Dividend Growth Investor: A record number of consistent dividend companies raising distributions

A record number of consistent dividend companies raising distributions

There was a record number of consistent dividend payers, which announced dividend increases over the past week. As a result, in order to make this information more readable, I have segregated the stocks that raised distributions in four groups: dividend champions, dividend achievers, potential dividend achievers and master limited partnerships.

Dividend Champions

Dividend champions are companies which have raised distributions for over twenty-five consecutive years. You could read my review of the dividend champions here.

Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. Johnson & Johnson raised its quarterly dividend by 5.60% to 57 cents/share. This dividend champion has raised distributions for 49 years in a row. Yield: 3.50% (analysis)

Exxon Mobil Corporation (XOM) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. Exxon-Mobil raised its quarterly dividends by 6.80% to 47 cents/share. This dividend aristocrat has managed to consistently raise dividends for 29 years in a row. Yield: 2.10% (analysis)

W.W. Grainger, Inc. (GWW) and its subsidiaries distribute facilities maintenance and other related products and services in the United States, Canada, Japan, and Mexico. W.W. Grainger raised its quarterly distributions by 22.20% to 66 cents/share. Yield: 1.80% (analysis)

American States Water Company (AWR), through its subsidiaries, provides water, electric, and contracted services in the United States. The company raised its quarterly distribution by 7.70% to 28 cents/share. This dividend champion has raised distributions for 57 years in a row. Yield: 3.20%

The Gorman-Rupp Company (GRC) engages in the design, manufacture, and sale of pumps and related fluid control products worldwide. The company raised its quarterly distribution by 7.10% to 11.25 cents/share. This dividend champion has raised distributions for 38 years in a row. Yield: 1.10%

California Water Service Group (CWT), through its subsidiaries, provides water utility and other related services in California, Washington, New Mexico, and Hawaii. The company raised its quarterly distribution by 3.40% to 11.25 cents/share. This dividend champion has raised distributions for 45 years in a row. Yield: 3.30%

Parker Hannifin Corporation (PH) manufactures fluid power systems, electromechanical controls, and related components. The company raised its quarterly distribution by 15.60% to 11.25 cents/share. This dividend champion has raised distributions for 55 years in a row. Yield: 1.60%

Dividend Achievers

Dividend achievers are companies which have raised distributions for at least ten years in a row. You could read my review of this dividend index here.

Chevron Corporation (CVX), through its subsidiaries, engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. It operates in two segments, Upstream and Downstream. The company raised its quarterly dividends by 8.30% to 78 cents/share. This dividend achiever has raised distributions for 24 years in a row. Yield: 2.90% (analysis)

International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. The company raised its quarterly dividends by 15.40% to 75 cents/share. This dividend achiever has raised distributions for 16 years in a row. Yield: 1.80%

Cullen/Frost Bankers, Inc. (CFR) , through its subsidiaries, provides various banking and financial products and services primarily in Texas. The company raised its quarterly dividends by 2.20% to 46 cents/share. This dividend achiever has raised distributions for 18 years in a row. Yield: 3.10%

Imperial Oil Ltd. (IMO) engages in the exploration, production, and sale of crude oil and natural gas in Canada. The company raised its quarterly dividends by 10% to 11 cents/share. This international dividend achiever has raised distributions for 19 years in a row. Yield: 0.90%

PartnerRe Ltd. (PRE), through its subsidiaries, provides reinsurance solutions worldwide. The company raised its quarterly dividends by 9.10% to 60 cents/share. This dividend achiever has raised distributions for 18 years in a row. Yield: 3%

UGI Corporation (UGI), through its subsidiaries, distributes and markets energy products and related services in the United States and internationally. The company raised its quarterly dividends by 4% to 26 cents/share. This dividend achiever has raised distributions for 24 years in a row. Yield: 3.10%

Artesian Resources Corporation (ARTNA), through its subsidiaries, provides water, wastewater, and engineering services on the Delmarva Peninsula. The company raised its quarterly dividends by 0.50% to 19.02 cents/share. This dividend achiever has raised distributions for 14 years in a row. Yield: 3.90%

Valmont Industries, Inc. (VMI) produces fabricated metal products; pole and tower structures; and mechanized irrigation systems in the United States and internationally. The company raised its quarterly dividends by 9.10% to 18 cents/share. This dividend achiever has raised distributions for 11 years in a row. Yield: 0.70%

Master Limited Partnerships

Master limited partnerships are pass-through entities, most of which have operations in the energy sector. Master limited partnerships in the energy sector are mostly involved in oil and gas distribution through pipelines, although there are others which are involved in exploration and production, storage and processing of energy products. Check my overview of master limited partnerships here.

