Investors who are looking for quality stocks that regularly raise dividends
have several lists available as a starting point in their research. The typical
lists include the S&P Dividend Aristocrats index , which consists of 42
constituents of the S&P 500 which have raised distributions for over a quarter
of a century and also have certain capitalization, liquidity requirements.
Another popular list includes the Dividend Achievers Index , which includes
almost all companies traded on US exchanges which have consistently raised
distributions for over one decade, and which also meet a certain liquidity
threshold as well. The third list, the dividend champions, is maintained by Dave
Fish . This is by far the most comprehensive list of dividend growth stocks
available for free. It breaks down the dividend growth universe into dividend
champions, dividend contenders and dividend challengers. The list could be
obtained from this link . The dividend champions list includes all stocks traded
in the US, which have raised dividends for at least twenty-five consecutive
years. I prefer the dividend champions list than the dividend aristocrats index,
since it is more complete and does not have artificial requirements such as
index membership or minimum trading volume. These requirements are typically
irrelevant to long-term dividend investors , who focus on fundamentals that
could support a growing distribution, not on day to day market fluctuations.
Currently there are 97 dividend champions, which yield 2.94% on average. Some
notable dividend champions include Colgate-Palmolive (NYSE: CL ), Procter &
Gamble (NYSE: PG ) and Coca-Cola (KO). Colgate-Palmolive has consistently raised
dividends for 47 years in a row, but for some strange reason is not a part of
the dividend aristocrats index. This is a great example why focusing on the
dividend champions list could provide a more comprehensive selection of elite
dividend stocks. Another dividend champion is Altria Group (NYSE: MO ). The only
reason why the company is not on the dividend aristocrat list is because its
dividend payment is lower due to the spin-off of Phillip Morris International
(NYSE: PM ) in 2008 and Kraft Foods (NYSE: KFT ) in 2007. Other than that, the
tobacco company has managed to increase dividends for 43 years in a row. The
dividend contenders list consists of all publicly traded stocks in the US, which
have raised distributions for over one decade, but less than 25 years. This list
is similar to the dividend achievers index . In a previous study of the dividend
achievers index, where I focused on the 1991 additions, I noted that almost 10%
of companies that raise distributions for a decade will keep raising them for
the next two decades. Most of the companies that end up on this list have gone
through several economic cycles and kept growing distributions, which is the
type of consistently positive feedback dividend income investors like in any
market. Currently there are 131 contenders, yielding 3.12% on average. Some
notable contenders include Chevron Corp. (NYSE: CVX ), Kinder Morgan Energy
Partners (NYSE: KMP ) and United Technologies (NYSE: UTX ). Chevron has raised
distributions for 23 years in a row, while United Technologies has delivered
sixteen years of consecutive dividend increases to its shareholders. Kinder
Morgan on the other hand has only raised distributions for fourteen years in a
row. The dividend challengers list includes companies which have raised
dividends for at least five years in a row. Most of the companies on this list
would probably stop growing distributions sometime before hitting the tenth year
of dividend growth, particularly if it was a function of the companies being at
the right place at the right time. However there is a big chance that this list
includes the next dividend king like Procter & Gamble (PG), which would raise
distributions for the next 50 years. Currently there are 189 dividend contenders
with an average yield of 2.94%. Some notable dividend challengers include Intel
Corporation (NASDAQ: INTC ), Waste Management (NYSE: WM ) and Oneok (NYSE: OKE
). Intel and Waste Management have raised distributions for seven years each,
while Oneok Inc has raised distributions for eight consecutive years. In
summary, I use the dividend champions spreadsheet in order to uncover hidden
dividend gems . It is the most comprehensive tool available to dividend growth
investors, as it consists of more constituents than the total number of members
of the dividend aristocrats and the dividend achievers indexes combined. Full
disclosure: Long PG, JNJ, UTX, KO, OKE, KMR, CVX, CL. For more information,
visit DividendGrowthInvestor.com.
