10 Mid Caps to Rule Them All

For reference, here are the choices for the previous nine weeks:

Jazz Pharmaceuticals
Thompson Creek Metals
American Water Works
Sohu
Gafisa
Arch Coal
Bank of Hawaii
Foot Locker
Perfect World

For the final week of 10 mid caps to rule them all, I'd like to throw diversification completely out of the picture and highlight arguably the strongest dividend growth story of the past decade, Alliance Resource Partners (Nasdaq: ARLP).

What it does
That's right, folks -- two coal stocks on one list. Alliance Resource Partners, much like Arch Coal (NYSE: ACI), is engaged in the production and marketing of coal that it sells to utilities to make electricity. With coal making up roughly half of all energy generation in the United States, and with nuclear power's future seriously in question following the tragic earthquake in Japan, coal has cemented its footprint as the primary source of electricity for years to come.

How it stacks up
Dividend-seeking investors, this one's for you!

Alliance Resource Partners may not have stunning growth like many of the other names in this series, or even some of its peers, but its dividend growth is unparalleled. Let's look at how Alliance Resource stacks up next to some of its peers on both a growth and dividend basis.

Patriot, James River, and Westmoreland are easy eliminations, with much smaller margins and in some cases negative future growth expectations. Peabody and CONSOL are both attractive, but being larger companies, their dividend growth and margins are stuck in the mid-to-high teens. Arch Coal makes the best comparison to Alliance Resource, and as should be no shock, I like both a lot but for different reasons. Arch Coal has Alliance handily beat based on future growth projections (mainly because Arch loves to grow through acquisitions), while Alliance boasts the best operating margin and fastest growing dividend in the sector. This time we have dual winners.... Read more