AmeriGas Partners, L.P. (APU), through its subsidiary, AmeriGas Propane, L.P., operates as a retail propane distributor in the United States. This MLP raised quarterly distributions to 74.50 cent/unit. Amerigas Partners has raised distributions for 6 years in a row. Yield: 6.20%

Energy Transfer Equity, L.P. (ETE), through its direct and indirect investments in the limited partner and general partner interests in Energy Transfer Partners, L.P., engages in midstream, intrastate, and interstate transportation of natural gas, as well as in storage of natural gas in the United States. This MLP raised quarterly distributions to 56 cent/unit. Energy Transfer Equity, L.P. has raised distributions for 5 years in a row. Yield: 4.90%

Holly Energy Partners, L.P. (HEP) operates a system of petroleum product and crude oil pipelines, storage tanks, distribution terminals, and loading rack facilities. This MLP raised quarterly distributions to 85.50 cent/unit. Holly Energy Partners, L.P. has raised distributions for 7 years in a row. Yield:6.30%

Magellan Midstream Partners, L.P. (MMP) , together with its subsidiaries, engages in the transportation, storage, and distribution of refined petroleum products in the United States. This MLP raised quarterly distributions to 77 cent/unit. Magellan Midstream Partners, L.P. has raised distributions for 11 years in a row. Yield:5%

Sunoco Logistics Partners L.P. (SXL) engages in the transport, terminalling, and storage of refined products and crude oil, as well as the purchase and sale of crude oil in the United States. This MLP raised quarterly distributions to $1.195/unit. Sunoco Logistics Partners L.P. has raised distributions for 10 years in a row. Yield: 5.40%

DCP Midstream Partners, LP (DPM), together with its subsidiaries, engages in gathering, compressing, treating, processing, transporting, storing, and selling natural gas in the United States. This MLP raised quarterly distributions to 62.50 cent/unit. DCP Midstream Partners, LP has raised distributions for 6 years in a row. Yield: 5.70%

Future Dividend Achievers

As a rule, I only invest in dividend stocks which have raised dividends for at least ten consecutive years. Otherwise investors could get whipsawed by short-term dividend raises which were caused by some temporary increase in business activity. A ten year period covers at least two cycles of economic expansion and contraction. Dividend paying companies that can afford to increase dividends through thick and thin are the ones to research further.

Arch Coal, Inc. (ACI) engages in the production and sale of steam and metallurgical coal from surface and underground mines to power plants, steel mills, and industrial facilities in the United States. The company raised its distributions paid to stockholders by 10% to 11 cents/share. This marked the eight consecutive annual dividend increase for the company. Yield: 1.30%

Ameriprise Financial, Inc. (AMP), through its subsidiaries, provides financial planning, products, and services primarily in the United States. The company raised its distributions paid to stockholders by 27.80% to 23 cents/share. This marked the seventh consecutive annual dividend increase for the company. Yield: 1.50%

BOK Financial Corporation (BOKF), a financial holding company, provides various financial products and services to commercial and industrial customers, and other financial institutions and consumers in the United States. The company raised its distributions paid to stockholders by 10% to 27.50 cents/share. This marked the seventh consecutive annual dividend increase for the company. Yield: 2.10%

Northrop Grumman Corporation (NOC) provides products, services, and solutions in aerospace, electronics, information systems, shipbuilding, and technical service sectors. The company raised its distributions paid to stockholders by 6.40% to 50 cents/share. This marked the eight consecutive annual dividend increase for the company. Yield: 3.20%

The Williams Companies, Inc. (WMB), through its subsidiaries, engages in finding, producing, gathering, processing, and transporting natural gas primarily in the United States. The company raised its distributions paid to stockholders by 60% to 20 cents/share. This marked the ninth consecutive annual dividend increase for the company. Yield: 2.50%

Donegal Group Inc. (DGICA), through its subsidiaries, provides personal and commercial lines of property and casualty insurance products to businesses and individuals in the United States. The company raised its distributions on it’s A shares by 4.30% to 12 cents/share. The company raised its distributions on its B shares by 4.90% to 10.75 cents/share. The yield on A shares is 3.60%, whereas the yield on the B shares is 2.60%. This marked the ninth consecutive annual dividend increase for the company.

