Top 7 Dividend Champions To Buy Now | 2021 Dividend Champions List - Sure Dividend

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Top 7 Dividend Champions To Buy Now | 2021 Dividend Champions List

Updated on July 15th, 2021 by Bob Ciura

Income investors are always on the hunt for high-quality dividend stocks. There are many ways to measure high-quality stocks. One way for investors to find great dividend stocks is to focus on those with the longest histories of raising dividends.

With this in mind, we created a downloadable list of all 142 Dividend Champions. You can download your free copy of the Dividend Champions list, along with relevant financial metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the link below:


Investors are likely familiar with the Dividend Aristocrats, a group of 65 stocks in the S&P 500 Index with 25+ consecutive years of dividend increases. Meanwhile, investors should also familiarize themselves with the Dividend Champions, which have also raised their dividends for at least 25 years in a row.

While their length of dividend increases is the same, leading to some overlap, there are also some important differences between the Dividend Aristocrats and Dividend Champions. As a result, the Dividend Champions list is much more expansive. There are many high-quality Dividend Champions that are not included on the Dividend Aristocrats list.

This article will discuss large cap stocks, and an analysis of our top 7 Dividend Champions, ranked according to expected total returns in the Sure Analysis Research Database.

Table of Contents

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Overview of Dividend Champions

The requirement to become a Dividend Champion is simple: 25+ years of consecutive annual dividend increases. The Dividend Aristocrats have the same requirement when it comes to number of years, but with a few additional requirements.

To be a Dividend Aristocrat, a company must also be included in the S&P 500 Index, must have a float-adjusted market cap of at least $3 billion, and must have an average daily value traded of at least $5 million. These added requirements preclude many companies that possess a sufficient track record of annual dividend increases, but do not qualify based on market cap or liquidity reasons.

As a result, while there is some overlap between the Dividend Aristocrats and the Dividend Champions, there are also many Dividend Champions that are not Dividend Aristocrats. Income investors might want to consider these stocks due to their impressive histories of annual dividend increases, so we have compiled them in the downloadable spreadsheet above.

In addition, we have ranked the top 7 Dividend Champions according to total expected annual returns over the next five years. Our top 7 Dividend Champions right now are ranked below.

The Top 7 Dividend Champions To Buy Right Now

The following 7 stocks represent Dividend Champions with at least 25 consecutive years of dividend increases, but they also have durable competitive advantages, long-term growth potential, and high expected total returns. Stocks have been ranked by expected total annual return over the next five years, from lowest to highest.

Top Dividend Champion #7: Enterprise Bancorp Inc. (EBTC)

Enterprise Bancorp Inc. was formed in 1996 as the parent holding company of Enterprise Bank and Trust Company, referred to as Enterprise Bank. Enterprise has 26 fullservice branches in the North Central region of Massachusetts and Southern New Hampshire.

The company’s primary business operation is gathering deposits from the general public and investing in commercial loans and investment securities.

The Bank offers commercial, residential and consumer loan products, cash management services, electronic banking options, insurance services, as well as wealth management. About half of the company’s loan portfolio is in commercial real estate and about a third is in commercial construction loans.

Other subsidiaries under Enterprise Bancorp are Enterprise Investment Services and Enterprise Insurance Services, which cater to the bank’s target market of business customers.

Enterprise Bancorp has a market cap of ~$400 million and is an exceptionally managed bank, which has remained profitable in every single quarter since its formation. It has also raised its dividend for 27 consecutive years.

In late April, Enterprise reported (4/22/21) financial results for the first quarter of fiscal 2021. The bank grew its net interest income 16% over the prior year’s quarter, primarily thanks to Paycheck Protection Program loans. In addition, thanks to a great improvement in its business outlook, the bank reduced its loan loss provisions by 89%. As a result, Enterprise grew its earningspershare from $0.34 to $0.86 year-over-year.

As the bank is recovering from the pandemic earlier than expected, we have raised our earningspershare forecast from $3.00 to $3.40. Based on this revised EPS forecast, shares of EBTC have a P/E of 10.5, slightly below our fair value estimate of 12.

In addition, we expect annual earnings growth of 5.0%, while the stock has a 2.2% dividend yield. We expect total annual returns of 10.9% per year over the next five years.

Top Dividend Champion #6: Telephone & Data Systems (TDS)

Telephone & Data Systems is a telecommunications company that provides customers with cellular and landline services, wireless products, cable, broadband,and voice services across 24U.S. states. The company’s Cellular Division accounts for more than 75% of total operating revenue.

On May 6th, TDS reported financial results for the first quarter. The company grew its total operating revenues by 4.5% to $1.32 billion. Diluted earnings per share fell from $0.59 to $0.48, an 18.6% decrease. Postpaid churn rate improved 10 basis points compared to the prior year, down to 1.12%.

Postpaid connections have grown steadily over the past several quarters.

