Like a fisherman, each week I cast my screening criteria net over the list of companies which have announced increases in distributions to shareholders. I then list out all companies which have managed to boost distributions for over five years in a row, and do a quick follow up in order to determine whether I want to dig a little further if a particular security piques my interest. This list also provides me with a measure of pockets of strength in certain sectors or individual stocks. After all, even if the overall economy is not doing fantastically well, there are always stocks or sectors which can grow for years before reaching a market saturation point. This would translate into higher earnings, dividends and stock prices over time, a trifecta that generally benefits investor’s returns.
Included below are five consistent dividend increasers, along with my commentary about each one of them:
Badger Meter Inc. (BMI) manufacturers and marketers flow measurement and control products to water and gas utilities, municipalities, and industrial customers worldwide. This dividend achiever raised quarterly distributions by 6.25% to 17 cents/share. This marked the 20 consecutive annual dividend increase for the company. Yield: 2%
Nordson Corporation (NDSN) engineers, manufactures, and markets products and systems for precision dispensing, testing and inspection, fluid management, surface treatment, and curing. This dividend champion raised quarterly distributions by 20% to 15 cents/share. This marked the 49th consecutive annual dividend increase for the company. Yield: 1.10%
While both Badger Meter and Nordson have been able to raise distributions for over 10 years in a row, they are overvalued at the moment and yield less than my 2.50% entry criteria. If they get closer to that yield either by falling in price or increasing distributions, I would add the stocks to my list for further research.
Connecticut Water Service, Inc. (CTWS), through its subsidiaries, operates as a regulated water company in Connecticut. It operates through three segments: Water Activities, Real Estate Transactions, and Services and Rentals. This dividend champion raised quarterly distributions by 2.10% to 24.25 cents/share. This marked the 43th consecutive annual dividend increase for the company. Yield: 3.10%
I like the fact that this utility has a long streak of distribution raises to its loyal investors. However, the dividend increase of 2.10% and the anemic ten year dividend growth rate of 1.60%/year are enough to make me want to look elsewhere. Utilities have historically been decent producers of current high income. The plight to chase dividends by yield hungry investors has led to poor risk reward opportunities for income investors in general.
Bob Evans Farms, Inc. (BOBE) owns and operates full-service restaurants under the Bob Evans and Mimi’s Café brand names in the United States. This dividend paying company raised quarterly distributions by 10% to 27.50 cents/share. This marked the 7th consecutive annual dividend increase for the company. Yield: 2.80%
While Bob Evans Farms looks attractively valued at the moment, it has not yet reached ten years of consecutive dividend increases. In addition, earnings have only increased from $2.13 in 2003 to $2.46 in 2012, which does not promise much in future distributions growth.
ITC Holdings Corp. (ITC), together with its subsidiaries, engages in the transmission of electricity in the United States. This dividend paying company raised quarterly distributions by 7.10% to 37.75 cents/share. This marked the 8th consecutive annual dividend increase for the company. Yield: 2.10%
Unfortunately, ITC is overvalued at the moment, as it trades at 21.80 times earnings and yields only 2.10%. I would add the stock to my list for future research and would consider initiating a position on dips below $60.
Full Disclosure: None
- My Entry Criteria for Dividend Stocks
- Dividend Achievers Offer Income Growth and Capital Appreciation
- Dividend Champions - The Best List for Dividend Investors
- The ten year dividend growth requirement
The price of oil has declined a lot since the summer of 2014. The West Texas Intermediate (WTI) in Cushing, Oklahoma has declined from a hig...
The stock market is finally having the correction everyone has been waiting for since 2012. In the past month, the S&P 500 is down by 7...
It is not a secret that stock prices have been rising for 6 - 7 years in a row now. This makes it easy to hold on to stocks, and believe tha...
I am often asked the following question in some variation: If I were starting a dividend portfolio today, and had a lump sum to put to work ...
As someone who has been investing in, and writing about dividend paying companies for over seven years , I have accumulated a lot of observa...
As many of you know, I only invest my money in companies which pay dividends. I have made a lot of money that way , and I use dividends as a...
Note: I originally planned to post this article tomorrow, but in light of recent developments about Baxalta being in the process of being ta...
I have been focusing on dividend growth investing for several years now. As such, I try to think about why it works, and also think about s...
As an investor my goal is to attain financial independence using my dividend growth strategy. As a dividend investor, my goal is to generat...
One of my favorite quotes from Warren Buffett deals with an issue that many dividend investors face from time to time. The quote is” If you...