Dividend Champions: Focus on Consumer Discretionary - Seeking Alpha

Dividend Champions: Focus on Consumer Discretionary - Seeking Alpha

The Dividend Champions spreadsheet and PDF have been updated through 2/28/11. Note that all references to Champions mean companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. Together, all of these companies may be referred to using the abbreviation “CCC.”

This is the ninth in a series of articles focusing on specific industries and isolating the CCC companies within those industries. The first eight can be found under my Articles page, beginning on March 2.

Consumer Choices

Beyond our basic needs, we face many choices of how to spend our consumer dollars. That includes personal products from tissues to household cleaners and clothing to entertainment, as well as the retailers where we choose to spend those dollars. (Retailing is often presented as an industry of its own, and I could have included grocers in the article on Food and Beverages, but the discretionary nature of these businesses make them a good fit for this article.) Most of the products in this category are relatively low-cost items that are purchased frequently, but there is also an element of big-ticket items, such as furniture and snowmobiles, not to mention the computers and big-screen televisions that might be bought at some of the retailers. Normally, this category might also include automobiles and trucks, but none of the automakers has a streak of dividend increases at the present time.

Naturally, there is also a degree of overlap, since many of these companies offer products and services that fall into more than one sub-category (or even outside the consumer segment), but I have grouped together similar classifications for comparison purposes. For example, the Media group may offer financial news or other specialized content and the Education companies may not typically be considered entertainment, but the grouping below brings together products and services that involve choices of how individuals might commit their time and energy. And the retailers could obviously be broken down many ways, but they all have a common thread in that they are physical locations (and, in some cases, websites) that consumers go to in order to purchase products.

The Companies

Consumer Discretionary companies make up an important segment of the CCC universe, with 52 firms. Although the average yield is a below the average for the CCC universe, the Consumer Product sub-group has an above average yield and there are other companies in almost every group that sport generous yields. Another positive is that these companies average much higher recent dividend increases (by percentage) and that growth is also reflected in the longer-term DGRs. Most of those listed are American companies, many with substantial foreign operations. Once again, I'm including as many columns of data as is practical, from a perspective of width and significance.

Summary

Consumer Discretionary stocks include many with long histories of annual increases, but their generally lower yields are a reminder of their inclusion in broader indices, like the S&P 500 (SPY), which are often dominated by such firms. Like the CCC universe in general, each sub-group offers some exceptional choices for portfolio diversification. I welcome feedback in the Comments section below.

Disclosure: I am long VFC, ECL, PG, AVP, CL, KMB, PII, SWK, COST, CVS.