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2022-03-25T17:24:00.002-05:00

The Most Important Financial Statement When Selecting Dividend Growth Stocks

2021-09-14T01:00:00.003-05:00

We all know what surprising the street will do to a stock's price. The street focuses on quarterly revenue, EPS, EBIT, EBITDA and margins. The income statement is where you find all the metrics that the street loves. Therefore, the income statement must be the most important financial statement... or is it?

In my opinion the most important financial statement is the lowly cash flow statement. Unfortunately, it is probably the least used and most misunderstood statement. Ultimately cash flow is what drives the value of any financial asset. The reason analysts look at revenue, EPS, EBIT, EBITDA and margins, they are trying to estimate a cash flow number.

The balance sheet is a snapshot of a company's financial position (assets and liabilities) at a single point in time, while the income statement summarizes a company's income and expenses over an interval of time to determine if a profit was earned. Both of these financial statements are prepared using accrual-basis accounting which matches revenues with the associated expenses to generate those revenues in the same period. This leads to a disconnect between cash and earnings.

For example, during the quarter a company sells some surplus land for cash. The attorney who handled the paperwork did not bill the company by the end of the quarter. Under U.S. accounting rules, you would record an expense on the income statement and a liability to pay the attorney on the balance sheet, although no cash has been paid. The balance sheet and income statement are not the best places to look when you want to understand what is going on with cash.

The cash flow statement is not based on accrual accounting, but instead is a cash-basis report focusing on inflows and outflows of cash. It adjusts out transactions that do not directly affect cash receipts and payments, such as adding depreciation back to net earnings. The cash flow statement allows investors to understand how a company's operations are running, where the cash is coming from and how it is being spent.

Transactions are categorized into the cash flow statement's three sections of operating, investing and financing activities. The accounting rules are very specific in defining what goes into each section, which ensures a degree of comparability between companies. Below is a short description of each section:

Operating activities measure cash generated from core business operations – the sale of the company’s products and services. Included here are income and costs associated with production, sales, delivery, as well as collecting cash from customers. Cash from operating activities should always be positive and greater than the company's net income. Earnings are considered "high quality" when operating cash flow is consistently greater than net earnings. If operating cash flow is less than net earnings, this is a strong signal you need to look deeper into the financials with a critical eye.

Investing activities focus on the purchase of the long-term assets the company needs to make and sell its products, along with any sales of long-term assets. This section also includes business acquisitions and strategic investments.

Financing activities include the inflow of cash from the sale of stock or issuance of debt, as well as the outflow of cash as dividends, purchases of treasury stock and repayment of debt.

When evaluating the sustainability of a company's dividend, I focus on Free Cash Flow. Free Cash Flow is Operating Cash Flow less normal capital expenditures (normally the first line in the investing section). For a business to remain viable, it must replace capital assets when they wear out. The next step is to compare Free Cash Flow with cash used to pay dividends. For that I calculate a Free Cash Flow Payout ratio.

The formula for Free Cash Flow Payout is simply Annual Dividend Per Share divided by Free Cash Flow Per Share. I like to see a percentage of 70% or less. The 70% is somewhat higher than many people look for with a traditional earnings-based payout ratio. I am comfortable with the higher number since we are talking about real cash generated from running the business vs. accounting earnings that may or may not be there.

This week, I screened my dividend growth stocks database for stocks that have a Free Cash Flow Payout of 55% or less, have increased dividends for at least 25 consecutive years, rated 3-stars or better and have a yield in excess of 2.5%. The select results are presented below:

Tompkins Financial (TMP) provides a full range of banking and financial service products to individuals, corporations and municipal customers in the U.S. Northeast. Yield: 2.7%

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. Yield: 3.4%

Franklin Resources Inc. (BEN) is one of the world's largest asset managers, serving retail, institutional and high-net-worth clients. Yield: 3.4%

Community Trust Bank Corp. (CTBI) owns and operates Community Trust Bank, Inc., which provides commercial banking services in Kentucky, Tennessee and West Virginia; and a trust company. Yield: 3.8%

Walgreens Boots Alliance, Inc. (WBA) is the largest U.S. retail drug chain in terms of revenues, this company operates more than 8,000 drug stores throughout the U.S. and Puerto Rico. Yield: 3.9%

Abbvie Inc. (ABBV) is a global research-based pharmaceuticals business that emerged as a separate entity following its spin-off from Abbott Laboratories at the start of 2013. AbbVie's key drug is Humira for rheumatoid arthritis. Yield: 4.4%

Mercury General Corp. (MCY), operating primarily in California, writes a full line of automobile coverage for all classifications of risk. Yield: 4.3%

Conclusion:

As an investor, you want to pay close attention to the cash flow statement. Given the complexity of today’s accounting rules, earnings on the income statement and assets and liabilities on the balance sheet are often misleading (e.g. mark-to-market of a derivative, recording an asset for an asset retirement obligation).

When a company consistently generates more cash than it uses, it will be able to increase dividends paid, buy back shares, reduce debt, or acquire another company. As a dividend investor, I want to know my company is financially capable of paying me a higher dividend each year, and the cash flow statement is the first place to look when making this determination.

How do you use the cash flow statement when evaluating a company?

Full Disclosure: Long LEG, CTBI, ABBV, MCY,

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Kroger and John Wiley Reward Shareholders With Dividend Increases

2021-06-28T15:42:00.005-05:00

As part of my monitoring process, I review the list of dividend increases every week. This exercise helps me to monitor events related to companies I own, in order to keep up with them better. It also helps me identify companies for further research.

I usually focus my attention on the companies that have managed to increase dividends for at least a decade. That’s because my goal is to find companies for long-term investment, which I can hopefully hold for decades. I am not interested in buying a stock that I then have to sell a few years down the road. I am interested in companies that can deliver performance for long periods of time.

There were two companies that raised dividends last week, which also have managed to boost dividends for at least a decade:

The Kroger Co. (KR) operates as a retailer in the United States.

Kroger raised its quarterly dividend by 16.70% to 21 cents/share. This marks the 15th consecutive year of annual dividend increases. The company continues to expect, subject to board approval, an increasing dividend over time. Over the past decade, Kroger has managed to increase dividends at an annualized rate of 13.30%.

I love hearing from the company executives, when they announce a dividend increase:

"In recognition of our strong performance during the last year, we are proud to increase the quarterly dividend at a higher rate than our historical average," said Rodney McMullen, Kroger's Chairman and CEO. "This increase reflects the Board of Directors' confidence in the strength of our free cash flow and our ability to deliver consistently strong and attractive total shareholder returns."

"Kroger remains committed to investing in the business to drive long-term sustainable net earnings growth, maintaining its current investment grade debt rating, and returning excess free cash flow to shareholders via share repurchase and a growing dividend over time. The company actively balances the use of its adjusted free cash flow to achieve these goals."

The company managed to grow earnings from 51 cents/share in 2011 to $3.27/share in 2020. Kroger is expected to earn $3.04/share in 2021.

The stock is selling for 12.86 times forward earnings and yields 2.15%. I find Kroger to be an interesting company for review. Check my analysis of Kroger for more information about this dividend achiever.

John Wiley & Sons, Inc. (JW.A) operates as a research and learning company worldwide.

John Willey & Sons raised its quarterly dividends by 0.70% to 34.50 cents/share. It was Wiley’s 28th consecutive annual increase. Over the past decade, this dividend champion has managed to raise dividends at an annualized rate of 8.60%. However, the 5 year rate is down to 3%.

The company is expected to earn $2.91/share in 2021. For reference, the company earned $2.80/share in 2011, which is not much of a growth.

The stock is selling for 19.73 times forward earnings and yields 2.41%. Given the lack of earnings growth over the past decade, I view it as a hold at best today.

Relevant Articles:

- Realty Income Delivers High Yields and Dependable Dividend Growth

- Nine Dividend Growth Stocks Rewarding Shareholders With Raises

- Ten Dividend Stocks For Further Monitoring

- Five Dividend Growth Stocks Rewarding Shareholders With Raises

With Dividend Growth Stocks, Cash Is King

2021-06-14T02:00:00.003-05:00

Are you looking for companies that can sustain and grow their dividend? In making that determination, a company's Statement of Earnings is one of the last places you should look. Cash is king for the dividend growth investor and the Statement of Cash Flows is where astute investors begin when they want to understand the viability of a company.

It's not that most companies have done anything wrong when preparing their Statement of Earnings, but under Generally Accepted Accounting Principles (GAAP) a lot of the entries have nothing to do with today's operations. Given this, I generally avoid most earnings related metrics (e.g. EBIT, EBITDA, payout ratio, etc.) Instead I focus on cash-based metrics, such as these:

Free Cash Flow - This has many definitions, but the one I use is operating cash flow less capital expenditures. Capital expenditures are deducted since you can't run a business for any period of time without expending some level of capital. These two numbers are easily located on the Statement of Cash Flows. This is the best snapshot of what cash the business has generated from "normal" operations and is available for dividends, debt, acquisitions and purchases of treasury stock.

Cash Flow Per Diluted Share - GAAP Earnings Per Share (EPS) has the same short-comings as GAAP earnings. When looking at EPS numbers I prefer a cash-based number. Cash Flow Per Diluted Share is calculated by taking the Free Cash Flow from above and dividing it by diluted shares outstanding (available on the Statement of Earnings).

Cash Payout Ratio - Dividend investors love payout ratios (dividends per share/EPS). Given my concerns with GAAP earnings and EPS, I once again prefer a cash-based version. The Cash Payout Ratio is calculated by dividing dividends per share by Cash Flow Per Diluted Share. Care should be taken when interpreting this ratio. For example, sometimes a high ratio with low debt is better than a low ratio with high debt.

Debt to Total Capital - Total capital is the sum of debt plus shareholders equity (both available on the Balance Sheet - don't forget the debt classified as short-term). Businesses are generally funded in one of two ways, equity or debt. Normally debt is more expensive than equity, while additional equity can potentially dilute current shareholders over the long-term. I consider a good balance to be 35% debt and 65% equity. I see the upper end for debt as 50% and then there needs to be a good reason for being there.

Cash Return on Capital Employed - This is simply Free Cash Flow divided by Total Capital (both are defined above). Again, I prefer using a cash number in the numerator. A lot of investors look at return on assets and return on equity. Each are flawed beyond their GAAP numerator. Return on assets ignores the liabilities side of the balance sheet, while return on equity ignores the debt component of capital.

To succeed as a dividend investor, you must find companies that can sustain and grow dividends by focusing on their ability to generate cash. You can fake earnings, but you can't fake cash.

Full Disclosure: No position in the aforementioned securities.

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This article was written by Dividends4Life. If you enjoyed this article, please subscribe to my feed [RSS] or have future articles emailed to you [Email].

Six Reliable Dividend Growth Stocks Rewarding Shareholders With Raises

2021-03-22T12:08:00.004-05:00

I review the list of dividend increases weekly, as part of my portfolio monitoring process. I usually narrow the list down to companies with at least a ten year history of annual dividend increases.

The next involves reviewing each company in sufficient detail, in order to determine if dividend increases are based on solid fundamentals. This review includes looking at trends in earnings per share, dividends per share, payout ratios as good start. The goal is to determine the likelihood of future dividend increases.

The last review point includes valuation. In general, I try to avoid overpaying for companies. Valuation is more art than science however ( as is investing in general). This is why it is important to look at relative valuations and growth in the opportunity set, not just focus on absolute numbers.

These steps keep me in fighting shape, and help me monitor as many companies in the investable dividend growth universe in advance. This helps me to be prepared when the right opportunity at the right price comes along.

