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I’ve written in the past about the Dividend Aristocrats, which is a list of (currently) 42 companies from the S&P 500 index that have increased their dividends for at least the past 25 years straight.
These are arguably the bluest of the blue chips. The Dividend Aristocrats have outperformed the S&P 500 over the past 1, 3, 5, and 7 years (albeit very slightly at times) with a slightly lower standard deviation (i.e., lower volatility).
While researching the Dividend Aristocrats recently, I ran across another, somewhat larger list known as the Dividend Champions. The criteria for being included on this list, which is maintained by The DRiP Resource Center are somewhat broader than for the Dividend Aristocrats, but it still requires a minimum of 25 years worth increasing dividends.
As of 12/31/10, the list of Dividend Champions included 98 companies with an average of 38.7 consecutive years of dividend increases, and an average yield of 2.86%. If you’re curious about the list, you can download it here.
I wanted to give you a taste of what’s on the list, but 98 companies, is a huge list, so I decided to narrow it down. What follows is a list of 24 Dividend Champions that have a price-to-earnings ratio of less than 20, dividend yield of at least 2%, and payout ratio (dividend/earnings) of less than 0.50:
- 3M Company (MMM)
- AFLAC Inc. (AFL)
- Air Products & Chem. (APD)
- Archer Daniels Midland (ADM)
- AT&T Inc. (T)
- Chubb Corp. (CB)
- Colgate-Palmolive Co. (CL)
- Commerce Bancshares (CBSH)
- ExxonMobil Corp. (XOM)
- Hormel Foods Corp. (HRL)
- Illinois Tool Works (ITW)
- Johnson & Johnson (JNJ)
- Lancaster Colony Corp. (LANC)
- McCormick & Co. (MKC)
- McGraw-Hill Companies (MHP)
- Medtronic Inc. (MDT)
- Pentair Inc. (PNR)
- PepsiCo Inc. (PEP)
- Questar Corp. (STR)
- RLI Corp. (RLI)
- Universal Corp. (UVV)
- Valspar Corp. (VAL)
- VF Corp. (VFC)
- Wal-Mart Stores Inc. (WMT)
Note that I’m not recommending that you go out and start investing in these companies, but if you’re interested in dividend growth investing, this seems like a good place to start doing some research.
As for me, I’m still not 100% sold on the idea of dividend growth investing. Don’t get me wrong, I like the idea of building a stream of passive income in the form of a portfolio consisting of dividend paying stocks, but it sort of has a “flavor of the month” (or perhaps decade) feel to it right now.
What about you? Are you a dividend-centric investor? Why or why not?
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