Top 10 Dividend Champions: Growing Dividends for Over 50 Years

Dividend Champions

If you’re working the Dividend Farming field, you’ll find DRIP Investing’s list of Champions, Contenders and Challengers packed with information to help you select investments.  Dividend Farming is a value-based approach to building a portfolio of stocks providing residual cash flow in the form of dividend payments.  In a nutshell, Dividend Farmers seek large companies with solid financial metrics and long histories of growing their dividends; possessing characteristics like those Ben Graham detailed in The Intelligent Investor.

In relation to those business traits, the table of Dividend Champions below, culled from the CCC List of 1.31.19, have grown their dividend payments for more than 50 consecutive years. 

  

To be a Dividend Champion, a firm must raise its dividend payment every year for 25 or more years.  All the firms in this table have more than doubled the minimum requirement to be considered a Champion.

Company	Sector	Industry	Years
American States Water	Utilities	Water Utilities	64
Dover Corp.	Industrials	Machinery	63
Northwest Natural Gas	Utilities	Gas Utilities	63
Emerson Electric	Industrials	Electrical Equipment	62
Genuine Parts Co.	Consumer Discretionary	Distributors	62
Procter & Gamble Co.	Consumer Staples	Household Products	62
Parker-Hannifin Corp.	Industrials	Machinery	62
3M Company	Industrials	Industrial Conglomerates	60
Vectren Corp.	Utilities	Multi-Utilities	59
Cincinnati Financial	Financials	Insurance	58

Why is the length of consecutive annual dividend payments, much less growth of those dividend payments, important?

 

Inertia is a start.  When a large firm engages in a practice, such as increasing its dividend for a long period of time, that activity becomes difficult to change.  Companies with long records of dividend payments are unlikely to change their payment practices due to habit.

Consequences to market value are a second reason long dividend growth histories are important.  Companies with lengthy records of increasing dividend payments know that changes to that pattern can have dire consequences to their stock prices, market image, and perceived credit worthiness.  Firms generally don’t flirt with consequences of that nature unless there are no alternatives and doing so becomes imperative.

Signaling financial strength to the market is a third reason to pay attention to dividend histories.  Firms increasing dividend payments annually over long periods communicate to the market they have the business strength to consistently generate cash to support those dividends.  Furthermore, the firms expect that strength to continue into the future.  Whether that “signal” is intentional or not, it persists and should not be discounted.

As a DIY Dividend Farmer, focus on risk minimization is critical.  If you’ll recall from the post on Risk vs Reward, risk is represented by a simple formula:  the probability of an event times the magnitude of the event.

 

Firms demonstrating a persistent record of increasing their dividends have a lower probability of running into financial issues, in my view, than firms without those records.  Although this probability may be difficult to quantify and may be considered subjective, I believe it’s supported by the characteristics of inertia, consequence, and signaling noted above inherently reducing the probability a firm will stop growing its dividend payment.

 

Reducing the probability of a negative event reduces the risk.  As Ben Graham, Warren Buffett, and his partner Charlie Munger regularly advise: build a margin of safety into your investing.  Dividend paying firms with stellar histories of increasing their dividend payments are a great way to do so.  Reviewing the 10 Dividend Champions with the longest time horizon of increasing dividend payments is a fine place to dive in if you’re considering Dividend Farming.

NOTE:  Of the ten firms listed in the table, Dividend Farmer owns shares in Proctor and Gamble.

The thoughts and opinions expressed here are those of the author, who is not a financial professional.  Opinions provided should not be considered investment advice.  They are presented for discussion and entertainment purposes only.  For specific investment advice or assistance, please contact a registered investment advisor, licensed broker, or other financial professional.