Over the past week, there were six companies which raised dividends to shareholders. Each company has a minimum ten year streak of annual dividend increases under its belt. The companies include:

Realty Income (O) increased its monthly dividend to 23.50 cents/share. That's a 1.73% increase over the dividend paid during the same time last year. Over the past decade, Realty Income has managed to increase dividends at an annualized rate of 4.90%. This dividend aristocrat has managed to grow dividends since 1994.

Between 2010 and 2020, Realty Income managed to grow FFO from $1.83/share to $3.31/share. Realty Income is expecting to generate FFO of $3.26 - $3.34/share in 2021.

The stock sells for 18.29 times FFO and yields 4.57%. Check my analysis of Realty Income for more information about the company.

WD-40 Company (WDFC) develops and sells maintenance products, and homecare and cleaning products in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific. The company increased its quarterly dividend by 7.46% to 72 cents/share. This marked the 12th consecutive year of dividend increases for this dividend achiever. Over the past decade, the company has managed to increase distributions at an annualized rate of 10.10%.

Between 2010 and 2020, the company grew earnings from $2.15/share to $4.40/share. WD-40 is expected to earn $5.51/share in 2021.

The stock sells for 53.87 times forward earnings and yields 0.97%.

Williams-Sonoma, Inc. (WSM) operates as an omni-channel specialty retailer of various products for home. The company raised its quarterly dividend by 11.32% to 59 cents/share. This marked the 16th consecutive annual dividend increase for this dividend achiever. Over the past decade the company has managed to increase dividends at an annualized rate of 13.60%.

Between 2011 and 2021, the company grew earnings from $1.83/share to $8.61/share. Williams-Sonoma is expected to earn $9.22/share in 2022.

The stock sells for 18.96 times forward earnings and offers a current yield of 1.35%

UDR, Inc. (UDR) is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate communities in targeted U.S. markets. The REIT hiked its quarterly dividends by 0.69% to 36.25 cents/share. This marked the tenth consecutive year of annual dividend increases for UDR. Over the past decade, the REIT has managed to hike dividends at an annualized rate of 7%.

Between 2011 and 2020, FFO/share grew from $1.28 to $1.85. The REIT is expected to earn $1.95/share in 2021.

The stock sells for 22.26 times FFO and yields 3.35%

Horizon Bancorp, Inc. (HBNC) operates as the bank holding company for Horizon Bank that provides a range of commercial and retail banking services. The company raised its quarterly dividend by 8.33% to 13 cents/share. This marked the tenth consecutive annual dividend increase for this newly minted dividend achiever. During the past decade, the company has been able to increase dividends at an annualized rate of 13.60%.

Between 2010 and 2020, the company grew earnings from $0.54/share to $1.55/share. Horizont Bancorp is expected to earn $1.45/share in 2021.

The stock is selling for 13.40 times forward earnings and yields 2.67%.

Independent Bank Corp. (INDB) operates as the bank holding company for Rockland Trust Company that provides commercial banking products and services to individuals and small-to-medium sized businesses primarily in Massachusetts. The bank hiked its quarterly dividend by 4.34% to 48 cents/share, marking the tenth consecutive annual dividend increase. It has managed to grow dividends at an annualized rate of 9.70% over the past decade.

The bank earned $2.12/share in 2011 and is expected to grow earnings to $3.95/share by 2021.

The stock is selling for 22.93 times forward earnings and yields 2.12%.

Relevant Articles:

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4 Higher-Yielding Consumer Stocks With A History of Rising Dividends

2021-02-22T02:00:00.006-06:00

When it comes to investing in Dividend Growth Stocks certain sectors have been more favorable to investors than others. Historically, the sectors most popular with dividend investors include Financial Services, Healthcare and Consumer Defensive. Each has provided good yields and growth over the years.

Financial Services has provided above average yields with dividend growth. This sector is not nearly as popular with dividend growth investors as it once was due to the 2008 financial meltdown. Understandably, there is an air of skepticism with these stocks and their management teams.

Healthcare, primarily pharmaceuticals, also has provided above average yields with dividend growth. The downside to pharmaceuticals is that drugs eventually go off patent so the companies must constantly innovate and keep new products in the pipeline.

However, the most steady performer over the years for both yield and growth is the Consumer Defensive sector. This sector includes companies that make and sell products such as soap, detergent, deodorant, toothpaste, etc. These are products that we need, or are willing to purchase, no matter what the economy is doing. They are relatively inexpensive, so in an economic downturn consumers continue to purchase them with no lifestyle changes.

This week, I screened my dividend growth stocks database for select Consumer Defensive companies with a yield at or above 3.0% and that have increased their dividends for at least 10 consecutive years. The results are presented below:

Kellogg Company (K) is a leading producer of ready-to-eat cereal also sells snack and convenience foods such as cookies, crackers, potato chips, cereal bars, fruit snacks and frozen waffles. The company has paid a cash dividend to shareholders every year since 1923 and has increased its dividend payments for 16 consecutive years. Yield: 4.0%

Kimberly Clark Corp. (KMB) is a global consumer products company producing tissue, personal care and health care brands include Huggies, Pull-Ups, Kotex, Depend, Kleenex, and Scott. The company has paid a cash dividend to shareholders every year since 1935 and has increased its dividend payments for 48 consecutive years. Yield: 3.5%

The Coca-Cola Company (KO) is the world's largest soft drink company, and also has a sizable fruit juice business. The company has paid a cash dividend to shareholders every year since 1893 and has increased its dividend payments for 58 consecutive years. Yield: 3.2%

Flowers Foods, Inc. (FLO) is one of the largest producers and marketers of bakery products in the United States. The company has paid a cash dividend to shareholders every year since 2002 and has increased its dividend payments for 18 consecutive years. Yield: 3.5%

As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.

My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 150+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.

Full Disclosure: Long KMB, KO,

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This article was written by Dividends4Life. If you enjoyed this article, please subscribe to my feed [RSS] or have future articles emailed to you [Email].

Fourteen Dividend Growth Stocks Raising Dividends For Shareholders

2021-02-17T03:00:00.001-06:00

In my monitoring process, I tend to analyze companies I own once every 12 to 18 months. However, I also receive push notifications such as annual reports, quarterly press releases, dividend increase notifications. Since most companies I focus on are major multi-national corporations, if they do something significant, it makes the business news.

I review the list of dividend increases every week, as part of my monitoring process. I focus on the companies with at least a ten year history of annual dividend increases, in order to reduce noise.

This process is helpful in monitoring how existing holdings are doing. It is also helpful in uncovering companies for future research.

Auburn National Bancorporation, Inc. (AUBN) operates as the bank holding company for AuburnBank that provides various banking products and services in East Alabama.

The company raised its quarterly dividend by 2% to 26 cents/share. This marked the 20th year of annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 2.70%.

Between 2010 and 2020, the company managed to grow earnings from $1.47/share to $2.09/share

The company sells for 18.80 times earnings and yields 2.65%

Brookfield Asset Management (BAM) is a leading global alternative asset manager and one of the largest investors in real assets.

The company raised its quarterly dividend by 8.33% tp 13 cents/share.

This is the tenth year of consecutive annual dividend increases for this international dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 9.20%.

The stock yields 1.21%.

CSX Corporation (CSX) provides rail-based freight transportation services.

The railroad hiked its quarterly dividend by 7.69% to 28 cents/share.

This is the 17th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 12.30%.

CSX Corp earned $1.35/share in 2010, and managed to grow profits to $3.60/share by 2020.

The stock is selling for 20.63 times forward earnings and yields 1.24%.

Eversource Energy (ES) a public utility holding company, engages in the energy delivery business. The company operates in four segments: Electric Distribution, Electric Transmission, Natural Gas Distribution, and Water Distribution.

This utility company raised its quarterly dividends by 6.17% to 60.25 cents/share.

This was the 23rd consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 8.30%.

Between 2009 and 2019, the company managed to grow earnings from $1.91/share to $2.81/share.

The company is expected to earn $3.64/share in 2020.

The stock is selling for 23.41 times forward earnings and yields 2.83%.

NextEra Energy, Inc. (NEE) generates, transmits, and distributes electric power in North America.

NextEra increased its quarterly dividend by 10% to 38.50 cents/share.

This marked the 26th year of annual dividend increases for this dividend aristocrat. Over the past decade, the company has managed to increase dividends at an annualized rate of 10.80%.

The company earned $1.15/share in 2011 and is expected to earn $2.52/share in 2021.

The stock is selling for 33 times forward earnings and yields 1.85%.

Nu Skin Enterprises, Inc. (NUS) develops and distributes personal care and wellness products worldwide. NuSkin raised its quarterly dividend by 1.33% to 38 cents/share.

That was the 21st year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 11.60%.

Between 2009 and 2019, the company managed to grow earnings from $1.40/share to $3.10/share. Nu Skin Enterprises is expected to earn $3.99/share in 2020.

The stock is selling for 12.24 times forward earnings and yields 3.11%.

NorthWestern Corporation (NWE) provides electricity and natural gas to residential, commercial, and industrial customers. The company operates through Electric Operations and Natural Gas Operations segments.

NorthWestern raised its quarterly dividend by 3.33% to 62 cents/share.

This was the 17th year of annual dividends increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 5.80%.

Between 2009 and 2019, the company managed to increase earnings from $2.02/share to $3.98/share.

NorthWestern is expected to earn $3.51/share in 2021.

The stock is selling for 12.24 times forward earnings and yields 3.11%

Primerica, Inc. (PRI) provides financial products to middle income households in the United States and Canada. The company operates in three segments: Term Life Insurance; Investment and Savings Products; and Corporate and Other Distributed Products.

The company raised its quarterly dividend by 17.50% to 47 cents/share.

This marked the 12th year of annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 55%.

The company is expected to earn $11.05/share in 2021.

The stock is selling for 12.83 times forward earnings and yields 1.33%.

Robert Half International Inc. (RHI) provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. The company operates through three segments: Temporary and Consultant Staffing, Permanent Placement Staffing, and Risk Consulting and Internal Audit Services.

The company raised its quarterly dividends by 11.76% to 38 cents/share.

This was the 18th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 10.10%.

Between 2010 and 2020, the company managed to increase earnings from 44 cents/share to $2.70/share. The company is expecting to earn $3.35/share in 2021.

The stock is selling for 22 times forward earnings and yields 2.06%.

Sonoco Products Company (SON) manufactures and sells industrial and consumer packaging products in North and South America, Europe, Australia, and Asia. The company operates through four segments: Consumer Packaging, Display and Packaging, Paper and Industrial Converted Products, and Protective Solutions.

The company raised its quarterly dividend by 4.65% to 45 cents/share.

That was the 39th year of annual dividend increases for this dividend champion. Over the past decade, the company has managed to increase dividends at an annualized rate of 4.50%.

The company earned $2.13/share in 2011 and is expecting to earn $3.54/share in 2021.

The stock is selling for 16.90 times forward earnings and yields 3%.

T. Rowe Price Group, Inc. (TROW) is a publicly owned investment manager.

The company raised its quarterly dividend by 20% to $1.08/share.

This marked the 35th consecutive annual dividend increase for this dividend aristocrat. Over the past decade, the company has managed to increase dividends at an annualized rate of 12.80%.

Between 2010 and 2020, the company has managed to grow earnings from $2.53/share to $9.98/share.

The company is expected to earn $11.98/share in 2021.

The stock is selling for 13.70 times forward earnings and yields 2.65%.

United Parcel Service, Inc. (UPS) provides letter and package delivery, specialized transportation, logistics, and financial services. It operates through three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight.

UPS raised its quarterly dividend by 1% to $1.02/share.

That’s the 12th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 7.90%.

The company earned $3.84/share in 2011, and is projected to earn $8.92/share in 2021.

