In compiling a Dividend Champions list, I get to see which companies are nearing the anniversaries of their previous dividend increases. Most of these firms raise their payout about the same time every year, but some companies go longer before boosting their dividends, and this can raise concerns about their streaks of increases.
Dividend-Doubt Series
This is the third in a monthly series listing companies whose latest dividend increase might be considered “overdue” because these companies have gone more than a year since their previous increase, a possible sign that the dividend (or at least the streak of increases) is in danger. (Note that the dates for these companies appears in red in the Dividend Champions spreadsheet and PDF.) Some firms regularly go more than a year between increases, so this is only an “early warning” sign that some of them may warrant concern. This series is intended to augment David Van Knapp's series about possible “Dividends in Danger?” As we get closer to year-end, some of the listing will act as a dividend streak “death watch,” since it will include companies that will be deleted if they fail to increase the dividend in 2011 (making the payout unchanged from that of 2010).
This month, I'm presenting the list a bit differently. Rather than break it down into Champions (25+ years of increases), Contenders (10-24 years), and Challengers (5-9 years), I'm including all companies in one list and sorting them alphabetically:
No. | 5/31 | % | Pay | Payout | TTM | ||||
Company | Symbol | Yrs | Price | Yield | Inc. | Date | %Ratio | P/E | * |
Allied World Assurance Co. | 5 | 60.62 | 1.32 | 11.11 | 12/10/09 | 6.93 | 5.25 | 1 | |
Astro-Med Inc. | 7 | 8.10 | 3.46 | 16.67 | 4/2/10 | 100.00 | 28.93 | 3 | |
CenturyLink Inc. | 37 | 43.19 | 6.71 | 3.57 | 3/22/10 | 97.32 | 14.49 | 1 | |
Comfort Systems USA Inc. | 6 | 10.37 | 1.93 | 11.11 | 9/21/09 | 100.00 | 51.85 | 2 | |
Communications Systems | 8 | 18.40 | 3.26 | 7.14 | 7/1/10 | 46.51 | 14.26 | 1 | |
Community Bank System | 17 | 25.08 | 3.83 | 9.09 | 7/9/10 | 49.23 | 12.86 | 2 | |
Consolidated Water Co. | 13 | 9.64 | 3.11 | 15.38 | 10/31/09 | 83.33 | 26.78 | 3 | |
Gas Natural Inc. | 5 | 11.50 | 4.70 | 12.50 | 4/30/09 | 58.06 | 12.37 | 1 | |
Greif Inc. A | 7 | 66.12 | 2.54 | 10.53 | 7/1/10 | 35.15 | 13.83 | 1 | |
Harleysville Savings | 22 | 14.90 | 5.10 | 5.56 | 8/19/09 | 57.14 | 11.20 | 2 | |
Harsco Corp. | 16 | 33.51 | 2.45 | 2.50 | 2/16/10 | 683.33 | 279.25 | 0 | |
Investors Real Estate Trust | 39 | 9.69 | 7.08 | 0.29 | 1/15/10 | 285.83 | 40.38 | 0 | |
ITT Corp. | 8 | 57.62 | 1.74 | 17.65 | 4/1/10 | 23.98 | 13.82 | 0 | |
Knight Transportation Inc. | 7 | 17.10 | 1.40 | 20.00 | 6/25/10 | 35.82 | 25.52 | 0 | |
Meridian Bioscience Inc. | 19 | 23.86 | 3.19 | 11.76 | 2/11/10 | 124.59 | 39.11 | 0 | |
Natural Resource Partners | 8 | 32.29 | 6.69 | 0.93 | 5/14/09 | 127.81 | 19.11 | 1 | |
Ohio Valley Banc Corp. | 15 | 18.40 | 4.57 | 5.00 | 2/10/10 | 64.12 | 14.05 | 0 | |
PG&E Corp. | 6 | 43.38 | 4.20 | 8.33 | 4/15/10 | 68.68 | 16.37 | 0 | |
Pharmaceutical Product Dev | 6 | 28.85 | 2.08 | 5.71 | 6/29/10 | 49.59 | 23.84 | 0 | |
PPL Corp. | 9 | 28.19 | 4.97 | 1.45 | 4/1/10 | 59.32 | 11.94 | 0 | |
Public Service Enterprise Gp | 7 | 33.50 | 4.09 | 3.01 | 3/31/10 | 43.63 | 10.67 | 0 | |
Royal Dutch Shell plc A | 5 | 71.43 | 4.70 | 5.00 | 6/10/09 | 44.04 | 9.36 | 0 | |
Royal Dutch Shell plc B | 5 | 72.32 | 4.65 | 5.00 | 6/10/09 | 44.04 | 9.48 | 0 | |
Tompkins Financial Corp. | 24 | 38.75 | 3.51 | 10.00 | 5/14/10 | 43.45 | 12.38 | 3 | |
United Bankshares Inc. | 37 | 24.25 | 4.95 | 3.45 | 1/4/10 | 72.29 | 14.61 | 2 | |
United Community Bancorp | 5 | 6.57 | 6.70 | 10.00 | 5/28/10 | -366.67 | -54.75 | 0 | |
Universal Forest Products | 16 | 29.23 | 1.37 | 233.33 | 12/15/09 | 61.54 | 44.97 | 0 | |
Universal Health Realty Trust | 22 | 43.31 | 5.59 | 0.83 | 6/30/10 | 187.60 | 33.57 | 0 | |
Westamerica Bancorp | 19 | 50.30 | 2.86 | 2.86 | 2/13/10 | 45.28 | 15.82 | 1 | |
Weyco Group Inc. | 29 | 24.08 | 2.66 | 6.67 | 7/1/10 | 55.65 | 20.94 | 0 |
*Number of years with no increase (1999-2010), except Challengers, which shows number of years with no increase since streak began.
There will be other companies that join this listing during the year as they pass the anniversary of their previous increase without hiking the dividend. Since the determinant for inclusion revolves around the actual dividend payment, that date is listed above, along with the payout ratio and the price/earnings ratio, two key indicators of a company's ability to increase the payout. (Because of space limitations, I'm limiting the columns shown.)
Some Companies at Greater Risk Than Others
So which dividends might be in danger? Some companies, such as REITs (Real Estate Investment Trusts) and MLPs (Master Limited Partnerships), have a tendency to pay out much more than earnings per share, simply because of their legal structure, so we can't tell much from seemingly high payout ratios or P/Es in such cases. Some alarming payout ratios and/or P/Es, like those at Harsco and Meridian Bioscience, may suggest great risk, but a look ahead at the estimated earnings per share for this year and next might provide a bit of comfort.
Note that delayed dividend hikes at some companies, such as PPL, Astro-Med, and PG&E will not result in deletion this year because those companies paid at least one dividend at a lower rate in 2010, meaning that the total payout in 2011 will be higher, barring an actual reduction. The Challengers group may see more streaks end, simply because they have not yet established a “culture” of dividend increases.
Disclosure: I am long CTL.
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