Columbia Sportswear Company (COLM) engages in the design, sourcing, marketing, and distribution of outdoor apparel, footwear, and related accessories and equipment in the United States, Europe, the Middle East, Africa, Latin America, the Asia Pacific, and Canada. The company raised its quarterly distributions by 10% to 22 cents/share. Yield: 1.30%

Full Disclosure: Long JNJ, GWW, CVX, XOM

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compounding returns: Building Passive Income with Dividend Growth Stocks

compounding returns: Building Passive Income with Dividend Growth Stocks

Building Passive Income with Dividend Growth Stocks

Dividend growth stocks offer a great deal of upside for long term investors. There are very few investments that can offer the type of long term, compounding growth as dividend paying stocks. Unlike non dividend paying equities, which rely solely on capital appreciation (an increase in the share price) for returns, dividend paying equities offer the potential for an increase in share price with the added benefit of passive growth of ownership stake (through DRIP investing) or passive dividend income.


Although many investors see dividend stocks as boring, there is absolutely nothing boring about the long term historical returns that can be achieved by wisely choosing a dividend stock portfolio. For more information on why we atcompounding returns favor dividend stocks, read Dividend Growth Stocks for the Long Term.

Photo By: Flickr

One of the most important but rarely discussed long term benefits of dividend investing is the ability to tap the consistent stream of quarterly dividend payouts to eventually help with day to day expenses. This ability to create passive long term income is one of the greatest benefits of dividend investing. It is no surprise that dividend paying, consistent growth companies have long been known as "widow and orphan stocks", because in the past, dividend income was often used as a source of passive income for families following the death of their primary breadwinner.


If you dream of early retirement, a source of passive income for your family, or even just an eventual source of income beyond your day job, dividend growth stocks may be one way to diversify your investment portfolio and income streams.

Step 1: Choosing a Dividend Growth Stock

You can't build a portfolio of dividend growth stocks without doing your homework. This is particularly important since you will plan to hold each dividend growth stock for the long term, allowing the slowly and consistently increasing dividend payout to build your portfolio into a legitimate source of passive dividend income.

Some things to think about when considering a dividend growth stock include:

• The industry's long term prospects.
• The company's long term prospects.
• The company's economic moat.
• The company's susceptibility to legislation or external factors.
• The company's management.
• The company's financials.
• Health of dividend payout.
• Historical growth of dividend payout.

For more information on how to evaluate dividend stocks for long term growth prospects and the health of their dividend, visit Dividend Stock Investing Strategy: How to Choose the Best Dividend Stocks.

Step 2: Building Your Portfolio of Stocks

Finding just one excellent dividend growth stock isn't enough if you are seeking a dividend income portfolio. In fact, in order to successfully use dividend growth investing to create passive income, you must find a number of solid, dividend paying companies with good long term growth prospects and a history of increasing dividend payouts over time.


So, how many stocks should you own within your dividend growth portfolio? The answer is simple. You should own as many stocks as you can actively track and manage. Purchasing shares of stock requires research. Owning stock requires additional research. Consider yourself to be what you are, an owner of a major corporation, and put in as much work and research as you believe would be appropriate.

Step 3: Building Your Net Worth with Dollar Cost Averaging

Building your net worth is easy when you dollar cost average into your stock positions. Sites like ING Direct offer a great way to dollar cost average into your investment accounts by scheduling investments on a weekly, monthly, or annual basis.


Dollar cost averaging is a great way to ensure that you continue investing despite the ups and downs of the market. Scheduling recurring transfers keeps you from attempting to time the market, and although it can result in purchasing shares in both rising and falling markets, dollar cost averaging is a widely accepted method of preventing putting all of your money into stocks at precisely the wrong time.


Dollar cost averaging into each position results in purchasing more shares when stock prices are low, and less when prices are high, dampening out some market volatility, and helping you build your net worth gradually over time.

Step 4: DRIP Your Way to Wealth with Dividend Reinvestment

Dividend Reinvestment Plans or DRIPs are one of the best techniques for small investors to build real wealth over time. DRIP plans allow you to purchase stock in a company and elect to reinvest the dividends in more shares of stock. DRIP plans offer an the amazing ability to not only compound your returns, but also to compound your dividends. Each time a dividend payout is issued, a fraction of a share of stock is added to your portfolio, resulting in a greater dividend payout during the following quarter. This continues indefinitely, and can result in huge returns. In fact, according to Dr. Jeremy Siegel in Stocks for the Long Run, 4th Edition: The Definitive Guide to Financial Market Returns & Long Term Investment Strategies, over 40% of the returns of the S&P 500 over the last 200 years have been attributed to reinvested dividends.