The stock is selling for 18.32 times forward earnings and yields 2.50%.

Cisco Systems, Inc. (CSCO) designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China.

Since initiating a dividend in 2011, Cisco has been rewarding shareholders with a raise annually. The last dividend increase was in February 2021, when the company raised distributions by 2.77% to 37 cents/share. Cisco has a 5-year annualized dividend growth of 13.30%.

The company managed to grow earnings from $1.33/share in 2010 to $2.64/share in 2020.

Cisco sells for 14.70 times forward earnings and yields 3.13%

PepsiCo, Inc. (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA).

PepsiCo announced a 5.10 percent increase in its annualized dividend to $4.30 per share.

The company is a dividend aristocrat, which has increased distributions for 49 years in a row.

Between 2010 and 2020, PepsiCo managed to grow its earnings from $3.91/share to $5.12/share. The company is expected to earn $6.06/share in 2021.

The stock is selling for 22.10 times forward earnings and yields 3.21%.

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- Busiest Week For Dividend Increases Ever

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- How to read my weekly dividend increase reports

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Are Defense Stocks Good Defensive Stocks?

2021-02-16T02:00:00.006-06:00

When the economy and the market starts heading south, many investors start buying dividend growth stocks. They have long been considered a defensive position in turbulent times. Given these investors defensive stance, one might ask how about some real defense stocks, as in the Aerospace and Defense industry.

With a steady flow of government money, defense stocks have long been considered a safe haven when the economy slows down and the market begins to sputter. However, with so many countries around the world, including the U.S., facing huge budget deficits, defense spending is where many politicians are looking for significant spending cuts.

Below are several defense stocks to consider and how they might be affected in the future:

Lockheed Martin Corp. (LMT)
This company, the world's largest military weapons manufacturer, is also a significant supplier to NASA and other non-defense government agencies. With over 90% of its revenues from global defense sales, LMT will be hard-pressed to escape unblemished when the budgetary ax falls. The stock boasts a yield of 3.2% after its most recent dividend increase.

Northrop Grumman Corp. (NOC)
This company is the world's third largest producer of military arms and equipment, with about 90% of its revenue from defense, and also has a large government IT services business. To the company's credit it has streamlined its business to focus on more profitable contracts such as command, control, communications, computers, intelligence, surveillance, and reconnaissance, or C4ISR; cybersecurity; unmanned aerial systems; manned aircraft; and services and logistics. NOC's lower yield of 2.0% reflects its strong balance sheet, low free cash flow payout (36%) and debt to capital (28%).

Raytheon Technologies Corporation (RTX)
Raytheon, the world's sixth largest military contractor, specializes in making high-tech missiles, advanced radar systems and sensors, defense electronics, and missile-defense systems. As a result of its non-platform-centric focus, RTN is one of the best-positioned companies among the large-cap defense players. Its diversified military products and GaN technology have helped the company gain a mixture a small and big defense contracts. Approximately 80 countries purchase the company's products. Yielding about 2.9%, RTN's free cash flow payout (86%) is above my desired maximum and has a good debt to capital (33%).

General Dynamics Corp (GD)
General Dynamics is the world's fourth largest military contractor and also one of the world's biggest makers of corporate jets. GD, with its diversified offerings, is also in a good position to survive defense spending cuts. The company's Aerospace business continues to enjoy a significant backlog for large-cabin aircraft, and should remain strong over the next several years. There is an opportunity to see margins expand as production becomes increasingly efficient. GD's strong balance sheet, low free cash flow payout (54%) and low debt to capital (27%) make it an appealing stock. However, its low yield of 3.0% will keep me from adding to my position in the near-term.

Aerospace and defense companies that do a lot of government work usually enjoy long contracts and are in a good position to weather economic downturns. However, to varying degrees, each of the above companies also is engaged in non-government commercial business that could be adversely affected by the next economic downturn. There is certainly a spot for defense stocks in my dividend growth portfolio, but I will patiently wait for the right time and entry point.

Full Disclosure: Long LMT, RTN, GD in my Dividend Growth Portfolio.

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Tags: LMT, NOC, RTN, GD,

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Eight Dividend Paying Companies Growing Dividends Like Clockwork

2021-02-09T05:00:00.002-06:00

As part of my review process, I look at the dividend increases every week. I use the following resources to compile this list, if you are interested to learn more about it.

I tend to narrow my attention down to the companies that have managed to increase dividends for at least ten years in a row. This helps me monitor how my existing investments are doing and also identify some emerging dividend growth success stories early on.

During the past week, there were several companies that managed to raise dividends to shareholders. The companies are listed below:

3M Company (MMM) develops, manufactures, and markets various products worldwide. It operates through four business segments: Safety and Industrial, Transportation and Electronics, Health Care, and Consumer.

The company raised its quarterly dividend by 0.68% to $1.48/share

This marks the 63rd consecutive year 3M has increased its dividend. 3M is a dividend king that has paid dividends to its shareholders without interruption for more than 100 years.

The pace of dividend increases has definitely slowed down in recent years, and is a far cry from the ten year dividend growth rate of 10.84%.

Between 2010 and 2020, 3M managed to boost earnings from $5.63/share to $9.25share. The company is expected to earn $9.61/share in 2021.

The stock seems fairly valued at 18.62 times forward earnings and a dividend yield of 3.30%.

Avista Corporation (AVA) operates as an electric and natural gas utility company. It operates through two segments, Avista Utilities and AEL&P.

The company raised its quarterly dividend by 4.30% to 42.25 cents/share. The dividend increase marks the nineteenth consecutive year of dividend increases for this dividend achiever.

Avista has managed to increase dividends at an annualized rate of 4.94% during the past decade.

Between 2009 and 2019, Avista managed to grow earnings from $1.58/share to $2.97/share. Avista is expected to earn $1.84/share in 2020.

The stock is selling for 20.75 times forward earnings and yields 4.40%.

Activision Blizzard, Inc. (ATVI) develops and distributes content and services on video game consoles, personal computers (PC), and mobile devices in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through three segments: Activision Publishing, Inc.; Blizzard Entertainment, Inc.; and King Digital Entertainment.

The Board of Directors declared an annual dividend of $0.47 per common share, which represents a 14.63% increase from 2020. This marked the 11th year of consecutive annual dividend increases for this dividend achiever.

Over the past decade, Activision Blizzard has managed to increase dividends at an annualized rate of 10.58%.

The company managed to grow earnings from 33 cents/share in 2010 to $$2.22/share in 2020. The company is expected to earn $3.51/share in 2021.

The stock is valued at 28.95 times forward earnings and yields 0.46%.

CME Group Inc. (CME) operates contract markets for the trading of futures and options on futures contracts worldwide.

The company raised its quarterly dividend by 5.88% to 90 cents/share. This marked the 11th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, CME Group has managed to grow distributions at an annualized rate of 13.96%.

CME Group managed to boost earnings from $2.48/share in 2009 to $5.91/share in 2019. The company is expected to earn $6.76/share in 2020.

The company’s stock is selling for 28.31 times forward earnings. CME Group yields 1.88%. This figure does not include the special dividend that is has paid regularly over the past few years – the last payment was for $2.50, which is an extra 1.30% yield.

Quest Diagnostics Incorporated (DGX) provides diagnostic testing, information, and services in the United States and internationally.

Quest Diagnostics raised its quarterly dividend by 10.70% to 62 cents/share. This marked the 10th consecutive annual dividend increase for this newly minted dividend achiever. Over the past decade, the company has managed to raise dividends at an annualized rate of 18.64%.

Between 2010 and 2020, Quest Diagnostics managed to increase earnings from $4.05/share to $8.94/share. The company is expected to earn $10.95/share in 2021.

The stock is selling for 11.12 times forward earnings and yields 2.03%. This looks like an interesting company that is selling at a cheap price, that also grows earnings and dividends. I would put it on my list for further research.

Corning Incorporated (GLW) engages in display technologies, optical communications, environmental technologies, specialty materials, and life sciences businesses worldwide.

The company raised its quarterly dividend by 9.09% to 24 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. Over the past decade it has managed to boost dividends at an annualized rate of 15.97%.

Corning is expecting to earn $1.96/share in 2021, which is only slightly higher than 2011's earnings of $1.78/share.

The stock is selling for 19.09 times forward earnings and yields 2.56%.

Prudential Financial, Inc. (PRU) provides insurance, investment management, and other financial products and services. It operates through eight segments: PGIM, Retirement, Group Insurance, Individual Annuities, Individual Life, Assurance IQ, International Businesses, and Closed Block.

The company hiked quarterly dividends by 4.50% to $1.15/share. This marked the 13rd consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has actually managed to grow dividends at an annualized rate of 14.36%.

Prudential Financial is expected to earn $11.71/share in 2021. For comparison, Prudential Financial earned $7.12/share in 2010. The company’s earnings per share are all over the place due the cyclical nature of the insurance industry.

The stock is selling for 6.85 times forward earnings and yields 5.73%.

RenaissanceRe Holdings Ltd. (RNR) provides reinsurance and insurance products in the United States and internationally. The company operates through Property, and Casualty and Specialty segments.

The company raised its quarterly dividend by 2.86% yo 36 cents/share. This marked the 26th consecutive annual dividend increase for this dividend champion. During the past decade, RenaissanceRe Holdings has managed to increase distributions at an annualized rate of 3.42%/year.

RenaissanceRe is expected to earn $14.69/share in 2021.

The stock is selling for 10.84 times forward earnings and yields 0.90%.

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- How to read my weekly dividend increase reports

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Turbo Charge Your Portfolio With Reinvested Dividends

2020-12-22T13:07:00.000-06:00

It is well-documented that a significant portion of the historical equity returns are a result of reinvested dividends. In Triumph of the Optimists: 101 Years of Global Investment Returns (2002), the authors looked at equity returns from capital gains and dividends from 1900 to 2000. They determined that performance in any given year was driven by capital appreciation, but long-term returns were largely the result of reinvested dividends. Looking at 101 years of data in the U.S. and U.K., they found that a market-oriented portfolio with dividends reinvested would have generated nearly 85 times the wealth of the same portfolio relying solely on capital gains.

When most people hear the phrase dividend reinvestment, they will often associate it with dividend reinvestment plans (DRIPs). Many companies offer DRIPs through their transfer agent. Instead of sending dividend checks to shareholders enrolled in the company's DRIP, the company reinvests those dividends by purchasing additional shares (or fractional shares) in the shareholder's name. Most plans will reinvest a shareholder's dividends without a fee or commission. Some brokerages offer similar plans.

It is important to note that you can reinvest dividends without participating in a formal DRIP plan. Personally I have chosen not to participate in a formal DRIP plan. I prefer the flexibility of determining where my dividends are invested. I add them to my normal monthly investment, thus I do not incur any additional commissions.

Do you reinvest dividends through a formal program, independently or not at all?

Full Disclosure: No position in the aforementioned securities.

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Fourteen Companies Spreading Holiday Cheers To Shareholders

2020-12-16T03:00:00.002-06:00

As part of my review process, I evaluate dividend increases every week. This process helps me to see how my portfolio holdings are doing. It also helps me to uncover and review new candidates for my portfolio.

I look for dependable dividends from companies with a minimum ten-year streak of annual dividend increases, fueled by earnings growth. I look for dependable dividends from companies with dependable earnings, and solid competitive advantages, which I can acquire at attractive valuations.

During the past week, the following companies increased dividends to shareholders. Each company has a ten year streak of annual dividend increases. I review the latest dividend increase relative to the ten year average, and the growth in earnings per share over the past decade. Last but not least, I discuss current valuation. The companies include:

Bristol-Myers Squibb Company (BMY) discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers products in hematology, oncology, cardiovascular, and immunology therapeutic classes.

