Dividend Dynamos: Five Classes of Dividend Standouts
Through my extensive research into dividend-paying stocks, I have identified more than 200 companies that have raised their annual dividend total each of the last ten years. I call them Dividend Dynamos. Rather than keep the data to myself, I’ve organized the companies into five classes and published them below.
Class A Dividend Dynamos: 50+ Consecutive Years of Annual Dividend Growth
These ten companies have increased their annual dividend totals each of the last 50 years. Which means they’ve been giving shareholders consistent raises since before man landed on the moon, before President Kennedy was assassinated, and before the first computer video game was invented. Class A Dividend Dynamos include the current dividend growth king, Diebold (DBD) — which began its streak in 1954 — and legendary corporations like Procter & Gamble (PG) and 3M (MMM).
Class B Dividend Dynamos: 40-49 Consecutive Years of Annual Dividend Growth
Every single one of these 31 companies has improved its annual dividend total for at least 40 consecutive years, putting it near the top of the Dividend Dynamo food chain. When these companies began their current dividend growth streaks, Babe Ruth was still the all-time home run king, the term “Watergate” had yet to enter the popular lexicon, and no one had ever made a call on a mobile phone. The list of Class B Dividend Dynamos includes celebrated brands like Coca-Cola (KO), Johnson & Johnson (JNJ), Lowe’s (LOW), Target (TGT), and Colgate-Palmolive (CL).
Class C Dividend Dynamos: 30-39 Consecutive Years of Annual Dividend Growth
These 38 companies have improved their annual dividend totals for at least 30 consecutive years, putting them among the 79 companies with the longest active dividend growth streaks. When these companies began their current dividend growth streaks, the first Hooters restaurant had yet to open, Michael Jordan hadn’t even played a college basketball game, and not a single home contained a Macintosh computer or a Nintendo Entertainment System. Listed among the Class C Dividend Dynamos are acclaimed corporations like Pepsi (PEP), Wal-Mart (WMT), Walgreen (WAG), McDonald’s (MCD), and Clorox (CLX).
Class D Dividend Dynamos: 20-29 Consecutive Years of Annual Dividend Growth
These 37 stocks have increased their annual dividend totals for at least 20 consecutive years, a claim only 116 publicly-traded companies can make. When they began their dividend growth streaks, not a single image had been posted to the “World Wide Web” and Justin Bieber’s mom had yet to reach Justin Bieber’s current age (17). Class D Dividend Dynamos include Aflac (AFL), Exxon Mobil (XOM), AT&T (T), and Chevron (CVX).
Class E Dividend Dynamos: 10-19 Consecutive Years of Annual Dividend Growth
Each of these 113 companies reached Dividend Dynamo status within the last decade, so you could say they still have their “Dynamo Diapers” on. While their dividend growth records aren’t as impressive as what you’ll find in the higher classes, that doesn’t mean they’re worse investments. Every single stock in the higher classes was a “Class E” Dynamo at one point, and an investment in any of them at that time would have paid off handsomely. Notable names among the Class E Dividend Dynamos include Nike (NKE), ConocoPhillips (COP), and Caterpillar (CAT).
About Dividend Dynamos
A Dividend Dynamo is a company that has raised its annual dividend total each of the last ten years. To eliminate any confusion and answer a few questions ahead of time, here are a few facts about how this database of impressive dividend growth stocks was compiled (and is maintained):
- A company doesn’t necessarily have to raise its dividend every four quarters to keep its dividend growth streak intact. At the end of each calendar year, its dividend total (whether they’re paid monthly, quarterly, annually, etc.) just has to beat the previous year’s figure.
- A company’s dividend growth streak begins the first calendar year its annual dividend total exceeds that of the previous year. Simply initiating a dividend does not get the streak started. All of the tables listing Dividend Dynamos are ranked by the origination year of their dividend growth streaks, and the first true year of dividend growth is listed under the “since” column.
- Since the list is based on annual dividend totals, a company’s Dividend Dynamo status can only be adjusted at the end of each calendar year. But the list is groomed religiously, with each company’s latest dividend hike listed (and linked to) within a day or two of being announced.
- In most cases, special dividends are ignored. I’m tracking growth of regular payouts. A company that chooses to distribute $5 per share of excess capital to its investors in addition to its regular dividends shouldn’t be punished for not matching the deed the following year.
- To keep things consistent, payouts are organized by their ex-dividend dates. There are a few exceptions to this rule, where companies are clearly increasing shareholder returns but get a little sloppy with their late-December/early-January ex-dividend dates, but in general I keep things sorted by ex-dividend dates.
- Foreign stocks are eligible to become Dividend Dynamos as long as they’re available for purchase on an American stock exchange via American Depositary Shares (ADS), that way they’re required to comply with the full registration and reporting requirements of the SEC. Dividends are tracked using the company’s local currency to eliminate the effects of fluctuating exchange rates.
- Some companies elect to accelerate future dividends to take advantage of current tax laws. For instance, many companies paid shareholders their first quarter 2011 dividends before the end of 2010, when it looked like favorable tax rates may expire. I prefer not to punish companies for maneuvers that are favorable to shareholders, so in these situations I allocate the accelerated dividends to the year that makes the most sense within the context of their dividend growth history.
Dividend Dynamos | Class A | Class B | Class C | Class D | Class E
