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Dividend Champions For Income Investors To Watch

Chris Lau, KAPITALL Contributor: One of the types of investments that generates high interest among users is “Dividend Champions.” As previously described, "Dividend Champion" is a term coined by The DRiP Investing Resource Center referring to U.S Companies that have offered AND increased their dividend for a minimum of 25 straight years. 

As a reminder, dividend payment payments are not a guarantee for investors. Interest payments to debt have the highest priority, followed by interest payments to preference shares of a company. To reduce the risks of buying companies that cancel dividend payments at any time, investors need to look at the following:

•    Consistent payment history
•    Cash flow
•    Flat to positive earnings growth
•    Positive Price of Profitability (“POP”)

Using Kapitall’s free Screener tool, 97 companies show up when searching for companies with a positive price/book, dividend yield of at least 4%, expected earnings growth of over 5%, POP greater than 0, and a positive net profit margin. An earnings growth of at least 5% is selected because it would make sense for investors to buy companies having a long-term growth rates higher than their dividend yield.

After Trust units are removed (they have special tax considerations for investors) from the list, the stock price, market capitalization and brand name recognition are accounted for. The 20 companies that stand out and may interest yield-hungry investors are:

Screen shot 2013-04-10 at 1.59.33 PM


A number of Canadian bank companies made the list of dividend champions: Royal Bank (RY), Bank of Nova Scotia (BNS), Canadian Imperial Bank of Commerce (CM), and Bank of Montreal (BMO). TD Bank (TD) is also a solid financial institution, and does not show up because the dividend yield is 4.07%, just below the yield offered by Royal Bank. Sun Life (SLF), a Canadian insurance company, pays a dividend yielding 5.53%.

In the defense space Raytheon (RTN) offers the lowest yield in this list. Shares rocketed higher from a recent $52 low reached in February 2013 and closed at $58.

Seagate (STX) and Intel (INTC) are companies operating in a mature segment of the hardware technology space. Seagate continues to prove its ability to grow profits and revenue in the manufacture of hard disk space. Intel steadily refreshes its PC chip architecture. Its latest iteration of PC chips will be even more energy efficient, while its inexpensive atom processor will have more processing cores.

Riskier investment plays that offer high dividend yields include Navios Maritime (NMM) with a market cap of $914 million and Golar LNG Partners LP (GLMP).

TAL International Group Inc (TAL) recently peaked at $45 as did Blackstone Group LP (BX). The two companies have similar POPs at 10 and 9, respectively. 

Complete List

1. Navios Maritime Partners L.P. (NMM): Operates dry cargo vessels internationally.

Market cap at $944.01M, most recent closing price at $14.17. Dividend yield at 12.3%.

2. The Blackstone Group (BX): Provides alternative asset management and financial advisory services worldwide.

Market cap at $23.2B, most recent closing price at $20.27. Dividend yield at 8.24%.

3. Golar LNG Partners LP (GMLP): Operates floating storage and regasification units (FSRUs) and liquefied natural gas (LNG) carriers.

Market cap at $1.84B, most recent closing price at $32.59. Dividend yield at 6.1%.

4. TAL International Group, Inc. (TAL): Engages in the lease of intermodal containers and chassis.

Market cap at $1.45B, most recent closing price at $42.83. Dividend yield at 5.98%.

5. Canadian Imperial Bank of Commerce (CM): Provides various financial products, services, and advice to individual, small business, commercial, corporate, and institutional clients in Canada and internationally.

Market cap at $30.8B, most recent closing price at $76.87. Dividend yield at 4.78%.

6. Bank of Montreal (BMO): Provides a range of retail banking, wealth management, and investment banking products and solutions in North America and internationally.

Market cap at $39.99B, most recent closing price at $61.27. Dividend yield at 4.74%.

7. Royal Bank of Canada (RY): Provides personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services under the RBC name worldwide.

Market cap at $84.63B, most recent closing price at $58.51. Dividend yield at 4.19%.

8. The Bank Of Nova Scotia (BNS): Together with its subsidiaries, offers various personal, commercial, corporate, and investment banking services in Canada and internationally.

Market cap at $66.9B, most recent closing price at $56.12. Dividend yield at 4.18%.

9. Intel Corporation (INTC): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide.

Market cap at $104.42B, most recent closing price at $21.09. Dividend yield at 4.14%.

10. Seagate Technology PLC (STX): Designs, manufactures, markets, and sells hard disk drives for the enterprise, client compute, and client non-compute market applications in the United States and internationally.

Market cap at $12.91B, most recent closing price at $35.98. Dividend yield at 4.11%.

11. Raytheon Co. (RTN): Provides electronics, mission systems integration, and other capabilities in the areas of sensing, effects, and command, control, communications, and intelligence systems, as well as mission support services in the United States and internationally.

Market cap at $19.01B, most recent closing price at $58.25. Dividend yield at 3.8%.


Written by Chris Lau, KAPITALL Contributor


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