Bristol Myers Squibb increased its quarterly dividend by 8.90% to 49 cents/share. This marks the twelfth consecutive fiscal year that Bristol Myers Squibb increased its dividend payouts. Over the past decade, this dividend achiever has managed to grow dividends at an annualized rate of 2.80%. I am glad to see it starting to kickstart earnings and dividend growth.

The company is expected to earn $6.38/share in 2020.

The stock is selling for 9.50 times forward earnings and yields 3.23%. Check my analysis of Bristol-Myers Squibb for more information about the company.

Abbott Laboratories (ABT) discovers, develops, manufactures, and sells health care products worldwide.

Abbott raised its quarterly dividend by 25% to 45 cents/share. Abbott has increased its dividend payout for 49 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index. The company has managed to increase dividends at an annualized rate of 7.80% over the past five years.

The company is expected to generate $3.55/share in 2020

Abbott stock is selling for 30.10 times forward earnings and yields 1.68%.

Pfizer Inc. (PFE) develops, manufactures, and sells healthcare products worldwide.

Pfizer increased its quarterly dividend by 2.60% to 39 cents/share. That marked the tenth year of consecutive annual dividend increases for the company. Over the past decade, Pfizer has managed to increase distributions at an annualized rate of 6.10%.

The company is expected to earn $2.84/share in 2020.

The stock is selling for 14.25 times forward earnings and yields 3.80%.

Mastercard Incorporated (MA), a technology company, provides transaction processing and other payment-related products and services in the United States and internationally.

Mastercard hiked its quarterly dividend by 10% to 44 cents/share. Mastercard has managed to increase dividends at an annualized rate of 36.20% over the past decade.

The company is expected to earn $6.36/share.

The stock sells at 51.50 times forward earnings and yields 0.54%.

Casey's General Stores, Inc. (CASY) operates convenience stores under the Casey's and Casey's General Store names.

Casey’s General Stores raised its quarterly dividend by 6.30% to 34 cents/share. That’s the 21st consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to increase distributions at an annualized rate of 14.30%.

The company is expected to earn $8.32/share in 2021.

The stock sells for 21.68 times forward earnings and yields 0.78%.

W. P. Carey Inc. (WPC) is an independent equity real estate investment trust. The firm also provides long-term sale-leaseback and build-to-suit financing for companies. It invests in the real estate markets across the globe. The firm primarily invests in commercial properties that are generally triple-net leased to single corporate tenants including office, warehouse, industrial, logistics, retail, hotel, R&D, and self-storage properties.

W.P. Carey raised its quarterly dividend by 0.20% to 1.046/share. This is an 0.80% increase over the dividends from the same time last year. Annualized dividend growth has been slowing down over the past one, three and five years.

The REIT sells for 14.50 times forward FFO and yields 6.10%. Check my analysis of W.P. Carey for more information on this dividend achiever.

SEI Investments Company (SEIC) is a publicly owned asset management holding company.

SEI Investments increased semi-annual dividends by 5.70% to declares $0.37/share. This marked the 30th consecutive annual dividend increase for this dividend champion. Over the past decade, the company managed to increase dividends at an annualized rate of 15.20%.

The company is expected to earn $2.91/share in 2020.

The stock is selling for 19.22 times forward earnings and offers a dividend yield of 1.31%.

Erie Indemnity Company operates as a managing attorney-in-fact for the subscribers at the Erie Insurance Exchange in the United States.

ERIE Indemnity (ERIE) raised its quarterly dividend by 7.30% to $1.035/share. This marked the 31st year of annual dividend increases for this dividend champion. Over the past decade, the company managed to increase dividends at an annualized rate of 7.20%.

The company is expected to earn $5.67/share in 2020.

The stock sells for 42.27 times forward earnings and yields 1.77%.

Pentair plc (PNR) provides various smart water solutions worldwide. It operates through three segments: Aquatic Systems, Filtration Solutions, and Flow Technologies.

Pentair raised its quarterly dividend by 5.30% to 20 cents/share. 2021 will mark the 45th consecutive year that Pentair has increased its dividend.

The company is expected to earn $2.43/share in 2020.

The stock sells for 21.14 times forward earnings nad yields 1.55%.

CubeSmart (CUBE) is a self-administered and self-managed real estate investment trust. The Company's self-storage properties are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers.

CubeSmart raised its quarterly dividend by 3% to 34 cents/share. This is the 11th consecutive year of dividend increases for this dividend achiever. During the past decade, it has managed to grow dividends at an annualized rate of 29%.

The stock sells for 19.77 times forward FFO and yields 4.13%.

Mid America Apartment Communities (MAA), an S&P 500 company, is a real estate investment trust, or REIT, focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities in the Southeast, Southwest, and Mid-Atlantic regions of the United States.

Mid America Apartment Communities raised its quarterly dividends by 2.50% to $1.025/share. The REIT is a dividend achiever with 10 years of annual dividend increases under its belt. Over the past decade, it has managed to increase dividends at an annualized rate of 4.60%.

The stock sells at 19.28 times forward FFO and yields 3.37%.

Alexandria Real Estate Equities, Inc. (ARE) is a real estate investment trust that invests in office buildings and laboratories leased to tenants in the life science and technology industries.

Alexandria Real Estate Equities raised its quarterly dividends by 2.80% to $1.09/share. This is the second increase this year, bringing the new distribution to be 5.80% higher than the dividend paid during the same time last year. During the past decade, this REIT has managed to increase distributions at an annualized rate of 5.50%.

The stock is selling for 23.60 times forward FFO and yields 2.53%.

Norwood Financial Corp. (NWFL) operates as the bank holding company for Wayne Bank that provides various banking products and services.

Norwood Financial raised its quarterly dividend by 4% to 26 cents/share. This marks the twenty-ninth consecutive year of dividend increases for the Company. Over the past decade, the company has managed to increase dividends at an annualized rate of 3.90%.

The stock sells for 13.87 times forward earnings and yields 3.85%.

Trinity Industries, Inc. (TRN) provides rail transportation products and services in North America. It operates through three segments: Railcar Leasing and Management Services Group, Rail Products Group, and All Other.

Trinity raised its quarterly dividend by 10.50% to 21 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, the company managed to grow distributions at an annualized rate of 14.90%.

The company is expected to earn 42 cents/share in 2020.

The stock yields 3.25% and sells for a forward P/E of 62.

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McDonald's Corporation (MCD) Dividend Stock Analysis

2020-12-02T02:00:00.001-06:00

Linked here is a detailed quantitative analysis of McDonald's Corporation (MCD). Below are some highlights from the above linked analysis:

Company Description: McDonald's Corporation is the largest fast-food restaurant company in the world, with about 35,000 restaurants in 119 countries.

Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description:

1. Avg. High Yield Price
2. 20-Year DCF Price
3. Avg. P/E Price
4. Graham Number

MCD is trading at a premium to all four valuations above. Since MCD's tangible book value is not meaningful, a Graham number can not be calculated. When also considering the NPV MMA Differential, the stock is trading at a 14.7% premium to its calculated fair value of $186.02. MCD did not earn any Stars in this section.

Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:

1. Free Cash Flow Payout
2. Debt To Total Capital
3. Key Metrics
4. Dividend Growth Rate
5. Years of Div. Growth
6. Rolling 4-yr Div. > 15%

MCD earned one Star in this section for 3.) above. MCD earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1976 and has increased its dividend payments for 43 consecutive years.

Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:

1. NPV MMA Diff.
2. Years to > MMA

The NPV MMA Diff. of the $479 is below the $500 target I look for in a stock that has increased dividends as long as MCD has. If MCD grows its dividend at 6.6% per year, it will take 3 years to equal a MMA yielding an estimated 20-year average rate of 2.74%. MCD earned a check for the Key Metric 'Years to >MMA' since its 3 years is less than the 5 year target.

Peers: The company’s peer group includes: Yum! Brands, Inc. (YUM) with a 1.8% yield, Starbucks Corp. (SBUX) with a 1.8% yield and The Wendy's Company (WEN) with a 1.2% yield.

Conclusion: MCD did not earn any Stars in the Fair Value section, earned one Star in the Dividend Analytical Data section and did not earn any Stars in the Dividend Income vs. MMA section for a total of one Star. This quantitatively ranks MCD as a 1-Star Very Weak stock.

Using my D4L-PreScreen.xls model, I determined the share price would need to decrease to $210.31 before MCD's NPV MMA Differential increased to the $500 minimum that I look for in a stock with 43 years of consecutive dividend increases. At that price the stock would yield 2.6%.

Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $500 NPV MMA Differential, the calculated rate is 6.7%. This dividend growth rate is higher than the 6.6% used in this analysis, thus no margin of safety. MCD has a risk rating of 1.50 which classifies it as a Low risk stock.

MCD is the dominant brand in the increasingly challenging global fast food industry. The company enjoys unrivaled scale advantages and international growth opportunities. As a result of its strong price appreciation over the years, MCD was one of the largest positions in my dividend growth portfolio; in 2016 I trimmed my position back to 5%. MCD is trading above my calculated fair value price of $186.02, its debt to total capital and its free cash flow payout are above my maximums. For now, I will wait for a more opportune time before adding to my position.

Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.

Full Disclosure: At the time of this writing, I was long in MCD (5.8% of my Dividend Growth Portfolio).

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Six Companies Rewarding Their Thankful Shareholders With a Raise

2020-11-30T03:00:00.003-06:00

There were several companies over the past week which announced their intent to raise dividends to shareholders. It is always great to see companies that are able to extend their long streaks of annual dividend increases. I find dividend increases to be a good indicator of how company executives feel about the near-term business environment. It also shows their confidence in the company’s growth prospects.

Factors that boards of directors consider when setting the dividend include future earnings expectations, payout ratio and dividend yield relative to those at peer companies, as well as returns available on other income-oriented investments.

This is why I find it very helpful to review dividend increases every week for established dividend growth companies. To be included in this list, a company should have managed to reward shareholders with a dividend hike for at least ten years in a row.

I review these press releases as part of my monitoring process. For the purposes of this article, I narrowed the list of dividend increases down to a more manageable level.

I focused on companies that can afford to grow dividends for at least a decade. I figured that a company which has managed to boost dividends during a recession and an expansion, or even longer, is better suited for further research by a long-term dividend growth investor like me.

In my previews, I look at the most recent dividend increase, and compare it to the ten year average. While there are some year-over-year fluctuations in dividend growth, it is helpful to see if dividend growth is decelerating.

In addition, it is helpful to review trends in earnings and dividends, alongside dividend payout ratios. This is another indicator of dividend safety.

Last, but not least, I also try to review the valuation behind every company. I prefer to buy future dividend income at attractive valuations; overpaying for future dividend income is not a good business decision.

Over the shortened Thanksgiving week, we had six companies hiking distributions to their thankful shareholders. I have had the first five of these companies consistently raising dividends during Thanksgiving week for the past several years that I have been writing these review. The companies include:

Hormel Foods Corporation (HRL) produces and markets various meat and food products in the United States and internationally. The company operates through five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other.

Hormel Foods increased its quarterly dividend by 5.40% to 24.50 cents/share, marking the 55th consecutive annual dividend increase for this dividend king. Hormel Foods has managed to increase distributions at an annualized rate of 16% over the past decade.

Between 2010 and 2020, Hormel managed to triple its earnings from 73 cents/share to $1.69/share.
Analysts expect Hormel to earn $1.80/share in 2021. It looks like earnings per share have plateaued for three years in a row if analyst projections are correct.

I believe that the stock price is overvalued at 26 times forward earnings. The stock yields 2.10%. I may consider it if it dips below $36/share. Check my analysis of Hormel for more information about the company.

