Monday, May 18, 2015

10 Small/Mid-Cap Dividend Growth Stocks Answering The Call

I have set aside 20% in my asset allocation for small and mid-cap equities. Generally, smaller cap securities are more volatile, but often offer a higher rate of return over the long-term. Most of this allocation is covered by small cap mutual funds in my 401(k).


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:

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 1972 and has increased its dividend payments for 13 consecutive years. Yield: 3.0%

Cincinnati Financial Corp. (CINF) is an insurance holding company that primarily markets property and casualty coverage. It also conducts life insurance and asset management operations. The company has paid a cash dividend to shareholders every year since 1954 and has increased its dividend payments for 55 consecutive years. Yield" 3.6%

The Clorox Company (CLX) is a diversified producer of household cleaning, grocery and specialty food products is also a leading producer of natural personal care products. The company has paid a cash dividend to shareholders every year since 1968 and has increased its dividend payments for 39 consecutive years. 2.8%

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 59 consecutive years. Yield: 2.7%

Hasbro, Incs' (HAS) broad portfolio of toys, games and entertainment offerings includes brands such as Transformers, Playskool, Monopoly and My Little Pony. The company has paid a cash dividend to shareholders every year since 1981 and has increased its dividend payments for 13 consecutive years. Yield: 2.6%

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 42 consecutive years. Yield: 2.7%

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 21 consecutive years. Yield: 4.8%

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 12 consecutive years. Yield: 6.1%

Piedmont Natural Gas (PNY) distributes natural gas to residential, commercial and industrial customers in portions of North Carolina, South Carolina and Tennessee. The company has paid a cash dividend to shareholders every year since 2003 and has increased its dividend payments for 12 consecutive years. Yield: 3.6%

J.M. Smucker Co.'s (SJM) products include coffee, peanut butter, fruit spreads, shortening and oils, ice cream toppings, health and natural foods, and beverages. The company has paid a cash dividend to shareholders every year since 1949 and has increased its dividend payments for 17 consecutive years. Yield: 2.2%

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, CINF, GPC, LEG, PNY, O, in my Dividend Growth Portfolio, long OHI in my High-Yield Portfolio and long CBRL, SJM in my High Dividend Growth Portfolio. See a list of all my dividend growth holdings here.

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