to a quarterly $0.40, for a yield of 3.1%

Emerson's fiscal year ends September 30th. In its fiscal 2011, Emerson posted earnings up 25% from 2010, to $3.24 per share. But the momentum came to a screeching half in Emerson's first quarter of the new year. Earnings in the quarter fell to $371 million, or $0.50 per share, from the year ago level of $480 million, or $0.63, per share, a decline of nearly 23%. In response, analysts covering the company have repeatedly lowered their predicted earnings for this year and next.

It is not all doom and gloom for Emerson; far from it. The company has expended research to over half a billion dollars a year, and is investing to increase its revenues in emerging markets beyond the 35% of sales it has recently been. Emerson has a rock solid balance sheet with long term debt just 29% of capital. But Emerson stock has risen over 15% since late December, 2011, and I believe its price is currently overextended. If and when its price to earnings ratio falls back to no higher than the market average, I would look seriously at Emerson as a long term buy.

Genuine Parts Company (GPC)

Genuine Parts is a maker and distributor best known for its replacement automobile parts business that operates throughout North America. It also has interests in industrial replacement parts. Genuine Parts stock was trading recently at between $64 and $65 per share, near the high side of its 52 week range of from $65.38 to $46.10. It is trading at a price to earnings ratio of 18.5, and has a market capitalization of $10 billion. Its dividend hike in the second quarter of 2011 was Genuine Parts 55th consecutive year with a dividend advance. That dividend currently stands at $0.45 per quarter, for a yield of 2.8%.

Genuine Parts core auto parts business is particularly well positioned, given that the average American car is approaching 11 years in age. But in the past few years, Genuine Parts has experienced revenue growth across all of its product lines, not just auto. Analysts are expecting 2011 earnings of $3.55 per share, which would be an 18% improvement over 2010. 2012 earnings are forecast at $3.97 per share, another 12% rise. With that kind of growth, the two year average PEG of 1.2 suggests a company that is not overvalued. However, the current price to earnings ratio at year end 2011 was the first time since 1996 that the ratio has been at a premium to the market.

On balance, I am lukewarm toward Genuine Parts. I love its dividend history of course, but do worry about its current valuation in light of its history. I would definitely be a buyer if the price falls to allow the current dividend to rise to 3.4% or higher, or a price of 53. I can see the company's stock rising to the $65 to $75 range by 2013, and current valuations just do not leave enough upside for me.

Source: 4 Overlooked Dividend Champions With Yields Of At Least 1.5x 10-Year Treasuries