Source: Investor Presentation

ARPU for postpaid connections grew from $47.23 to $47.65, a 0.9% increase. Total residential revenue per wireline connection grew from $54.30 to $56.97 year-over-year. Total broadband connections increased 9% to 467,300 connections and broadband revenue grew 16%.

Telephone & Data Systems operates in the competitive telecommunications industry. Price wars are common among telecoms in the constant battle for subscribers. That said, the entire industry benefits from a high level of concentration. There are only a few major telecoms (AT&T, Verizon, and T-Mobile) that dominate the U.S. market. Building a new network large enough to compete with the established giants, TDS included, would be extremely prohibitive.

TDS has historically held up well during recessions, as consumers are reluctant to cut their telecommunications services, even during an economic downturn. During the Great Recession, TDS’ earnings-per-share actually increased 69% from 2008-2010. The company has remained profitable during the current period of economic weakness caused by the coronavirus pandemic.

TDS has increased its dividend for 45 years, and the stock has a solid current yield of 3.2%. Due to the volatility in the company’s earnings history, we believe that the best way to assess the valuation of TDS is by looking at its price-to-book ratio. TDS is currently trading at aprice-to-book ratio of ~0.6, which is lower than its 10-year average of 0.7. We believe shares are undervalued.

In addition to returns generated by an expanding valuation multiple, expected growth and dividends, we expect total returns of 11.0% per year over the next five years.

Top Dividend Champion #5: BancFirst Corp. (BANF)

BancFirst Corp. serves as the financial holding Company for BancFirst, a state-chartered bank headquartered in Oklahoma City, Oklahoma. BancFirst has 107 banking locations serving 58 communities throughout Oklahoma and has over 1,900 employees.

BancFirst offers a variety of commercial banking services to retail customers and small and mid-sized businesses. For retail customers, this includes checking, savings, CDs, personal loans, and other services. The bank offers business lending services for commercial customers, including agricultural and multi-family loans, and various business banking services.

On April 21, 2021, BancFirst Corporation’s first-quarter results. The company reported a net income of $42.5 million, or $1.27 diluted earnings per share, compared to net income of $22.6 million, or $0.68 diluted earnings per share, for the first quarter of 2020. This was an increase of 88% year over year. No provision for credit losses was recorded in the quarter compared to a provision for credit losses of $19.6 million for 1Q20.

Net interest income for the quarter increased to $77.2 million compared to $74.1 million for the first quarter of 2020. Net interest income increased year over year due to loan growth, PPP fee income of about $9.5 million, and decreased interest rates paid on deposits. Total assets were $10.5 billion, an increase of $1.3 billion from the end of last year.

BancFirst has increased its dividend for 27 consecutive years, and the stock has a 2.3% yield. Shares are also undervalued, with a 2021 P/E of 13 compared with our fair value estimate of 15. Including 6% expected EPS growth, total returns are estimated to reach 11% for BANF stock over the next five years.

Top Dividend Champion #4: Lowe’s Companies (LOW)

Lowe’s Companies is the second-largest home improvement retailer in the US (after Home Depot). Lowe’s operates more than 2,200 home improvement and hardware stores in the U.S. and Canada.

The company has increased its dividend for over 50 consecutive years, making it one of just 31 Dividend Kings.

Lowe’s reported first quarter results on May 19th. Quarterly revenue of $24.4 billion increased 24% from the same quarter last year. Comparable sales (which measures sales at stores open at least one year) increased 26%. Earnings-per-share on an adjusted basis, increased 81% year-over-year.

We forecast 7% annual EPS growth over the next five years. Lowe’s has a long runway of growth up ahead.

Source: Investor Presentation

Another key to Lowe’s success has been its booming e-commerce platform. This is a key differentiator between successful retailers like Lowe’s and the many retailers that are reporting losses or going out of business. Lowe’s is benefiting right alongside the e-commerce boom.

Lowe’s enjoys competitive advantages from scale and brand power as it operates in a duopoly with Home Depot. Neither of the two are expanding their store count significantly, and neither is interested in a price war. Both should remain highly profitable, as the home improvement market in the US is large enough for two companies to succeed.

Based on expected EPS of $11.01 for the current fiscal year, Lowe’s stock trades for a P/E ratio of 17.4. Our fair value estimate is a P/E of 20. The combination of valuation changes, expected EPS growth and dividends lead to total expected returns of 11.0% per year through 2026.

Top Dividend Champion #3: Enbridge Inc. (ENB)

Enbridge is an oil & gas company that operates the following segments: Liquids Pipelines, Gas Distributions, Energy Services, Gas Transmission & Midstream, and Green Power & Transmission.

Enbridge is a large-cap stock with a market capitalization of ~$80 billion.

Note: As a Canadian stock, a 15% dividend tax will be imposed on US investors investing in the company outside of a retirement account. See our guide on Canadian taxes for US investors here.

