NEW YORK ( TheStreet) -- In my initial column this month, I explored the wonders of dividends. Typically greeted warmly by investors, they can be far more meaningful than simply as a source of income for shareholders. Dividends can also be an indicator of a company's overall health. Companies that continue to raise their dividends year in and year out can be sending a signal that management is confident in the company's prospects and confident enough to up the ante of the amount they return to shareholders on a fairly regular basis.

Given the shellacking companies often take if they have to reduce or eliminate their dividend, this is not something that can be faked to placate shareholders. A dividend must be paid in cash, and any management team that knowingly raises the dividend beyond what the company can sustain would be doing so at their peril. In a sense, this represents a built-in system of checks and balances.
Below a $5 billion market cap there are plenty of companies growing, stable and paying out dividends.

In my initial column, I focused on identifying larger companies with growing dividends and the wherewithal to continue that into the future. Here I lower the bar in terms of market capitalization to an upper limit of $5 billion, highlighting some smaller dividend growers available to investors. I've also set a lower limit of $500 million; while there may be some opportunities in names below that level, those may be too small for some investors.

All other criteria remain the same as in my initial search:
  • Dividend payout ratio below 50% for the past two years
  • Dividends have been raised for at least the past seven years
  • Dividend growth rate at least 10% for the past five years
  • Long-term debt-to-equity ratios below 50%
  • U.S. companies only

In all, 30 companies made the grade, a good number considering the stringent criteria. But the previous search featured some very familiar companies. This one features some that may not be as well-known to investors.

Just one retailer made the cut, Men's Wearhouse ( MW), which has increased its quarterly dividend from 0.05 cents in 2006 to 18 cents this year. That's an increase of 360%, yet the payout ratio is still just over 23%. Investment data and research provider Factset ( FDS - Get Report) is the largest company on the list. It has increased its quarterly dividend more than fivefold since 2005 and still has me shaking my head -- earlier in my career, when I was responsible for Bloomberg's equity data department, Factset was making quite a splash, and has quietly grown itself into a formidable nearly $5 billion market cap company.

At the very bottom of the list in terms of size you'll find an interesting name, $540 million market cap company Badger Meter ( BMI - Get Report). This company, which makes water meters and related products, has more than doubled its dividend in the past seven years. During that time, the stock is up more than 300%.

Other companies meeting the criteria include property and casualty insurers Amtrust Financial Services ( AFSI), Infinity Property and Casualty ( IPCC) and American Financial Group ( AFG - Get Report), as well as life insurance companies Assurant ( AIZ - Get Report) and American Equity Investment Life ( AEL - Get Report). There are plenty of regional banks, including Prosperity Bancshares ( PB - Get Report), Bank of the Ozarks ( OZRK) and BOK Financial ( BOKF - Get Report).

Other names include publisher John Wiley & Sons ( JW.A - Get Report), metal fabrication name Valmont Industries ( VAM), farm products name The Andersons ( ANDE - Get Report), trucking companies Knight Transportation ( KNX - Get Report) and Landstar System ( LSTR - Get Report), auto repair name Monro Muffler Brake ( MNRO - Get Report), chemical companies NewMarket ( NEU - Get Report) and Westlake Chemical ( WLK - Get Report) and one of my former employers, SEI Investments ( SEIC - Get Report).

Outside the five insurance companies and three banks, this is a fairly diverse group of businesses that have all continued to increase their payouts to shareholders.

At the time of publication, Heller had no positions in the stocks discussed here.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.