Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Second-Quarter Dividend Champions

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

With half of 2011 officially in the books, it's now time to look back at the second quarter, just as we did with the first, to uncover its true dividend standouts.

Why should you care about dividend payouts? According to Standard & Poor's, in the first quarter the amount of companies currently paying a regular cash dividend increased from 37.9% to 39.3%, but the overall yield paid to investors actually fell slightly, from 2.41% to 2.39%. This means it's getting harder to find quality dividend payers although the field of paying companies is increasing.

Also, as fellow Fool Morgan Housel elaborates, stock buybacks are vastly outpacing dividend growth rates. A staggering 219 companies in the S&P 500 spent more on buybacks in the second quarter than they did on dividends. While you could easily argue that stock buybacks favor shareholders, I'd much rather have a guaranteed quarterly cash payment coming my way.

For that reason, I've selected the following seven companies as my second-quarter dividend champions. These companies come from a diverse range of sectors, but they all share one belief: Investors come first.


Dividend Yield

Payout Ratio

Percentage of quarterly dividend hike

Chevron (NYSE: CVX  ) 3.1% 28% 8%
Alliance Resource Partners (Nasdaq: ARLP  ) 4.7% 46% 3%
Newmont Mining (NYSE: NEM  ) 1.5% 12% 33%
Tiffany (NYSE: TIF  ) 1.5% 33% 16%
Tower Group (Nasdaq: TWGP  ) 3.2% 15% 50%
Dr Pepper Snapple Group (NYSE: DPS  ) 3.1% 43% 28%
Cypress Semiconductor (NYSE: CY  ) 1.8% 58% N/M

This impressive list of growth can essentially be broken down into three categories: the steady growers, the dramatic pops, and the up-and-comers.

The steady growers

  • Chevron: Oil offers nearly guaranteed dividend income growth, regardless of economic conditions. From heating oil for our homes to fuel for our cars, we need oil, regardless of overall economic conditions. Thus, it's no surprise that Chevron has delivered such regular dividend increases to shareholders. Its payout boasts a steady 6.1% compounded annual growth rate over the past five years. Currently yielding 3.1% with a very low payout ratio of 28%, Chevron's dividend appears very safe moving forward.
  • Alliance Resource Partners: The only returning company from the first-quarter dividend champions list, Alliance shares many similarities with Chevron. While Alliance doesn't deal in oil, it does provide coal to power U.S. electrical plants. With energy generation always crucial,  this company's products will always be in demand. With 25 dividend increases over the past 10 years, and a staggering five-year compounded dividend growth rate of 14.1%, it should be no surprise why Alliance is back on this list.

The dramatic pops

  • Newmont Mining: Who said mining companies were a dividend wasteland? Certainly not Newmont, which became the first company to float its quarterly payout based solely on the average selling price for spot gold during the quarter. This payout depends on gold prices' continued rise, but it also gives shareholders the potential for rapid appreciation. During the quarter, Newmont raised its dividend by a clean 33%; it now pays double what it paid out in the year-ago period. Considering that the company will boost its dividend by $0.20 for every $100 increase in the price of gold, all I can say to the shiny yellow metal is, "Go, baby, go!"
  • Tiffany: Whatever pullback Japan's earthquake might have caused looks moot when you consider the strength of the Tiffany brand name. In a rough retail environment, the company has not been shy about raising both its earnings estimates and its dividend. Figuring in the recently announced quarterly dividend boost from $0.25 to $0.29, Tiffany has now raised its dividend an eye-popping 625% since 2003. With a payout ratio of only 33%, there's still plenty of room for this dividend to potentially move even higher.
  • Tower Group: Property and casualty insurance isn't an exciting business by any means, but dividend increases like the one we witnessed from Tower Group this quarter will get any investor pumped. Already trading below book value, and priced attractively at less than eight times forward earnings, it's not rocket science to see why Tower made my list of 10 small caps to rule them all. The 50% dividend hike this quarter? Now that was just gravy! Tower has also increased its quarterly payout by 652% over the past five years. Those figures are enough to make anyone hug their insurance agent.

The up-and-comers

  • Dr Pepper Snapple Group: It didn't take long for Dr Pepper Snapple to double its dividend after being spun off by Cadbury in 2008. After just six quarters as a dividend-paying public company, Dr Pepper Snapple has rewarded shareholders with a quarterly payout jump from $0.15 to $0.32 per share. This dividend hike actually gives Dr Pepper Snapple a higher yield, at 3.1%, than rivals Coca-Cola and PepsiCo, which are hovering at or just under 3%. Projected to grow at 9% over the next five years, and supported by a payout ratio of only 43%, Dr Pepper Snapple's dividend looks like a solid bet for years to come.
  • Cypress Semiconductor: Cypress is the only true newcomer to the list. The semiconductor company, which has been consistently growing revenue by double digits, launched a quarterly dividend of $0.09, which translates into a dividend yield of 1.8%. If the company can hit current analyst projections, its payout ratio for 2012 would be a modest 24%. While countless semiconductor stocks are sitting on their cash, Cypress is taking the initiative to reward shareholders who've stuck with the company even after it spun off SunPower.

Foolish roundup
We could arguably include a lot more than just the seven companies discussed above, but it's easy to see now why these companies could be a great addition to any dividend investor's portfolio.

What dividend companies are rewarding you the most? Share your ideas in the comments section below, and consider reading our free report on 13 high-yielding stocks you can buy today.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong. The Motley Fool owns shares or Coca-Cola and PepsiCo. Motley Fool newsletter services have recommended buying shares of Chevron, Alliance Resource Partners, Coca-Cola, PepsiCo, and Cypress Semiconductor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that believes in the what you see is what you get approach.

Read/Post Comments (0) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1514564, ~/Articles/ArticleHandler.aspx, 10/22/2016 10:06:04 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
ARLP $23.45 Down -0.50 -2.09%
Alliance Resource… CAPS Rating: ***
CVX $101.30 Down -0.57 -0.56%
Chevron CAPS Rating: ****
DPS $87.86 Up +0.74 +0.85%
Dr. Pepper Snapple… CAPS Rating: ***
NEM $36.35 Down -0.66 -1.78%
Newmont Mining CAPS Rating: ***
TIF $73.37 Up +0.58 +0.80%
Tiffany and Co. CAPS Rating: **
TWGP.DL $0.00 Down +0.00 +0.00%
Tower Group CAPS Rating: ***