Becton, Dickinson and Company (BDX) develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide.

The company’s dividend eked out a small 5.10% increase to 83 cents/share. Becton Dickinson has raised its dividend for the 49th consecutive year. If BD hikes dividends in 2021, this dividend champion will be upgraded to the elite dividend king status. Over the past decade, Becton Dickinson has managed to boost dividends at an annualized rate of 8.90%.

The company earned $5.49/share in 2010 and analysts expect Becton Dickinson to earn $12.53/share in 2021.

The stock seems fairly valued at 18.15 times forward earnings and a dividend yield of 1.45%. The rate of dividend growth has slowed down, and if you want to review earnings per share, you would have to dig a little deeper into things such as purchase accounting adjustments and other items that the company deems as one-time events.

McCormick & Company, Incorporated (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. The company operates in two segments, Consumer and Flavor Solutions.

McCormick managed to hike its quarterly dividend by 9.70% to 68 cents/share. This marks the 35th consecutive year that this dividend champion has increased its quarterly dividend. McCormick has managed to boost dividends at annualized rate of 9% over the past decade.

The company earned $2.75/share in 2010, and managed to grow this to $5.24/share in 2019.
Analysts expect that McCormick will earn $5.71/share in 2019.

Unfortunately, this great company is overvalued at 32.50 times forward earnings and yields 1.45%. Check my analysis of McCormick for more information about the company.

Hingham Institution for Savings (HIFS) provides various financial products and services to individuals and small businesses in the United States.

The company increased its quarterly dividend to 47 cents/share, which is a 4.40% increase over the dividend paid during the same time last year. This dividend champion has consistently increased regular quarterly cash dividends over the last twenty-five years. The bank also announced a special dividend in the amount of 70 cents/share. During the past decade, it has managed to increase dividends at an annualized rate of 6.10%.

The company managed to grow earnings from $4.81/share in 2010 to $17.83/share in 2019.
The stock is fairly valued at 10.80 times earnings and offers a dividend yield of 0.85%.

The York Water Company (YORW) impounds, purifies, and distributes drinking water. It also owns and operates three wastewater collection systems and two wastewater treatment systems.

The company raised its quarterly dividend by 4% to 18.74 cents/share. This is the twenty-third consecutive year that this dividend achiever has increased its dividend. During the past decade, York Water has managed to grow its distribution at an annualized rate of 3.20%.

York Water has stated that it has managed to pay dividends every year since 1816, but I have been unable to find any history on distribution payments that goes beyond 1912. If anyone from the company’s IR department is reading, I would love to see the data behind this claim.

The company earned $0.71/share in 2010 and managed to grow earnings to $1.11/share in 2019.

Analysts expect the company to earn $1.25/share in 2020.

The stock is overvalued at 37.22 times forward earnings and sells at a dividend yield of 1.60%.

South Jersey Industries, Inc. (SJI) provides energy-related products and services. The company engages in the purchase, transmission, and sale of natural gas.

The company hiked its quarterly dividend by 2.50% to 30.25 cents/share. With this announcement, SJI has increased its dividend for 22 consecutive years. During the past decade, this dividend achiever has managed to boost distributions at an annualized rate of 6.90%.

Analysts expect that South Jersey Industries will generate $1.56/share in 2019.

The stock is fairly valued at 15.80 times forward earnings and offers a dividend yield of 4.90%. Sadly, the dividend payout ratio is at 78%, which means that the pace of future dividend growth will be slow at best.

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Eleven Dividend Growth Stocks That Grew Dividends Last Week

2020-11-19T03:00:00.003-06:00

My monitoring process involves reviewing notable information for companies on my watchlist and companies on my portfolio. A fairly significant chunk is spent reviewing the dividend growth universe for value. I also review the list of dividend increases every week, but focus on the ones that have at least a ten year track record of annual dividend increases.

It is a helpful tool to help me see the pace of dividend growth for companies I may be interested. It is also a helpful exercise to familiarize myself with companies that I may have not looked at before, and potentially place them on my list for further research. I like to review a lot of companies, and watch them operate in real time. This trains me to hopefully identify certain patterns that may be helpful in my stock research and selection process.

That process is also a nice summary of what I look for in a company. I view a long streak of dividend increases as an indication of quality. Only a limited number of companies end up being able to grow dividends for ten years in a row. This is my investable universe. I review the most recent dividend increase, and compare it to the past five and ten years. It is helpful to see a company whose growth is fairly consistent over time. It is also helpful to compare this growth along with the growth in earnings per share, and observing the payout ratio as well. In general, dividend growth investing is about selecting a company that grows earnings and dividends in lockstep, and grows intrinsic value as a result. Last but not least, we are looking to acquire such a company without overpaying for it. Valuation is part art, part science, because the right multiple depends on variable such as growth, dependability of the earnings stream, industry and interest rates.

In general, I look for companies that can continue to thrive, no matter what the underlying economic conditions are. It is amazing that no matter what we went through in 2020, there are so many companies that are resilient enough, so that they can continue growing their dividends. Find a company so good that it can increase its dividend and share buyback during a pandemic.

During the past week, the following companies managed to increase dividends to shareholders:

ManpowerGroup Inc. (MAN) provides workforce solutions and services in the Americas, Southern Europe, Northern Europe, and the Asia Pacific Middle East region.

The company increased its semi-annual dividend by 7.35% to $1.17/share. This marked the tenth consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow distributions at an annualized rate of 11.40%.

Earnings are cyclical and rise and fall with the economy. Earnings peaked at $5.73/share in 2007, fell to a loss of $3.26/share in 2010, before rebounding to $8.56/share in 2018. Manpower Group is expected to earn $3.32/share in 2020.

Right now the stock is selling for 26.20 times forward earnings and yields 2.70%.

Aaron’s, Inc. (AAN) operates as a specialty retailer of consumer electronics, computers, residential and office furniture, household appliances, and accessories in the United States and Canada.

The company increased its quarterly dividend by 12.50% to 4.50 cents/share. This marked the seventeenth consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow distributions at an annualized rate of 11.90%.

The company earned $1.37/share in 2009. Aaron's is expected to earn 5.13/share in 2020.

Right now the stock is selling for 11.70 times forward earnings and yields 0.30%.

Microchip Technology Incorporated (MCHP) develops, manufactures, and sells semiconductor products for various embedded control applications in the Americas, Europe, and Asia.

The company increased its quarterly dividend by 0.14% to 36.85cents/share. This marked the 19th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow distributions at an annualized rate of 0.75%.

Between 2009 and 2019, the company grew earnings from $1.31/share to $2.23/share. Microchip Technology is expected to earn $6.26/share in 2020.

Right now the stock is selling for 20.15 times forward earnings and yields 1.20%.

Snap-on Incorporated (SNA) manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. It operates through Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services segments.

Snap-On raised its quarterly dividend by 13.895 to$1.23/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to grow dividends at an annualized rate of 12.60%.

The company earned $4.07/share in 2009 and managed to grow that earnings stream to $12.41/share in 2019. Snap-On is expected to earn $10.74/share in 2020.

Right now the stock is selling for 15.95 times forward earnings and offers a dividend yield of 2.87%.

Assurant, Inc. (AIZ) provides lifestyle and housing solutions that support, protect, and connect consumer purchases in North America, Latin America, Europe, and the Asia Pacific. The company operates through three segments: Global Lifestyle, Global Housing, and Global Preneed.

The company raised its quarterly dividend by 476% to 66 cents/share. This marked the 17th year of annual dividend increases for this dividend achiever. During the past decade, it has managed to grow dividends at an annulized rate of 15.20%.

Between 2009 and 2019, Assurant managed to grow earnings from $3.63/share to $5.84/share. The company is expected to earn $8.97/share in 2020.

Right now the stock is selling for 14.90 times forward earnings and yields 2%.

Automatic Data Processing, Inc. (ADP) provides cloud-based human capital management solutions worldwide. It operates through two segments, Employer Services and Professional Employer Organization (PEO).

The company raised quarterly dividends by 2.20% to 93 cents/share. This marked the 45th consecutive annual dividend increase for this dividend champion. Over the past decade ADP has managed to grow dividends at an annualized rate of 10.60%.

Between 2009 and 2019, the company managed to increase earnings from $2.63/share to $5.70/share. The company is expected to generate $5.63/share in 2020.

Right now, the stock is selling for 30.50 times forward earnings and yields 2.20%.

Service Corporation International (SCI) provides deathcare products and services in the United States and Canada. The company operates through Funeral and Cemetery segments.

The company raised quarterly dividends by 10.53%to 21 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. Over the past decade SCI has managed to grow dividends at an annualized rate of 16.23%.

The company managed to grow earnings from $0.49/share in 2009 to $1.99/share by 2019. Service Corporation International is expected to earn $2.60/share in 2020.

Right now the stock is selling for 19.20 times forward earnings and yields 1.70%.

Southside Bancshares, Inc. (SBSI) operates as the bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations.

The company raised its quarterly dividend by 3.23% to 32 cents/share. This marked the 26th consecutive year of annual dividend increases for this dividend champion. During the past decade, it has managed to grow dividends at an annulized rate of 12.50%.

Between 2009 and 2019, Southside Bancshares managed to grow earnings from $2.05/share to $2.20/share. The company is expected to earn $2.23/share in 2020.

Right now the stock is selling for 13.30 times forward earnings and yields 4.30%.

Atmos Energy Corporation (ATO) engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through Distribution, and Pipeline and Storage segments.

Atmos increased its quarterly dividend by 8.70% to 62.50 cents/share. This was a higher rate of increase than the ten year average of 4.95%/year over the past decade. This was the 37th year of annual dividend increases for this dividend champion.

Between 2009 and 2019, Atmos managed to grow earnings from $2.07/share to $4.35/share. The company is expected to earn $5.02/share in 2020.

Right now the stock is selling for 20.35 times forward earnings and yields 2.45%.

Lancaster Colony Corporation (LANC) manufactures and markets specialty food products for the retail and foodservice markets in the United States. The company operates in two segments, Retail and Foodservice.

The company raised its quarterly dividends by 7.15% to 75 cents/share. This marked the 58th consecutive annual dividend increase for this dividend king. Over the past decade, the company has managed to grow distributions at an annualized rate of 8.65%.

Lancaster Colony managed to boost earnings from $3.17/share in 2009 to $4.97/share in 2019. The company is expected to generate $5.61/share in 2020. The stock is selling at 31.20 times forward earnings and yields 1.70%.

MDU Resources Group, Inc. (MDU) engages in regulated energy delivery, and construction materials and services businesses in the United States. The company's Electric segment generates, transmits, and distributes electricity for residential, commercial, industrial, and municipal customers in Montana, North Dakota, South Dakota, and Wyoming

MDU Resources hiked its quarterly dividend by 2.40% to 21.25 cents/share. This marked the 29th consecutive year of annual dividend increases for this dividend champion. During the past decade, the company has managed to boost distributions at an annuazlied rate of 2.7%.

MDU resources has failed to grow earnings per share since 2007, when EPS was at $2.36. The company is expected to earn $1.83/share in 2020.

Right now the stock is selling at 13.60 times forward earnings and yields 3.40%.

As usual this is just a list of companies that raised dividends last week. It is not a recommendation to buy or sell companies. I use this exercise of monitoring dividend increases as part of my monitoring process. It helps me decide which companies to put on my list for further research and which ones to discard for the time being.

