Income investors know how valuable dividend payments are. Reinvested dividends have made up a huge portion of a stocks’ total return over the course of many decades. That’s why so many investors take those quarterly checks very seriously.
When investors think of dividend stocks, they usually revert to the mega-cap blue chip stocks that make up the Dow Jones Industrial Average or the S&P 500 Index. While those stocks are certainly worthy of investment consideration, you don’t have to limit yourself to the biggest stocks the market has to offer. There happen to be many smaller companies that have maintained equally impressive dividend track records as their large-cap counterparts. Each of the following stocks fits the bill, having raised dividends for decades in a row, and each currently sports a valuation of $2 billion or less.
Long dividend track records aren’t just for large caps
This past May, American States Water Co (NYSE:AWR) said that its board of directors had approved a 14% dividend increase. The company’s new payout, $1.62 per share annualized, represents a 3% yield going forward.
American States Water Co (NYSE:AWR) is no stranger to providing its investors with healthy dividend raises. The company, which operates as a water and electric utility in California, represents the gold standard among dividend payers: American States Water has provided investors with 59 consecutive years of increases in its aggregate annual dividend, according to the company.
Diebold Incorporated (NYSE:DBD) provides self-service machines to the financial, commercial, and retail markets worldwide. Its products mainly include automated teller machines and check-cashing machines.
Diebold Incorporated (NYSE:DBD) has an enviable dividend track record that many companies would love to boast. Earlier this year, Diebold raised its quarterly dividend for the 60th consecutive year. This represents the longest current streak of any publicly traded company in North America.
Of course, no company can maintain such a streak without the underlying fundamentals. In fiscal 2012, the company achieved revenue growth of 5.5% year over year. Steady growth has allowed Diebold Incorporated (NYSE:DBD) to maintain its generous payout, which stands at 3.4%.
Medical and surgical supply distributor Owens & Minor, Inc. (NYSE:OMI) increased its shareholder payout earlier this year, representing the 16th consecutive annual dividend raise. The $2 billion company by market capitalization, which also offers supply chain logistics to the medical industry, currently pays a $0.96 per-share annualized dividend. That means at recent prices, the stock yields roughly 2.9%.
Owens & Minor reported 2% growth in first-quarter revenue, year over year. In addition, the company reiterated its 2013 outlook, guiding investors to expect revenue growth of 2% to 4% for the full year and adjusted EPS to be at least $1.90 per share. Clearly, Owens & Minor still has plenty of room to grow its dividend for many years to come.
Small companies, big dividends
Small-cap stocks, which tend to carry market values of $2 billion or less, are often favored by many investors because of greater growth potential than large-caps. In theory, due to their smaller stature, stocks with lower market capitalizations may have more room to run than slower-growing, stodgy large-caps.
If, in addition to small-cap investing, you’re interested in receiving income from your stock investments, this list is a great springboard for further research. Each of these stocks is highly profitable and has a demonstrated track record of rewarding shareholders with quarterly dividend payments for many decades. Even more impressively, each of these stocks has managed to raise its dividend on an annual basis for many years in a row. As a result, these companies may be great alternatives to the run-of-the-mill large-caps you know all too well.
The article These Small Cap Companies Are Dividend Legends originally appeared on Fool.com and is written by Robert Ciura.
Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Robert is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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