Enbridge reported its first-quarter results in early May. Distributable Cash Flow (DCF) of $1.37 per common share increased 2.2% from the same quarter last year. Separately, Enbridge reaffirmed its full-year guidance for 2021. The company expects EBITDA of $13.9 billion to $14.3 billion and DCF per share of $4.70 to $5.00 for the full year.

The company also expects steady growth through 2023.

Source: Investor Presentation

We expect 4.5% annual cash flow per share growth for Enbridge over the next five years, due primarily to new projects. Enbridge is one of the largest pipeline operators in North America. Its vast asset footprint serves as a tremendous competitive advantage, as it would take many billions of dollars of investments from new market entrants if they wanted to be able to compete with Enbridge.

Enbridge is a high dividend stock with a 7% yield. The combination of dividends, DCF-per-share growth, and an expanding valuation multiple could lead to total annual returns of 11.9% per year over the next five years.

Top Dividend Champion #2: ABM Industries (ABM)

ABM Industries has increased its dividend for 53 consecutive years. ABM Industries is a leading provider of facility solutions, which includes janitorial, electrical & lighting, energy solutions, facilities engineering, HVAC & mechanical, landscape & turf, and parking.

Source: Investor Presentation

ABM Industries reported its second-quarter earnings results (fiscal 2021) on June 9th. Revenue of $1.5 billion was flat from the previous year’s quarter. Despite flat revenue, margin expansion helped the company grow its bottom line.

Earnings-per-share of $0.82 beat analyst estimates by $0.11 per share, representing 37% year-over-year growth. Management also increased its earningspershare guidance to $3.30 to $3.50 for the full fiscal year.

ABM stock yields 1.7%. Due to the low dividend payout ratio and its very stable, recessionresilient business model, ABM Industries’ dividend looks very safe.

Shares also look significantly undervalued, with a fiscal 2021 price-to-earnings ratio of 12.9, which is well below our fair value estimate of 17.5.

We expect total annual returns of 12.4% over the next five years, driven by 5% expected EPS growth, the 1.7% dividend yield, and a ~5.9% annual boost from a rising P/E multiple.

Top Dividend Champion #1: AT&T Inc. (T)

AT&T is a giant communications company, offering mobile, broadband and video to 100 million U.S. consumers and 3 million businesses. AT&T is on the Dividend Aristocrats list.

On April 22nd, 2021 AT&T reported Q1 2021 results for the period ending March 31st, 2021. For the quarter the company generated $43.9 billion in revenue, up 2.7% from $42.8 billion in Q1 2020, as higher mobility and WarnerMedia revenue more than offset declines in domestic video, business wireline and Latin America.

Source: Investor Presentation

Reported net income equaled $7.5 billion or $1.04 per share. On an adjusted basis, earningspershare equaled $0.86 compared to $0.84 in the year-ago quarter. AT&T ended the quarter with a net debttoEBITDA ratio of 3.1x. AT&T also updated its full year 2021 outlook, continuing to expect 1% revenue growth, adjusted earningspershare to be stable with 2020 and a dividend payout ratio in the high50% range.

AT&T is a colossal business, but it is not a fast grower. From 2007 through 2019 AT&T grew earnings-per-share by 2.2% per year. AT&T is optimistic about generating future growth as the company seeks to slim down.

On February 25th, AT&T announced it will spin off multiple assets into a separate company called New DIRECTV that will own and operate the DirecTV satellite TV business, as well as AT&T TV and U-verse video. AT&T will own 70% of the company, and will sell 30% ownership to TPG for approximately nearly $8 billion, which will be used to pay down debt.

Then, AT&T announced a mega-merger with Discovery (DISCA) in which TimeWarner will merge with Discovery, and AT&T will receive $43 billion in a combination of cash, securities and retention of debt. AT&T shareholders receive stock representing 71% of the new company, with Discovery shareholders owning 29%.

These deals will allow AT&T to become more efficient and refocus itself on its core telecommunications services. The funds raised will provide AT&T additional financial resources to invest in growth, and also to pay down debt to improve the balance sheet.

5G is a significant growth catalyst. AT&T continues to expand 5G to more cities around the country. AT&T now provides access to 5G to parts of 355 U.S. markets, covering more than 120 million people.

Shares of AT&T trade for a price-to-earnings ratio just under 10.0, which below our fair value P/E of 11. The stock also has an attractive dividend yield of 7.4%. Combined with 3% expected annual earnings-per-share growth, we expect total annual returns of 12.8% per year over the next five years.

Final Thoughts

The various lists of stocks by length of dividend history are a good resource for investors who focus on high-quality dividend stocks. In order for a company to raise its dividend for at least 25 years, it must have durable competitive advantages, highly profitable businesses, and leadership positions in their respective industries. They also have long-term growth potential and the ability to navigate recessions while continuing to raise their dividends.

The top 7 Dividend Champions presented in this article have long histories of dividend growth, and the combination of high dividend yields, low valuations, and future earnings growth potential make them attractive buys right now.

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