Relevant Articles:

- Nine Dividend Growth Stocks Rewarding Owners With A Raise

- Busiest Week for Dividend Increases Since February

- Eleven Companies Rewarding Shareholders With Regular Dividend Increases

- Four Dividend Increases From Last Week

4 Big-Name Dividend Stocks Crushing The S&P 500

2020-11-09T01:00:00.003-06:00

Most every investor has a benchmark they are trying to beat. For many investors, that benchmark is the S&P 500. It is easily followed and can be directly invested in via many different index funds such as SPDR S&P 500 (SPY) and Vanguard 500 Index Inv (VFINX).

This year my dividend growth portfolio is under-performing the S&P 500. The old adage that trees don't grow to the sky certainty holds true. Obviously, that is not to say that all dividend growth stocks have under-performed.

If we look carefully we can find some gems that have performed quite well so far this year. Below are several multi-billion dollar dividend stocks that have out-performed the S&P 500 this year, to date on an annualized basis:

McDonald's Corporation is (MCD) the largest fast-food restaurant company in the world, with about 35,000 restaurants in 119 countries.
Mkt. Cap: $157.9b | Yield: 2.4% | Adjusted Return: 11.8%

The Procter & Gamble Company (PG) is a leading consumer products company that markets household and personal care products in more than 180 countries.
Mkt. Cap: $343.2b | Yield: 3.2% | Adjusted Return: 14.2%

Wal-Mart Stores, Inc. (WMT) is the largest retailer in the world, operating a chain of over 10,000 discount department stores, wholesale clubs, supermarkets and supercenters.
Mkt. Cap: $397.7b | Yield: 1.6% | Adjusted Return: 22.9%

Microsoft (MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.
Mkt. Cap: $1.525T | Yield: 1.1% | Adjusted Return: 36.3%

Over the same period the S&P 500 (SPY) was up 7.2%. The returns were calculated using the IRR() spreadsheet function, which takes into account the timing of dividends, buys and sells. Short-term performance is never the sole reason for long-term investors to buy. What goes up significantly, usually comes back down.

Full Disclosure: Long MCD, PG, WMT, MSFT,

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This article was written by Dividends4Life. If you enjoyed this article, please subscribe to my feed [RSS] or have future articles emailed to you [Email].

Eleven Companies Rewarding Shareholders With Regular Dividend Increases

2020-10-28T03:00:00.002-05:00

As part of my monitoring process, I review the list of dividend increases every week. This exercise helps me monitor the progress of existing holdings. It also helps me identify companies for further research. I use this process in conjunction with my screening process.

As part of this process, I look at the companies that raised dividends over the past week. I narrow my focus on companies with an established track record of annual dividend increases. I look for companies that have managed to increase for at least a decade.

I then review the company’s most recent dividend increase, and compare it to the ten year average for perspective.

I also look at the growth in earnings, along with estimated earnings for this year. It is helpful to gain an understanding if the company has been able to grow dividends due to growth in the business. If growth is achieved through expanding the payout ratio, I am generally not interested in such a company.

Last but not least, I review valuation. This includes P/E ratios, dividend yields, but also compare that with historical dividend growth and trends in earnings per share. As you can see, I have come to the conclusion that valuation is more art than science.

During the past week, there were several companeis that raised dividends. Each company has at least a ten year track record of annual dividend increases: The companies include:

Home Bancshares, Inc. (HOMB) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities.

The company increased its quarterly dividend by 7.70% to 14 cents/share. This marked the tenth consecutive annual dividend increase for this newly minted dividend achiever. During the past decade, it has managed to grow distributions at an annualized rate of 25%.

The company raised earnings from $/share in 2009 to $/share in 2019. Home Bancshares is expected to earn $1.18/share in 2020.

The company sells for 15 times forward earnings and yields 3.16%.

Middlesex Water Company (MSEX) owns and operates regulated water utility and wastewater systems. It operates in two segments, Regulated and Non-Regulated.

The company increased its quarterly dividend by 6.30% to 27.30 cents/share. This marked the 47th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to grow distributions at an annualized rate of 3.20%.

Between 2009 and 2019, the company was able to grow earnings from 72 cents/share to $2.01/share.Middlesex Water is expected to earn $2.12/share in 2020.

The company sells for 32.90 times forward earnings and yieods 1.56%.

Standex International Corporation (SXI), together with subsidiaries, manufactures and sells various products and services for commercial and industrial markets in the United States and internationally. The company operates through five segments: Electronics, Engraving, Scientific, Engineering Technologies, and Specialty Solutions. The company hiked its quarterly dividend by 9.10% to 24 cents/share, marking its tenth consecutive annual dividend increase. During the past decade, it has managed to grow distributions at an annualized rate of 8.60%.

Standex is expected to earn $3.65/share in 2020.

The company sells for 17.80 times forward earnings and yields 1.50%

American Electric Power Company, Inc. (AEP) is an electric public utility holding company that engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments.

American Electric Power raised its quarterly dividend by 5.70% to 74 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to grow its dividends at an annualized rate of 5.15%.

Between 2009 to 2019, the company’s earnings went from $2.96/share to $3.88/share.

American Electric Power is expected to earn $4.32/share in 2020.

The company sells for 21.30 times forward earnings and yields 3.20%

Hubbell Incorporated (HUBB) designs, manufactures, and sells electrical and electronic products in the United States and internationally. The company operates through two segments, Electrical and Power.

The company increased its quarterly dividend by 7.70% to 98 cents/share. This marked the 13th consecutive annual dividend icnrease for this dividend achiever. Over the past decade Hubbell has managed to grow dividends at an annualized rate of 9.40%/year.

Between 2009 and 2019 the company managed to grow earnings from $3.15/share to $7.31/share. Hubbell is expected to earn $7.22/share in 2020.

The company sells for 21.25 times forward earnings and yields 2.56%

The Gorman-Rupp Company (GRC) designs, manufactures, and sells pumps and pump systems worldwide.

The company increased its quarterly dividend by 10.70% to 15.50 cents/share. This marked the 48th consecutive annual dividend icnrease for this dividend champion. Over the past decade Gorman-Rupp has managed to grow dividends at an annualized rate of 7.80%/year.

The company grew earnings from 70 cents/share in 2009 to $1.37/share in 2019. Gorman-Rupp is expected to earn $1.10/share in 2020.

The company sells for 31 times forward earnings and yields 1.80%

Avery Dennison Corporation (AVY) produces and sells pressure-sensitive materials worldwide. The company raised its quarterly dividend by 6.90% to 62 cents/share. This marked the 10th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has been able to raise dividends by 6.35%/year.

In 2008, the company earned $2.70/share. It managed to grow earnings to $3.57/share by 2019. Avery Dennison is expected to earn $6.06/share in 2020.

The company sells for 23.40 times forward earnings and yields 1.75%

Stepan Company (SCL) produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products in North America, Europe, Latin America, and Asia. The company operates through three segments: Surfactants, Polymers, and Specialty Products.

Stepan raised its quarterly dividend by 10.90% to 30.50 cents/share. This marked the 53rd consecutive year of annual dividend increases for this dividend king. During the past decade, the company has managed to boost dividends at an annualized dividend growth of 8.60%.

Between 2009 and 2019, Stepan managed to grow earnings from $2.92/share to $4.42/share. Stepan is expected to earn $5.21/share in 2020.

The company sells for 22.70 times forward earnings and yields 1.03%

Lincoln Electric Holdings, Inc. (LECO), designs, develops, manufactures, and sells welding, cutting, and brazing products worldwide. It operates through three segments: Americas Welding, International Welding, and The Harris Products Group.

The company increased its quarterly dividend by 4.10% to 51 cents/share. This marked the 26th consecutive annual dividend icnrease for this dividend champion. Over the past decade Lincoln Electric has managed to grow dividends at an annualized rate of 13.30%/year.

The company earned $2.46/share in 2008, right before the Global Financial Crisis. While it has had some dips in earnings per share in 2009 and in 2014 – 2016, its earnings per share grew to $4.68/share in 2019. Lincoln Electric is expected to earn $3.58/share in 2020.

The company sells for 29.50 times forward earnings and yields 1.93%

Whirlpool Corporation (WHR) manufactures and markets home appliances and related products. It operates through four segments: North America; Europe, Middle East and Africa; Latin America; and Asia.

The company raised its quarterly dividend by 4.20% to $1.25/share. This marked the 10th consecutive annual dividend increase for this newly minted dividend achiever. Over the past decade, the company has been able to raise dividends by 10.70%/year.

Between 2009 and 2019, the company managed to increase earnings from $4.34/share to $18.45/share.

Whirlpool is expected to earn $13.02/share in 2020. The company sells for 15.20 times forward earnings and yields 2.50%

Tompkins Financial Corporation (TMP), a community-based financial services company, provides commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. The company operates in three segments: Banking, Insurance, and Wealth Management.

The company increased its quarterly dividend by 3.85% to 54 cents/share. This marked the 34th consecutive annual dividend icnrease for this dividend champion. Over the past decade Tompkins Financial has managed to grow dividends at an annualized rate of 5%/year.

Between 2009 and 2019, Tompkins Financial grew earnings from $2.96/share to $5.37/share. Tompkins Financial is expected to earn $4.49/share in 2020.

The company sells for 13 times forward earnings and yields 3.70%

Relevant Articles:

- How to value dividend stocks

- Four Dividend Increases From Last Week

- Price, Value and Sources of Returns

- Dividend Growth Investing Principles

2020 Top Investment Picks – Q3 Update

2020-10-21T02:00:00.012-05:00

At the beginning of the year, I put together a list of Top Investment Picks for 2020 from the investment community and track them on this website. This is just meant to be a fun exercise to see how the picks do. As part of the process, I intend do provide quarterly updates on the picks to see how they are doing. This is the update after Q3.

My pick of Twilio (TWLO) leads the charge at the end of Q3 with a 151% return YTD. This is what I said at the end of 2019:

Going with a SaaS stock for 2020. Twilio is a wide moat programmable communication platform. While revenue growth has slowed as it hits $1B ARR in 2019, top line growth is still expected ~30%. TWLO remains one of the more reasonably priced SaaS plays in the market as it continues to grow and capture more of the TAM.

I will provide the next update at the end of the year. Note that you can track the progress anytime by going to the Stock Picks page.

Happy Hunting

R2R

This article was written by Roadmap2Retire. If you enjoyed this article, please consider subscribing to my feed at Roadmap2Retire.com/feed.

Three Dividend Growth Stocks In the News

2020-10-16T15:23:00.000-05:00

I review the list of dividend increases as part of my monitoring process. This helps me review the story behind companies I already own. It also helps me review companies for potential inclusion into my watchlist.

A long track record of annual dividend increases is an indication of a quality company with a strong business model. Its strength could be due to a favorable environment, competitive position, unique product, patent or trademark, a strong brand, a loyal group of customers or a combination of the above.

I find it helpful to identify these businesses and place them on my list for further research.

During the past week, there were three companies with long histories of annual dividend increases, which also hiked distributions to shareholders.

The companies include:

Northwest Natural Holding Company (NWN) provides regulated natural gas distribution services to residential, commercial, industrial, and transportation customers in Oregon and Southwest Washington.

The utility raised its quarterly dividend by 0.50% to 48 cents/share. This marked the 65th consecutive annual dividend increase for this dividend king. Over the past decade, it has managed to increase the dividend at an annualized rate of 1.75%.

Earnings peaked at $2.83/share in 2009, and gradually declined to $2.07/share in 2019. The company is expected to generate $2.27/share in 2020.

Currently, the stock is fairly valued at 20.70 times forward earnings and yields 4.10%. Given the lack of earnings growth, and the high payout ratio,

RPM International Inc. (RPM) manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide.

The company raised its quarterly dividend by 5.60% to 38 cents/share. This marked the 47th consecutive annual dividend increase for this dividend aristocrat.

