Overdue Dividend Increases

David Fish maintains one of the best resources for dividend growth investors, the so-called CCC list. The list is updated monthly and contains all U.S.-listed stocks that have increased their dividends for at least 5 consecutive years. The acronym CCC stands for the 3 categories of stocks in the list, divided based on the number of consecutive years of increases: Dividend Champions (25 or more years), Dividend Contenders (10-24 years) and Dividend Challengers (5-9 years).

In compiling the CCC list, Fish gets a chance to see which companies are approaching the anniversaries of their previous dividend increase announcements. Since many companies raise their dividends about the same time every year, he is alerted when dividend increases are not announced as expected.

In many cases, companies announce an increase "just in time" and avoid breaking the streak of dividend increases. In some cases, though, companies fail to announce dividend increases, essentially freezing their payments at the existing amount.

Note that companies do not have to announce dividend increases every year to maintain a streak, nor do they have to increase their dividends annually to retain a streak. Fish compares calendar year totals and, specifically, the total amount paid in consecutive calendar years. Therefore, a company's dividend streak will end only if it pays the same total dividend in back-to-back years.

Following is an example of Microsoft Corp's (NASDAQ:MSFT) recent dividend history. The company pays the same quarterly dividend in every quarter of its fiscal year, which is not aligned with the calendar year:

Even if MSFT pays the same dividend in December 2015 as it did in December 2014 (31¢), the company's streak of dividend increases would not end. In fact, as long as MSFT pays more than 31¢ in at least one quarter in 2016 (assuming payments of 31¢ in the other quarters), the company will retain its streak.

Note that Fish converts dividends paid in foreign currency to dollar equivalents before making comparisons. Therefore, dividend increases paid in foreign currency must also increase in dollar terms, otherwise the stock will be lose its dividend streak status!

One of DivGro's holdings, Nippon Telegraph & Telephone Corp (NYSE:NTT), is an example of a stock that no longer appears in the CCC list even though it continues to increase its dividends annually (in yen).

Source: NTT website

In a recent Seeking Alpha article, David Fish identifies 18 companies that soon could lose their dividend streak status and 21 ADR (American Depository Receipt) stocks that could fall victim to the strong dollar, despite increasing their dividends in the foreign currency.

The following DivGro holding appears in Fish's 2015 death watch list, which contain stocks that must pay an increased dividend in 2015 to retain dividend streak status:

DivGro holdings whose streak will end without any increase by the end of 2016 include Chevron Corp (NYSE:CVX) and Starwood Property Trust Inc (NYSE:STWD):

Finally, a few stocks could have their dividend streaks disrupted due to merger or spin-off activity. DivGro holding Baxter International Inc (NYSE:BAX) just spun off Baxalta (NYSE:BXLT) and PartnerRe Limited (NYSE:PRE) is merging with Axis Capital Holdings Limited (NYSE:AXS). At this point, it is uncertain whether BAX and PRE will retain their dividend streaks.

Do you own any stocks in David Fish's 2015 and 2016 death watch lists? Do you sell stocks that fail to pay increased dividends in more than 2 consecutive years? Please comment below!