For Dividend Security Check Out These 10 Profitable Champions

If you like dividend stocks, you probably want to make sure they can maintain, or even grow, their dividend. If history is any indicator, Dividend champions can likely offer the stability you're looking for. [Related list:  20 Highest Yield Dividend Champions]

"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. Just over 100 make the cut.

Because dividend payments are taken from a company's profits, it's important to make sure the profit margins of "champions" are strong. So t o narrow down the list to the names below we wanted to pick out stocks with impressive profitability metrics. In particular, to analyze their profitability, we compare the companies' trailing twelve month (TTM) gross, operating, and profit margins with their industry averages to find those more profitable than their peers. Here's a breakdown:

TTM Gross margin: This metric that tells us the percentage of a company's revenue is left after paying all production expenses. Costs include overhead, payroll and taxation. ((revenues – cost of goods sold) / Revenue ) *100  =  Gross margin %

TTM Operating margin: This tells us the percentage remaining after all operating expenses are paid. Operating expenses include: supplies, repairs, research and development, and depreciation. (Operating Income / Net Operating Revenue) *100  = Operating Margin %

TTM Pretax margin:  A company's earnings before taxes. This incorporates all of the expenses associated with business excluding taxes. It can help to determine the overall operating efficiency of the firm. The higher the pretax margin, the more profitable the company. (Net profit before taxes / net sales) *100 = Pretax Margin

Business Section: Investing Ideas

Below is a list of stocks that we compiled using the criteria above.

As a recap: These stocks are dividend champion that have a market cap over $300 million and are trading over $1 per share. They have also reported gross, pretax and operating margins more profitable than their industry peers. These impressive margins help ensure they will continue to consistently pay and increase their dividends.

The list below has the final stocks. Do you think they will maintain their dividend for the years to come?

1. 3M Co. ( MMM): Operates as a diversified technology company worldwide. Market cap at $71.92B, most recent closing price at $102.62.

The company has raised dividends for 54 consecutive years. Current yield: 2.34%.  TTM gross margin at 50.75% vs. industry average at 42.96%. TTM operating margin at 21.68% vs. industry average at 13.81%. TTM pretax margin at 21.24% vs. industry average at 12.7%.  
 

2. Commerce Bancshares, Inc. ( CBSH): Operates as the bank holding company for Commerce Bank, N. Market cap at $3.51B, most recent closing price at $38.42.

The company has raised dividends for 44 consecutive years. Current yield: 2.33%.  TTM gross margin at 93.96% vs. industry average at 72.91%. TTM operating margin at 51.54% vs. industry average at 45.82%. TTM pretax margin at 36.83% vs. industry average at 23.46%.  
 

3. Community Trust Bancorp Inc. ( CTBI): Operates as the holding company for Community Trust Bank, Inc. Market cap at $531.05M, most recent closing price at $34.02.

The company has raised dividends for 32 consecutive years. Current yield: 3.73%.  TTM gross margin at 84.46% vs. industry average at 72.91%. TTM operating margin at 51.14% vs. industry average at 45.82%. TTM pretax margin at 32.6% vs. industry average at 23.46%.  
 

4. Emerson Electric Co. ( EMR): Operates as a diversified manufacturing and technology company. Market cap at $41.69B, most recent closing price at $57.73.

The company has raised dividends for 56 consecutive years. Current yield: 2.86%.  TTM gross margin at 42.6% vs. industry average at 34.6%. TTM operating margin at 17.03% vs. industry average at 9.91%. TTM pretax margin at 13.12% vs. industry average at 6.94%.  
 

5. Energen Corp. ( EGN): Engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids in the continental United States. Market cap at $3.42B, most recent closing price at $47.42.

The company has raised dividends for 31 consecutive years. Current yield: 1.20%.  TTM gross margin at 56.15% vs. industry average at 34.9%. TTM operating margin at 29.74% vs. industry average at 16.22%. TTM pretax margin at 24.57% vs. industry average at 15.76%.  
 

Interactive chart: Compare dividend yields for the first 5 companies on this list over the past two years

6. HCP, Inc. ( HCP): An independent hybrid real estate investment trust. Market cap at $21.21B, most recent closing price at $46.91.

The company has raised dividends for 28 consecutive years. Current yield: 4.52%.  TTM gross margin at 62.61% vs. industry average at 39.77%. TTM operating margin at 62.61% vs. industry average at 36.89%. TTM pretax margin at 34.81% vs. industry average at 19.55%.  
 

7. McDonald's Corp. ( MCD): Operates as a foodservice retailer worldwide. Market cap at $95.55B, most recent closing price at $95.17.

The company has raised dividends for 36 consecutive years. Current yield: 3.23%.  TTM gross margin at 43.24% vs. industry average at 35.73%. TTM operating margin at 30.33% vs. industry average at 18.27%. TTM pretax margin at 29.31% vs. industry average at 16.09%.  
 

8. National Fuel Gas Co. ( NFG): Operates as a diversified energy company primarily in the United States. Market cap at $4.73B, most recent closing price at $56.62.

The company has raised dividends for 42 consecutive years. Current yield: 2.68%.  TTM gross margin at 45.89% vs. industry average at 26.83%. TTM operating margin at 28.81% vs. industry average at 15.22%. TTM pretax margin at 23.08% vs. industry average at 11.83%.  
 

9. Sigma-Aldrich Corporation ( SIAL): Develops, manufactures, purchases, and distributes a range of chemicals, biochemicals, and equipment worldwide. Market cap at $9.19B, most recent closing price at $76.34.

The company has raised dividends for 36 consecutive years. Current yield: 1.034%.  TTM gross margin at 56.54% vs. industry average at 37.2%. TTM operating margin at 25.66% vs. industry average at 16.09%. TTM pretax margin at 24.97% vs. industry average at 14.%.  
 

10. T. Rowe Price Group, Inc. ( TROW): A publicly owned asset management holding company. Market cap at $18.86B, most recent closing price at $73.13.

The company has raised dividends for 25 consecutive years. Current yield: 1.90%.  TTM gross margin at 47.12% vs. industry average at 38.16%. TTM operating margin at 45.14% vs. industry average at 26.44%. TTM pretax margin at 47.48% vs. industry average at 25.45%.  
 

Interactive chart: Compare dividend yields for the last 5 companies on this list over the past two years

List compiled by Kapitall's Rebecca Lipman

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