“One of the primary ways we continuously reward our shareholders is by annually increasing our cash dividend,” stated Frank C. Sullivan, RPM chairman and CEO. “Increasing the dividend, combined with an appreciating stock price, is key to our ability to consistently deliver long-term value and outperform the cumulative total return of the broader market.”

Over the past decade, RPM International has managed to grow dividends at an annualized rate of 5.80%.

Between 2009 and 2019, RPM International grew earnings from $1.39/share to $2.34/share.

RPM International is expected to generate $3.93/share.

Currently, the stock is selling for 22.20 times forward earnings and yields 1.75%. RPM International is close to being fairly valued today.

McDonald's Corporation (MCD) operates and franchises McDonald's restaurants in the United States and internationally.

The company increased its quarterly dividend by 3.20% to $1.29/share. This marked the 44th year of consecutive annual dividend increases for this dividend aristocrat.

"Today's dividend increase reflects our strong financial position and represents continued confidence in our ability to drive profitable growth and long-term shareholder value while still investing in our people and the business."

During the past decade, McDonald's has managed to increase dividends at an annualized rate of 8.70%.

Between 2009 and 2019, McDonald’s was able to grow earnings from $4.11/share to $7.88/share,

McDonald’s is expected to generate $5.88/share in 2020.

Right now the stock is selling for 38.24 times forward earnings and yields 2.30%. I find the stock to be pricey at the moment. I would love to be able to buy McDonald's at a lower price from here.

Relevant Articles:

- Dividend Growth Investing Principles

- Three Companies Raising Dividends to Shareholders

- Four Dividend Growth Stocks Rewarding Shareholders With Higher Payouts

3 Recent Buys

2020-10-05T02:00:00.003-05:00

A quick update on a few recent purchases in my portfolio. I used the recent correction in Nasdaq to add to my positions.

First purchase: I added to my position in Amazon (AMZN) @ $3,175.00. I continue to put a big portion of my portfolio into FAMG names as I believe the big tech companies will keep growing and have tremendous potential with their global reach.
I added to my position in MercadoLibre (MELI) @ $1,100.00. MELI gives me exposure to EM markets focused on Latin America as e-commerce and payments sees tremendous tailwinds. The company is well run and this looks like an attractive position to add.
I added to my position in Constellation Software (CSU.TO) @ 1,480.00. My largest position by far. I have gone overweight on this name as the current weakness took the stock price <$1500. CSU makes approx 10% of my overall portfolio.

Full Disclosure: Full list of holdings is available here.

This article was written by Roadmap2Retire. If you enjoyed this article, please consider subscribing to my feed at Roadmap2Retire.com/feed

Eight Dividend Growth Stocks Rewarding Shareholders With a Raise

2020-09-30T03:00:00.002-05:00

As part of my monitoring process, I review the list of dividend increases every week. This exercise is helpful in monitoring the progress for existing holdings in my dividend growth portfolio. It is also a helpful exercise to uncover hidden gems for further research.

I like to review the press releases, and see if I can see something that jumps at me. The tone of press releases, the rate of change in dividends, when compared to historical averages and growth in fundamentals, gives me a very decent approximation if management is bluffing or is simply staying the course.

I usually focus on the companies that have managed to increase dividends for at least a decade. During the past week, the following companies raised dividends for their shareholders:

Lockheed Martin Corporation (LMT) is a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space Systems.

Lockheed Martin raised its quarterly dividend by 8.30% to $2.60/share. This marked the 18th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to grow distributions at an annualized rate of 14.40%.

Between 2010 and 2019, Lockheed Martin managed to grow earnings from $7.81/share to $21.95/share. Lockheed is expected to earn $24.17/share in 2020.

The stock is attractively valued at 16 times forward earnings. Lockheed Martin yields 2.70%.

Artesian Resources Corporation (ARTNA) provides water, wastewater, and other services on the Delmarva Peninsula.

Artesian Resources increased its quarterly dividend by 3% to 25.71 cents/share. This dividend champion company has increased dividends for 28 years in a row. The company has managed to grow distributions at an annualized rate of 3.10% during the past decade.

The company managed to grow earnings from $1/share in 2010 to $1.60/share in 2019. Artesian Resources is expected to generate $1.68/share in 2020.

The stock is selling for 20.10 times forward earnings and yields 3.05%.

Honeywell International Inc. (HON) operates as a diversified technology and manufacturing company worldwide.

The company increased its quarterly dividend by 3.30% to 93 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. Honeywell has managed to grow annual distributions at an annualized rate of 10.75% during the past decade.

The company grew earnings from $2.59/share in 2010 to $8.41/share in 2019. Honeywell is expected to earn $6.87/share in 2020.

The stock is selling for 23.50 times forward earnings and yields 2.30%.

The First of Long Island Corporation (FLIC) operates as the holding company for The First National Bank of Long Island that provides financial services to small and medium-sized businesses, professionals, consumers, municipalities, and other organizations.

The company increased its quarterly dividend by 5.60% to 19 cents/share. This marked the 25th consecutive annual dividend increase for this newly minted dividend champion. Over the past decade, this dividend champion has managed to grow distributions at an annualized rate of 7.70%.

The company managed to increase earnings from $1.02/share in 2010 to $1.67/share in 2019.

The stock trades at 8.40 times forward earnings and yields 5.25%.

Accenture plc (ACN) provides consulting, technology, and outsourcing services worldwide. Accenture raised its quarterly dividend by 10% to 88 cents/share. This marked the 16th consecutive annual dividend increase for this dividend achiever. Accenture has managed to grow dividends at an annualized rate of 14.80% during the past decade.

The company managed to increase earnings from $2.66/share in 2010 to $7.36/share in 2019. Accenture is expected to generate $8.04/share in 2020.

The stock sells for 26.70 times forward earnings and yields 1.65%.

Bank of South Carolina Corporation (BKSC) operates as the holding company for The Bank of South Carolina that provides commercial banking services to individuals, professionals, and small and middle market businesses in South Carolina.

The company hiked its quarterly dividend by 6.25% to 17 cents/share. This marked the 10th consecutive annual dividend increase for this dividend contender. During the past decade, it has managed to grow distributions at an annualized rate of 5.70%.

The company managed to increase earnings from 58 cents/share in 2010 to $1.31/share in 2019. The stock sells for 13.50 times earnings and yields 4.20%.

Hingham Institution for Savings (HIFS) provides various banking products and services to individuals and small businesses in the United States.

The bank increased its quarterly dividend by 4.35% to 45 cents/share. The new dividend rate is 12.50% higher than the rate paid during the same time last year. The bank has consistently increased regular quarterly cash dividends over the last twenty-five years. The Bank has also declared special cash dividends in each of the last twenty-five years, typically in the fourth quarter. Over the past decade, it has managed to grow dividends at an annualized rate of 6.10%.

The company increased earnings from $4.81/share in 2010 to $17.83/share in 2019. The stock sells for 10.30 times earnings and yields 1%.

Fortis Inc. (FTS) operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries.

The utility raised its quarterly dividend by 5.90% to 50.50 cents/share. This marked the 47th consecutive year of annual dividend increases for this Canadian dividend aristocrat. Over the past decade, Fortis has managed to grow dividends at an annualized rate of 5.80%. In addition, the Corporation has extended its targeted average annual dividend per common share growth of approximately 6% to 2025 based on a 2020 annualized dividend of $1.91. Just for reference, the stock data is listed in Canadian Dollars, not US dollars.

The stock trades at 20.84 times forward earnings and yields 3.75%.

Relevant Articles:

- Where to find international dividend paying stocks?

- Is international exposure overrated?

- International Dividend Stocks – Pros and Cons

- A Costly Misconception about foreign dividend stocks

Baby R2R’s Portfolio Update – Q2 2020

2020-08-18T11:42:00.000-05:00

This post is part of the series where I share the progress of Baby R2R’s investment portfolio. I started documenting this in Q3 2017 and intend to provide quarterly updates.

Baby R2R was born in Spring 2016 and a few months later, I setup her education fund to which I contribute on a regular basis. We live in Canada, so we take advantage of the RESP program (Registered Education Savings Plan), an account type where we can save and invest for our child’s secondary education. In addition to tax advantages, we also receive an education grant, which matches upto 20% of the saved amount (upto a max of $500 per year). How can anyone say no to free money?

In addition to the education fund, we also decided to start a Nest Egg fund, where we save and invest for Baby R2R and let compounding do its job over the course next couple of decades. The two accounts take different approaches to investing strategy.

The Education Fund

To get full benefits from the government, I contribute $2,500 per year and will receive $500 in grants. So, the total contribution amount going into the account is (and will be) $3,000 per year.

Portfolio Composition

For the Education fund, I have chosen to go with index funds. I used to hold four different ETFs to construct a global balanced portfolio, but with the introduction of new multi-asset balanced ETFs, I have decided to switch for the sake of simplicity. I still hold a couple of bond ETFs in the account, but will eventually liquidate.

As of Q2 2020, this portfolio only consists of the following two ETFs. Activity in the portfolio continued as usual with small incremental purchases each month.

iShares Growth ETF Portfolio (XGRO.TO)
BMO Aggregate Bond ETF (ZAG.TO)

The Nest Egg Fund

The Nest Egg Fund is extra savings and contributions that I earmark part of my tax free savings account for Baby R2R. The goal was to save an extra $100-$200/month.

Portfolio Composition

This portfolio consists of only 3 stocks currently:

Alphabet Inc (GOOGL)
Brookfield Asset Management (BAM.A.TO)
Franco Nevada Corp (FNV.TO)

Summary

Between the two accounts, I am happy with the progress we are making for our daughter’s future. The account values have grown and Baby R2R has started earning dividend income (to date, just the dividend income has added up to $735 between the two portfolios).

The drop in income is due to selloffs in dividend-focused stocks and some income-focused ETFs that I used to own.

What are your thoughts on these portfolios and the plan going forward? Share your thoughts below.

Full Disclosure: Long all stocks & funds mentioned above. Our full list of holdings is available here.

Nine Dividend Paying Companies Raising Dividends Last Week

2020-08-06T15:20:00.002-05:00

As part of my monitoring process, I review the list of dividend increases every week. This exercise helps me to monitor existing portfolio holdings, and to identify promising companies for further research.

I tend to focus my attention on companies with at least ten years of annual dividend increases. This activity helps me to focus on companies with a higher chance of delivering sustainable dividends, and lets me identify the companies with a long runway for future dividend increases.

I review each company, in order to determine if it can continue raising its dividends for the foreseeable future. I believe that rising earnings per share are the fuel behind future dividend increases.

I look at rising earnings per share, in conjunction with trends in the dividend payout ratio. A high payout ratio is generally a warning sign, unless the business model is highly predictable or earnings are growing faster than dividends. I generally prefer if earnings and dividends grow at roughly the same long-term rate. Sometimes there are changes, and reasons for why that’s not the case, especially if a company just recently started growing dividends from a low base.

I like to review trends in dividend growth too, and check if it is accelerating, decelerating or just keeping pace at a constant rate.

I also like to review the valuation in terms of P/E and yield. While these are viewed as old-fashioned today, I have found them to be useful yardsticks to follow, along with dividend growth, payout ratio and earnings growth. Valuation is part art, part science.

American States Water Company (AWR) provides water and electric services to residential, industrial, and other customers in the United States. It operates through three segments: Water, Electric, and Contracted Services.

The company raised its quarterly dividend by 9.80% to 33.50 cents/share. This marked the 66th consecutive year of annual dividend increases for this dividend king. During the past decade, this dividend king has managed to grow distributions at an annualized rate of 8.70%.

Between 2009 and 2019, the company grew earnings from 81 cents/share to $2.28/share.
The company is expected to earn $2.29/share in 2020.

