One of my favorite lists for dividend growth investing is the dividend aristocrats index. It features companies in the S&P composite index, which have managed to increase distributions for at least 25 consecutive years. There are 51 dividend aristocrats in the list. So far this year, 25 of them have announced dividend increases. A dividend increase signals confidence in the near term financial position in the firm that announces it.
I scrolled through the list, and identified the six companies that managed to boost distributions by more than 10%. If a company boosts dividends by 10% per year, its dividend payment would double in seven years. In other words, if you purchased $1000 worth of a dividend stock yielding 3% today, in 7 years your dividend income would be $60, or a cool 6% yield on cost. I have listed each one below, included some detail about the company as well as an overview.
Air Products and Chemicals, Inc. (APD) provides atmospheric gases, process and specialty gases, performance materials, equipment, and services worldwide. The company raised its annual dividend by 10.30% to $2.56/share. This dividend aristocrat has raised distributions for 30 years in a row. The ten year annual dividend growth rate has been 11.10% on average. Air Products and Chemicals is trading at 13.80 times earnings and yields 3.20%. The stock is attractively priced at the moment, and I will look to add to my existing position subject to availability of funds. (analysis)
Exxon Mobil Corporation (XOM) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. The company raised its annual dividend by 21.30% to $2.28/share. This dividend aristocrat has raised distributions for 30 years in a row. The ten year annual dividend growth rate has been 7.40% on average. Exxon Mobil is trading at 9.40 times earnings and yields 2.90%. The decline in oil prices, coupled with the fall in the stock market has created a rare buying opportunity for the stock. I would consider adding to my position in the stock, subject to availability of funds. (analysis)
Family Dollar Stores, Inc. (FDO) operates a chain of self-service retail discount stores primarily for low and middle income consumers in the United States. The company raised its annual dividend by 16.70% to $0.84/share. This dividend aristocrat has raised distributions for 36 years in a row. The ten year annual dividend growth rate has been 11.80% on average. Family Dollar Stores is trading at 19.80 times earnings and yields 1.20%. The stock is overpriced at the moment, and I am waiting for a dip to add to my existing position in the stock. (analysis)
Genuine Parts Company (GPC) distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, Canada, and Mexico. The company raised its annual dividend by 10% to $1.98/share. This dividend aristocrat has raised distributions for 56 years in a row. The ten year annual dividend growth rate has been 4.80% on average. Genuine Parts Company is trading at 16.50 times earnings and yields 3.10%. I analyzed the company in 2010, but never really bought it, since it didn’t hit my entry price. (analysis)
W.W. Grainger, Inc. (GWW) engages in the distribution of maintenance, repair, and operating supplies, as well as other related products and services for businesses and institutions primarily in the United States and Canada. The company raised its annual dividend by 21.20% to $3.20/share. This dividend aristocrat has raised distributions for 41 years in a row. The ten year annual dividend growth rate has been 13.70% on average. W.W. Grainger is trading at 20 times earnings and yields 1.70%. I would consider adding to my position in the stock on dips below $130.
Sigma-Aldrich Corporation (SIAL), a life science and high technology company, develops, manufactures, purchases, and distributes various chemicals, biochemicals, and equipment worldwide. The company raised its annual dividend by 11.10% to $0.80/share. This dividend aristocrat has raised distributions for 36 years in a row. The ten year annual dividend growth rate has been 15.90% on average. Sigma-Aldrich is trading at 18 times earnings and yields 1.20%. The low yield has prevented me from initiating a position in the stock.
Full Disclosure: Long APD, XOM, FDO, GWW
- How to generate $1000/month in dividends
- Dividend Aristocrats List for 2012
- Margin of Safety in Dividends
- Build your own Berkshire with dividend paying stocks
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