Dividend Champions: Focus on Technology and Transportation - Seeking Alpha

Dividend Champions: Focus on Technology and Transportation - 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 10th in a series of articles focusing on specific industries and isolating the CCC companies within those industries. The first nine can be found under my Articles page, beginning on March 2.

Two-for-One

In this final installment of my series on industry groups within the CCC universe, I'm presenting the last two industries, Technology and Transportation. Neither has a large number of companies, but the corporations represent the most prominent firms within their industries. Although they are largely unrelated – save for the eventual transportation of technology components – they are both key elements in our economy, both domestically and internationally.

Technology

Technology has advanced to the stage where many of the firms involved are being referred to as mature companies, and that often translates into dividend-paying corporations which, in this case, have established histories of increasing their payout to shareholders. Although their yields, on average, are lower than the average for the CCC universe, their dividend growth rates are typically higher and their payout ratios are still lower than typical CCC companies. They range in size from $54 million in market capitalization [Astro-Med (ALOT)] to $223 billion [Microsoft (MSFT)] and there are some above average yields to consider, like Intel's 3.38%.

Transportation

The Transportation sector is mainly composed of Railroads and trucking companies, but also includes firms like Ryder, which describes itself as a Logistics firm. To some extent, this sector has been characterized as a cyclical part of the economy, but its importance to most other industries is undeniable. Railroads have prospered in recent years as they have shown themselves to be a cheaper and more efficient method of shipment than long-haul trucking. But intermodal shipping, which allows for the transfer of containers from ocean-going vessels to flat-bed rail cars and eventually to short-haul truck beds, has been a boon to all segments of the transportation industry. Yields are typically below average, but dividend growth rates tend to be higher.

Summary

In this final installment of the series on industries represented by the CCC companies, we have two seemingly dissimilar sectors of the economy. But that is also a good demonstration of the wide-ranging type of economic activity that exists in our society and can be included in portfolio diversification. When I started the series on March 3, I wrote that I hoped to cover the CCC universe in relatively quick fashion, so that the data would not have a chance to get “stale.” I think that has been accomplished, but I also hope that these articles will continue to act as a good starting point for investors to research high-quality companies and industries in their goal to own the best dividend growth companies available. I welcome feedback in the Comments section below.

Disclosure: I am long INTC, MSFT, CSX, UNP, R.