Consider what Warren Buffett has to deal with. His investments have grown so large that it is difficult to achieve the same growth rates as the early years. Being so large, Buffett is forced to take significant positions and only select from the best of large cap stocks. This dramatically limits his investment options.
In 1999 during Berkshire Hathaway's (BRK.A) shareholder meeting, Buffett stated that he could generate 50% returns if only he had less money to invest and focus on small companies. It's the smaller, faster growing companies that typically offer the highest returns.
Small caps tend to be thinly traded and often not closely followed by analysts. This provides opportunity for identifying stocks trading at a significant discount to their intrinsic value.
This week, I screened my dividend growth stocks database for Small- and Mid-Cap stocks (using Morningstar's classificaion) with a yield and dividend growth at or above 3.5% and a minimum of 10 consecutive years of dividend growth. The results are presented below:
New Jersey Resources Corp. (NJR) is an energy services holding company that provides retail & wholesale energy services to customers in states from the Gulf Coast to New England and Canada, with 487,000 customers in NJ. The company has paid a cash dividend to shareholders every year since 1951 and has increased its dividend payments for 19 consecutive years.
Dividend Growth: 4.31% | Yield: 3.7%
Meredith Corp. (MDP) publishes a suite of magazines and websites focused on food, parents and women (Better Homes and Gardens) and operates 12 local TV stations.
Dividend Growth: 14.37% | Yield: 3.8%
Magellan Midstream Partners LP (MMP) is engaged in the transportation, storage and distribution of refined petroleum products primarily through its 9,600-mile pipeline system. The company has paid a cash dividend to shareholders every year since 1951 and has increased its dividend payments for 19 consecutive years.
Dividend Growth: 8.11% | Yield: 3.9%
Leggett & Platt Inc. (LEG) makes a broad line of bedding and furniture components and other home, office and commercial furnishings, as well as products for non-furnishings markets. The company has paid a cash dividend to shareholders every year since 2001 and has increased its dividend payments for 13 consecutive years.
Dividend Growth: 3.51% | Yield: 4.1%
Avista Corp. (AVA) generates, transmits and distributes energy as well as engages in energy-related businesses. The company operates in two business segments. The company has paid a cash dividend to shareholders every year since 1899 and has increased its dividend payments for 11 consecutive years.
Dividend Growth: 5.17% | Yield: 4.6%
W. P. Carey Inc. (WPC) is an investment firm that provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. The company has paid a cash dividend to shareholders every year since 1998 and has increased its dividend payments for 14 consecutive years.
Dividend Growth: 5.04% | Yield: 5.1%
Realty Income Corporation (O) is an equity real estate investment trust that owns commercial retail real estate properties in the United States. The company has paid a cash dividend to shareholders every year since 1994 and has increased its dividend payments for 19 consecutive years.
Dividend Growth: 4.11% | Yield: 5.5%
Digital Realty Trust, Inc. (DLR), a real estate investment trust (REIT), that owns, acquires, repositions and manages technology-related real estate. The company has paid a cash dividend to shareholders every year since 2005 and has increased its dividend payments for 10 consecutive years.
Dividend Growth: 15.00% | Yield: 5.6%
Alliance Resource Partners LP (ARLP) produces and markets coal primarily to utilities and industrial users in the United States. It offers low-sulfur coal, medium-sulfur coal, and high-sulfur coal. The company has paid a cash dividend to shareholders every year since 1999 and has increased its dividend payments for 11 consecutive years.
Dividend Growth: 8.10% | Yield: 6.1%
Omega Healthcare Investors Inc. (OHI) is a real estate investment trust (REIT) that invests in income-producing healthcare facilities, mainly long-term care facilities located in the United States. The company has paid a cash dividend to shareholders every year since 2003 and has increased its dividend payments for 11 consecutive years.
Dividend Growth: 8.28% | Yield: 6.6%
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 230+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long LEG, O in my Dividend Growth portfolio and long MDP, AVA, DLR, OHI in my High-Yield portfolio. See a list of all my dividend growth holdings here.
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