I've been writing lots of brain-busting theoretical articles lately. It's time to have a little fun, set theory aside for awhile, and just come up with some names.
As I write this, the yield on the 10-year Treasury is 2.25%. A yield 50% higher than that would be 3.375%. Assuming any of these stocks you might purchase does not cut its dividend, that initial yield on cost would be locked in for as long as you own the stock. With future dividend increases, it would get larger.
So the list below is of Dividend Champions with yields higher than 3.375%. As a measure of how low interest rates are, there are no fewer than 18 Champions (out of 103) that qualify.
The fact that a stock is a Champion at all indicates that it has a dividend-increase streak of at least 25 years. Treasuries, of course, have no such streaks. I have included the 5-year dividend growth rate (DGR) as well as the number of consecutive years each stock has increased its dividend payout. I have omitted stocks whose most recent declared increase was over 12 months ago.
I have also pointed out stocks whose most recent increase is significantly lower than its 5-year DGR. There are no fewer than 12 of these. I don't know if this suggests a long-term trend of shrinking dividend increases, is a hangover from the Great Recession and financial crisis, has some other cause, or is just random.
As always, my thanks go to David Fish for allowing me to stand on his shoulders and present different perspectives of his Dividend Champions.
Champions with Yields 50% Higher than 10-Year Treasuries
Stock | Ticker | Yield % | 5-Year DGR % | Years of Dividend Growth | Notes |
Altria | 5.45 | 15.0 | 43 | Most recent increase = 7.9% | |
AT&T | 5.75 | 5.3 | 28 | Most recent increase = 2.3% | |
Black Hills | 4.51 | 2.0 | 42 | ||
Cincinnati Financial | 4.58 | 4.1 | 51 | Most recent increase = 0.6% | |
Community Trust Bancshares | 4.02 | 3.4 | 31 | Most recent increase = 1.6% | |
Consolidated Edison | 4.17 | 0.9 | 38 | ||
HCP | 5.06 | 2.5 | 27 | REIT | |
Kimberly-Clark | 4.06 | 7.8 | 40 | Most recent increase = 5.7% | |
Leggett & Platt | 4.95 | 9.9 | 40 | Most recent increase = 3.7% | |
Mercury General | 5.69 | 4.7 | 25 | Most recent increase = 1.7% | |
Middlesex Water | 4.02 | 1.4 | 39 | ||
Northwest Natural Gas | 3.89 | 4.7 | 56 | Most recent increase = 2.3% | |
Old Republic International | 6.54 | 3.5 | 31 | Most recent increase = 1.4% | |
Pitney Bowes | 8.27 | 2.9 | 30 | Most recent increase = 1.4% | |
United Bankshares | 4.23 | 2.1 | 38 | ||
Universal | 4.27 | 2.2 | 41 | ||
Vectren | 4.79 | 2.4 | 52 | Most recent increase = 1.5% | |
Washington REIT | 5.86 | 1.1 | 39 | REIT Most recent increase = 0.3% |
Source: Dividend Champions, updated 2/29/2012.
The usual fine print applies. Appearance on this list does not mean that these are all great stocks for dividend investors. Dividend stocks - like any investment - should be matched to your own situation and goals. Being stocks, they are all subject to systematic market risk. The bottom line is to do your own due diligence before investing in anything.