The stock is overvalued at 33.60 times forward earnings. The stock yields 1.75%.

Community Trust Bancorp, Inc. (CTBI) operates as the bank holding company for Community Trust Bank, Inc. that provides commercial and personal banking services to small and mid-sized communities.

The company raised its quarterly dividend by 1.30% to 38.50 cents/share. This marked the 40th consecutive year of annual dividend increases for this dividend champion. During the past decade, this dividend champion has managed to grow distributions at an annualized rate of 3.10%.

Between 2009 and 2019, the bank grew earnings from $1.50/share to $3.64/share. The company is expected to earn $3.10/share in 2020.

The stock is attractively valued at 9.90 times forward earnings and yields 5%.

McKesson Corporation (MCK) provides pharmaceuticals and medical supplies in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, Prescription Technology Solutions, International, and Medical-Surgical Solutions.

The company raised its quarterly dividend by 2.45% to 42 cents/share. This marked the 13th consecutive year of annual dividend increases for this dividend achiever. During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 12.65%.
The company has managed to grow earnings from $2.95/share in 2009 to $4.95/share in 2019. The company is expected to earn $14.40/share in 2020.

McKesson sells for 10.40 times forward earnings. The stock yields 1.10%.

Portland General Electric Company (POR) is an integrated electric utility company, engages in the generation, wholesale purchase, transmission, distribution, and retail sale of electricity in the state of Oregon. The company operates seven thermal plants; seven hydroelectric plants; and two wind farms.

The company raised its quarterly dividend by 5.85% to 40.75 cents/share. This marked the 15th consecutive year of annual dividend increases for this dividend achiever. During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 4.10%.

This utility managed to grow earnings from $1.31/share in 2009 to $2.39/share in 2019.
The company is expected to earn $2.39/share in 2020.

The company sells for 18.50 times forward earnings. The stock offers a dividend yield of 3.70%.

Republic Services, Inc. (RSG) provides non-hazardous solid waste collection, transfer, disposal, recycling, and environmental services in the United States.

The company raised its quarterly dividend by 4.95% to 42.50 cents/share. This marked the 18th consecutive year of annual dividend increases for this dividend achiever. During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 7.25%.

Republic Services managed to grow earnings from $1.30/share in 2009 to $3.33/share in 2019.
The company is expected to earn $2.85/share in 2020.

The stock is not cheap at 30.60 times forward earnings. Republic Services yields 1.95%.

The Scotts Miracle-Gro Company (SMG) manufactures, markets, and sells consumer lawn and garden products in the United States and internationally. The company operates through three segments: U.S. Consumer, Hawthorne, and Other.

The company raised its quarterly dividend by 6.90% to 62 cents/share. This marked the 11th consecutive year of annual dividend increases for this dividend achiever. During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 16.30%.

The company managed to grow earnings from $2.32/share in 2009 to $8.18/share in 2019.
The company is expected to earn $6.37/share in 2020.

The stock sells for 24.90 times forward earnings. The stock offers a dividend yield of 1.55%.

W.W. Grainger, Inc. (GWW) distributes maintenance, repair, and operating (MRO) products and services in the United States, Canada, and internationally.

The company raised its quarterly dividend by 6.25% to $1.53/share. This marked the 49th consecutive year of annual dividend increases for this dividend champion. During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 12.30%.

Between 2009 and 2019, W.W. Grainger managed to increase earnings from $5.62/share to $15.32/share. The company is expected to earn $15.94/share in 2020.

The stock sells for 21.40 times forward earnings and yields 1.80%.

Altria Group, Inc. (MO) manufactures and sells cigarettes, smokeless products, and wine in the United States.

The company raised its quarterly dividend by 2.40% to 86 cents/share. This marked the 51st consecutive year of annual dividend increases for this dividend king. During the past decade, this dividend king has managed to grow distributions at an annualized rate of 9.70%.

Altria earned $1.87/share in 2010 and is expected to earn $4.31/share in 2020.

The stock is cheap at 9.50 times forward earnings. The stock yields 8.35%.

Eagle Bancorp Montana, Inc. (EBMT) operates as the bank holding company for Opportunity Bank of Montana that provides various retail banking products and services to small businesses and individuals in Montana.

The company raised its quarterly dividend by 2.60% to 9.75 cents/share. This marked the 21st consecutive year of annual dividend increases for this dividend achiever. During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 3.30%.

The bank grew earnings from 52 cents/share in 2009 to $1.69/share in 2019. The company is expected to earn $2.36/share in 2020

The stock sells for 6.55 times forward earnings and yields 2.50%.

Relevant Articles:

- My Favorite Exercise As A Dividend Growth Investor
- Three Dividend Stocks in the News
- Two Sweet Dividend Increases For Long-Term Shareholders
- Dividends are a fact, share prices are an opinion

3 Recent Buys – BAM, FB, MSFT

2020-07-28T02:00:00.000-05:00

A quick update on a couple of recent buys in the portfolio.

First purchase: I added to my position in Brookfield Asset Management (BAM.A.TO) @ CAD$44.00 with the recent weakness in stock price. There are still a lot of overhanging questions on the impact of BPY (Brookfield Real Estate subsidiary) on the parent company and how the commercial real estate market will play out, but I decided to incrementally add to my position here.
Second purchase: I added to my position in Facebook Inc (FB) @ $209.70. The recent backlash against FB from companies to pull ads was a good buying opportunity imo. Some of these companies have stated that this is a pause for just one month, while others have left it open-ended. Regardless, the revenue source is diversified with third party analytics showing that FB’s top 10 advertisers make only 1.5% of total revenue.
Third purchase: I continued building on my new position of Microsoft Corp (MSFT) @ $193.50. Recently I decided to go up the risk curve a bit and sold off most of my bond allocation & decided moving those funds to one of the two AAA rated companies with a long road of growth ahead. I am close to a full position now, but may add more in the future as my overall portfolio grows and sizing automatically changes.

Full Disclosure: Long BAM.A.TO, FB, MSFT. Our full list of holdings is available here.

This article was written by Roadmap2Retire. If you enjoyed this article, please consider subscribing to my feed at Roadmap2Retire.com/feed

Five Dividend Growth Stocks Rewarding Shareholders With Raises

2020-07-23T07:53:00.000-05:00

As part of my monitoring process, I review the list of dividend increases every week This activity helps me to monitor the business performance of any companies I am invested in. It also helps me to identify any hidden dividend gems, and place them on my list for further research.

My reviews are an example of the quick way I use to evaluate companies, before deciding if they are worth a second look later or not.

The companies in today’s article have managed to grow dividends for at least ten years in a row. These companies also announced a dividend increase during the past week. The companies include:

PPG Industries, Inc. (PPG) manufactures and distributes paints, coatings, and specialty materials worldwide.

The company raised its quarterly dividend by 6% to 54 cents/share. This marked the 49th year of consecutive annual dividend increases for this dividend champion. PPG Industries has managed to grow dividends at an annualized rate of 6.40% over the past decade.

Between 2010 and 2019, PPG Industries managed to grow earnings from $2.31/share to $5.22/share.
The company is expected to generate $4.44/share in 2020

The stock sells for 24 times forward earnings and yields 1.95%.

Computer Services, Inc. (CSVI) delivers core processing, digital banking, managed services, payments processing, print and electronic distribution, and regulatory compliance solutions to financial institutions and corporate entities in the United States.

The company raised its quarterly dividend by 19.10% to 25 cents/share. According to their press release, this marked the 49th year of consecutive annual dividend increases for the company. Sadly, I have not been able to verify this with any other independent source. I see that the stock has been publicly traded since 2003, hence I have to use this data as a starting point for the dividend record. If the stock was privately held before, the record of annual dividend increases before that doesn’t count.
If I find reliable data showing that the record started 49 years ago, I would update my stance on the topic.

Computer Services has managed to grow dividends at an annualized rate of 15.80% over the past decade.

Between 2010 and 2019, Computer Services managed to boost earnings from 81 cents/share to $1.91/share.

The stock sells for 27 times forward earnings and offers a dividend yield of 1.90%.

National Retail Properties (NNN) invests primarily in high-quality retail properties subject generally to long-term, net leases.

This real estate investment trust raised its quarterly dividend by 1% to 52 cents/share. This marked 31 years of consecutive annual dividend increases for this dividend champion.

The company has raised dividends by 3.10%/year annualized over the past decade.

Over the past decade, National Retail Properties has managed to boost its AFFO/share from $1.73 in 2009 to $2.79 in 2019.

The REIT is selling for 13.35 times forward FFO and yields 5.85%.

Stanley Black & Decker, Inc. (SWK) engages in tools and storage, industrial, and security businesses worldwide.

The company raised its quarterly dividend by 1.40% to 70 cents/share. This marked the 53th consecutive annual dividend increase for this dividend king. This dividend king has managed to boost distributions at an annualized rate of 7.60% over the past decade.

The company managed to boost earnings from $2.79/share in 2009 to $6.35/share in 2019.
The company is expected to earn $5.73/share in 2020.

The stock is selling for 25.10 times forward earnings and offers a dividend yield of 1.85%.

Marsh & McLennan Companies, Inc. (MMC) is a professional services company that provides advice and solutions to clients in the areas of risk, strategy, and people worldwide. It operates in two segments, Risk and Insurance Services, and Consulting.

The company increased its quarterly dividend by 2.20% to 46.50 cents/share. Marsh & McLennan has managed to grow dividends at an annualized rate of 8.10% over the past decade.
Earnings increased from $1.55/share in 2010 to $3.41/share in 2019.

The company is expected to generate $4.60/share in 2020.

The stock sells at 24.65 times forward earnings and yields 1.65%.

MGE Energy, Inc. (MGEE) operates as a public utility holding company primarily in Wisconsin. It operates through five segments: Regulated Electric Utility Operations; Regulated Gas Utility Operations; Nonregulated Energy Operations; Transmission Investments; and All Other.

MGE Energy raised its quarterly dividend by 5% to 37 cents/share. This event marked the company's 45th consecutive year of increasing its dividend. MGE Energy is a dividend champion which has managed to grow dividends at an annualized rate of 3.60% during the past decade.

MGE Energy managed to grow earnings from $1.67/share in 2010 to $2.51/share in 2019.

The stock looks richly valued at 26.50 times forward earnings. It yields 2.20%.

Relevant Articles:

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- Avoiding High Portfolio Ownership of Successful Investments
- Two Cheap Dividend Stocks Raising Dividends Last Week
- Bank OZK and John Wiley & Sons Reward Shareholders With Raises

3 Recent Buys

2020-07-13T02:00:00.000-05:00

A quick update on a couple of recent buys in my portfolio.

First purchase: Last week, I added to my position in Franco Nevada Corp (FNV.TO) @ $181.00. The recent pullback provides what I believe is a decent place to add in a marketplace where everything else seems overpriced & overextended.
Second purchase: This was a swap of my shares in Brookfield Infrastructure Partners. After the recent split between the LP units (BIP/BIP.UN.to) and C-corp (BIPC/BIPC.to), it seems like there is much higher investor appetite for the C-corp shares — likely due to simpler tax filing system for the US investors & fund flows. I decided to sell my BIP.UN.TO shares and buy the BIPC.TO shares instead.
Third purchase: I added to my position in Adyen NV (ADDYF) @ $1,190.00. Continuing to build on this position that I recently initiated a couple of weeks ago. See original post on my reasoning for going long Adyen here.

What are your thoughts on these purchases. Share a comment below.

Full Disclosure: Long FNV.TO, BIPC.TO. Our full list of holdings is available here.

This article was written by Roadmap2Retire. If you enjoyed this article, please consider subscribing to my feed at Roadmap2Retire.com/feed