When investors hear dividend growth stocks mentioned, they immediately think of large-caps like Johnson & Johnson (JNJ), The Procter & Gamble Company (PG), The Coca-Cola Company (KO) and 3M Co. (MMM). Often small/mid-cap stocks are associated with growth stocks, and since the underlying companies are looking to grow there is little or no cash available for dividends. Not all small/mid-cap stocks fall under the growth category, many are considered value stocks and quite a few of these consistently increase their dividends.
For a stock to be included on my Stock Ideas list it must have increased its dividend for at least 10 consecutive years (10 years for Achievers, 25 years for Aristocrats and Champions). Below is a representative sample of several small/mid-cap dividend stocks included on the list, along with the number of years of consecutive dividend increases:
McCormick & Company Inc. (MKC) primarily produces spices, seasonings and flavorings for the retail food, food service and industrial markets. Trademarks include McCormick and Lawry's. The company has paid a cash dividend to shareholders every year since 1925 and has increased its dividend payments for 32 consecutive years. Yield: 2.0%
Cracker Barrel Old Country Store (CBRL) develops and operates the Cracker Barrel Old Country Store restaurant and retail concept in the United States. The company has paid a cash dividend to shareholders every year since 1901 and has increased its dividend payments for 22 consecutive years. Yield: 2.9%
Genuine Parts Co. (GPC) is a leading wholesale distributor of automotive replacement parts, industrial parts and supplies, and office products. The company has paid a cash dividend to shareholders every year since 1948 and has increased its dividend payments for 62 consecutive years. Yield: 3.1%
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 1939 and has increased its dividend payments for 45 consecutive years. Yield: 3.5%
Realty Income Corporation (O) is an equity real estate investment trust that owns, develops and manages retail real estate, primarily single tenant buildings throughout most of the U.S. The trust is also among a handful of REITS that pay monthly dividends. The company has paid a cash dividend to shareholders every year since 1994 and has increased its dividend payments for 24 consecutive years. Yield: 5.2%
The above is not a buy list, but does demonstrate the availability of small/mid-cap dividend growth stocks to potentially help meet this portion of your asset allocation. Sometimes smaller companies are still run by the original founders' or their families and there is a pride in these companies that is not always found in those run by "professional managers".
Full Disclosure: Long JNJ, PG, KO, MMM, CBRL, LEG, GPC, O in various income portfolios. See a list of all my Dividend Growth Portfolio holdings here.
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