March is a favorite month for many reasons. One of the principal reasons is because of the madness that descends every year at this time on sports fans and basketball courts all across the country. From high school sectionals all the way to the college championships, I love what the games represent. The madness of March, like capitalism itself, allows for the best to rise and be recognized. Through hard work and preparation, diligent effort, tremendous will, heart, and sometimes a little luck, excellence rises and is rewarded. The madness of March is one of the few remaining examples of a pure competitive American spirit. No politics, no spin–pure will, effort and accomplishment. Like many others, I love it.
With that competitive American spirit in mind, there is a way to sort through the statistics and spin on countless publicly traded companies to find a few successful long-term competitors with some very impressive records. The method I’m speaking of is to look at the dividend and distribution history of a company.
These Companies aren’t Sexy
Dividends, in a nutshell, are the way companies share some of the profits of their activities with their shareholders. Every quarter they send a check to the shareholder or their IRA. Some companies also have the wonderful habit of increasing the amount of those checks every year. But only a very few have the absolute distinction of increasing the amount each year for the last 50 years. Now, these companies are in no way sexy. They rarely make the “Hot Stocks” lists. They are often called stodgy, old-fashioned, or even, heaven forbid, boring. But they pay their shareholders. And they have paid them in increasing amounts for 50 or more years.
But 50+ Years of Raising Dividends is Very Sexy.
Since it’s bracket, bubble and Cinderella time, I’d like to talk about these dividend companies (i.e. teams) in the terms of March Madness. I’ve broken the teams into two divisions, A & B. Division A has acceptable current yields and are at or near their 52-week highs. Call them your big conference teams “playing well late in the season” with potential to stretch their wins deep into tournament play. Division B has good current yields and are at relatively attractive prices for entry. Call them your smaller conference championship teams with potential for a few Cinderellas to emerge.
All of our Division A and B teams have raised their dividends and or distributions each of the last 50 years or more and are rated 3 stars or higher by Standard & Poor’s (except for one Division B team, which has no star rating from S&P).
Allow me to present Division A:
The team formerly known as Minnesota Mining and Manufacturing.
Similar to another superstar from the Twin Cities and formerly known by some other name, 3M Co (NYSE:MMM) comes out of the Midwest with a deep bench and a long 102-year-tradition of success. Regardless of what kind of opposition the team faces, the strength of its bench continues to perform. On the floor or quick off the bench, the team can draw revenues from services and or products in Industrial and Transportation, Health Care, Consumer and Office, Safety, Security, and Protection, Display and Graphics, and Electronics and Communications. Supporting the team from behind the bench include wholesalers, retailers, jobbers, distributors, and dealers. As part of the powerful “DOW 30 Conference,” with a current yield of 2.4% and powering through its 52-week high on Feb. 28, 3M Co (NYSE:MMM) may be one to watch this tournament season and into the summer.
Suburban Chicago powerhouse with low expectations from “professionals.”
A team that doesn’t have quite so deep a bench is the powerhouse from suburban Chicago, Dover Corp (NYSE:DOV). Dover still has a formidable revenue generating lineup, including products and services in Communication Technologies, Energy, Engineered Systems, and Printing and Identification. Also, it set a new 52-week high recently (Feb. 22) and has a current yield of a little less than 1.9%. A Forbes “scouting report” showed that the team is still somewhat out of favor with so-called “professional” investors. As of Feb. 15 it is the 89th most shorted stock of the S&P 500, with a “days to cover” stat of 5.15. If Dover Corp (NYSE:DOV) continues to move higher and those shorts get nervous, the team may make for a strong tournament showing and a great summer.