Top 14 Dividend Champions: Sweet Spot for Total Return (Part 1)

Considering today's low-interest environment, dividend paying common stocks are rapidly becoming a more and more popular option for investors seeking income. Identifying dividend paying companies that have a long history of growing their dividends provides icing on the cake. The old investing adage that says you should strive to make your money work as hard for you as you worked for it, proves sage advice. Therefore, in this vein, the hardest working portfolio you could possess is one that gets you a raise in pay each year. You deserve it, and the right dividend paying common stocks are capable of giving you a raise each year. Common sense would dictate that the best place to find dividend paying companies that can give you a raise in pay each year is from lists of companies that have done it. The list of Dividend Champions includes 98 companies that have raised their dividends every year for at least 25 years. This list can be found here courtesy of David Fish. A second excellent source is the Dividend Aristocrats index, available from Standard & Poor's Corp. This index is comprised of 42 large-cap, blue-chip companies within the S&P 500 that have likewise increased their dividend every year for 25 years. Both of the lists mentioned above provide a fertile field of excellent candidates that income-seeking investors can use to screen from. In two previous articles, we covered the 10 highest yielding companies and then the 10 lowest yielding companies of the 98 Dividend Champions (links to both of these articles can be found here: Article 1 - Article 2). In this two-part article we will cover 14 Dividend Champions that we believe represent the current "sweet spot" of the 98 possible choices. As an interesting aside, 11 of these 14 Dividend Champions "sweet spot" selections are also Standard & Poor's Corp. Dividend Aristocrats. The following F.A.S.T. Graphs™ summary and review lists these 14 "sweet spot" candidates in order of highest to lowest dividend yield within the group. Each company covered in this article, as well as our previous two articles, were reviewed since calendar year 1997. This provides an apples-to-apples time frame comparison. In order to be qualified as a "sweet spot" candidate, each company had to possess the following characteristics and criteria: The current dividend yield had to be above average, exceeding 2% (S&P 500 average equals 1.8%)., The historical total return since 1997 had to exceed the S&P 500’s., Total cumulative dividend income since 1997 should exceed the S&P 500's., Historical earnings-per-share growth had to exceed the S&P 500., Debt to equity had to be under 50%, the lower the better., Each company had to be an industry-leading, large-cap blue-chip., Of course, each company had to increase their dividend for at least 25 years consecutively., Most importantly, each company had to be attractively valued based on the consensus of leading analysts reporting to FirstCall or Zacks forecasts for five-year future earnings growth.. Summary and Review: 14 blue-chip Sweet Spot Dividend Championsclick to enlarge Fundamentals at a glance F.A.S.T. Graphs™ (First Seven-part one)The following "fundamentals at a glance" will review the first seven "sweet spot" candidates, highlighted in blue above, through the lens of our F.A.S.T. Graphs™ research tool. Per reader requests, we have included a F.A.S.T. Graphs™ on the S&P 500 for perspective and as a benchmark comparison (click on each to enlarge). As you review each company's earnings and price correlated F.A.S.T. Graphs™, we suggest that you make special note of the consistency of each company's operating record as compared to the average company (S&P 500). Abbott Laboratories (ABT)About Abbott LaboratoriesFounded in 1888 by Dr. Wallace Abbott, a Chicago physician, Abbott is a broad-based health care company that discovers, develops, manufactures and markets products and services that span the continuum of care - from prevention and diagnosis to treatment and cure. Abbott's principal businesses are global pharmaceuticals, nutritional and medical products, including diagnostics and cardiovascular devices. Abbott Laboratories (ABT) F.A.S.T. Graphs™Abbott Laboratories has achieved a remarkably consistent record of earnings growth, and offers a dividend yield that exceeds the rate available on 10 year treasury bonds. Also, notice how strong operating results continued right through the great recession of 2008. This blue-chip has a debt-to-equity ratio of 33%, and trades at a historically low valuation since 1997. Abbott Laboratories has modestly outperformed the S&P 500 since 1997 even though beginning valuation was high and current valuation is low. Their annual dividend growth rate was often double digits, and their payout rate ratio remarkably consistent.... Read more