It is therefore extremely important to reinvest dividends regularly within a no cost DRIP investing program until you need the dividends as a source of passive income. Dividend reinvestment is a one way to turbo-charge your investment returns and make sure your passive income streams will meet your needs in the future.

Step 5: Tapping Your Passive Income for Expenses

When is the right time to tap your dividends and stop utilizing the DRIP option within your investment portfolio? Only time will tell. When life presents a situation where passive income from your investment portfolio is required, then the time is right to tap that source. Remember, that's why you invested in dividend growth stocks in the first place.

The amazing thing about investing in dividend growth stocks for passive income is that provided enough time, your passive income from dividend growth investing can provide enough income to sustain some of your families needs without requiring you to sell any shares of stock.


If you can live off of your dividend stream alone, the price of your shares of stock will often continue to appreciate, even after you tap your stream of dividends to pay expenses. This means that your net worth will continue to increase, even while you pay yourself a salary of dividend income which increases every year as the companies in your portfolio increase their dividend payouts.

Are you a long term dividend growth investor? When do you plan to tap your stream of passive income?


For more dividend investing and passive income strategies, visit the Totally Money Blog Carnival.

Dividend Champions for May 2011 - Seeking Alpha

The Dividend Champions spreadsheet and PDF have been updated through 4/29/11 and are available here. 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.

During the past month, I have focused on updating the listings for dividend increases and other announcements. Following is a discussion of my latest efforts:

What's New

During April, there were no new Champions, but a few of the longest streaks were extended, with American States Water (AWR) paying a higher dividend for the 57^th straight year, Procter & Gamble (PG)logging its 55^th consecutive annual increase, and Johnson & Johnson (JNJ) boosting its payout for the 49^th straight year. There were also companies graduating from Challenger to Contender status with their 10^thstraight year of higher dividends, including Watsco Inc. (WSO),Southern Company (SO), and Valmont Industries (VMI). And although Contender Hudson City Bancorp (HCBK) was deleted after its anticipated dividend cut, the ranks of CCC companies still expanded to 448 with the 5^th year of higher dividends by Teekay Offshore Partners (TOO) and Southwest Gas (SWX). Already, 14 of 42 companies in my recent article of expected increases have announced dividend hikes.

A new column has been added to the spreadsheet and PDF that shows the premium or discount to the Graham Number. A good description of the Graham Number can be found in this SA article by Dividends4Life: which says in part:

Price calculated by taking the square root of 22.5 times the tangible book value per share times EPS (trailing twelve months). Benjamin Graham, Warren Buffett’s mentor and the father of value investing, developed rules for defensively screening stocks. This formula uses his principles to calculate the 'maximum' price one should pay for the stock.

The 22.5 was derived by multiplying what Graham considered reasonable values of 15 for a Price/Earnings ratio and 1.5 for a Price/Book Value ratio. I've taken this a step further by calculating the premium or discount that the current trading price represents, compared with the Graham Number. (I think it would have been hard to use (or even eyeball) the Graham number in column T and the Price in column H.)

Trends Still Strong

Companies continue to be generous with their increases now that the recent recession has passed and profits are growing. The average increase by the 100 Champions rose from 6.37% at the end of March to 6.56% at the end of April. The average yield slipped from 2.82% to 2.79%, while the average share price increased from $54.12 to $54.85, a new high since I began compiling the listing in December 2007. Meanwhile, the Contenders' average increase slipped from 8.33% to 8.07%, while the average yield dipped from 2.95% to 2.88%, largely because the average price was $50.31, up from $48.34 at the end of March. The Challengers' average dividend increase bounced back from 9.50% to 9.52%, while the average price and yield went from $46.12 and 2.92%, respectively, to $47.17 and 2.90%.

The average yield for the 448 companies slipped from 2.91% to 2.87%, still more than a full percentage point above the S&P 500's yield, while the latest dividend increases average a healthy 8.44%. One thing that might be more noticeable is the prevalence of companies increasing their dividends for the second time this year, indicated in the Note column by the '&' symbol.

This is especially true of the MLPs (Master Limited Partnerships), which feature low-percentage recent increases, but increase the rate each quarter. Note that I've also expanded the column descriptions on the Notes tab to describe the new Premium or Discount to the Graham Number and other Fundamental Data columns. As always, I welcome suggestions in the Comment section below.

Disclosure: I am long PG, JNJ.

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