Over the past week, several dividend companies raised distributions to shareholders. I narrowed down the list to five companies, each of which had raised dividends for over a quarter of a century. In order to be successful however, dividend investors need to be able to isolate those companies with a strong dividend raising record, which also have bright prospects ahead of them. Purchasing a small piece of their business should also be done only at attractive valuations, after a thorough analysis has been completed. The five dividend champions that announced dividend hikes over the past week, are reviewed below and include:
3M Company (MMM) operates as a diversified technology company worldwide. The company raised its dividends by 7.60% to 63.50 cents/share. This marked the 55th consecutive annual dividend increase for this dividend king. Over the past decade, the company has managed to boost distributions by 6.60%/year. Currently, 3M Company is attractively valued at 16.20 times earnings and yields 2.50%. I like the potential for earnings and dividend growth for 3M company. The company has managed to boost earnings from $2.53/share in 2002 to $6.32/share by 2012. Forward earnings/share are expected to reach $6.84 in 2013 and $7.51 in 2014. As a result, I plan on adding to my position in the stock subject to availability of funds, as long as the price is below $101.60. Check my analysis of the stock for more information.
Archer-Daniels-Midland Company (ADM) manufactures and sells protein meal, vegetable oil, corn sweeteners, flour, biodiesel, ethanol, and other value-added food and feed ingredients. The company raised its dividends by 8.60% to 19 cents/share. This marked the 37th consecutive annual dividend increase for this dividend champion. The company raised distributions after 5 quarters, rather than four, which probably scared many investors off. At the previous dividend increase in 2011 however, the company maintained the new dividend rate for only 3 quarters, before raisin it again. Over the past decade, the company has managed to boost distributions by 12.30%/year. Currently, Archer-Daniels-Midland is attractively valued at 14.60 times earnings and yields 2.50%. I own a very small position in the stock, and I plan to update my research before committing more capital to it.
Bemis Company, Inc. (BMS) manufactures and sells flexible packaging products and pressure sensitive materials in North America, Latin America, Europe, and the Asia Pacific. The company raised its dividends by 4% to 26 cents/share. This marked the 30th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to boost distributions by 6.80%/year. While the stock yields 2.70%, I find that the stock is currently overvalued at 22.10 times earnings and as such a hold.
WGL Holdings, Inc. (WGL), through its subsidiaries, sells and delivers natural gas, and provides energy-related products and services. The company raised its dividends by 5% to 42 cents/share. This marked the 37th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to boost distributions by 2.30%/year. Currently, WGL Holdings is attractively valued at 15.40 times earnings and yields 3.90%. Given the slow earnings and distributions growth over the past decade, and the projected low growth ahead, I view this stock as a hold at best.
Diebold, Incorporated (DBD) provides integrated self-service delivery and security systems and services primarily to the financial, commercial, government, and retail markets worldwide. The company raised its dividends by almost one percent to 28.75 cents/share. This marked the 60th consecutive annual dividend increase for this dividend king. Over the past decade, the company has managed to boost distributions by 5.60%/year. Currently, Diebold is attractively valued at 15 times forward earnings and yields 3.90%. While 60 years of consecutive dividend growth is a record for a dividend growth stock, I am not so bullish on the stock going forward. Over the past decade, earnings have been very volatile, and the near term prospects for growth are not that rosy either. Dividend investors should focus more on prospects for future total returns, rather than a super lengthy past record of dividend raises such as in this case. Check my analysis of the stock for more details.
Full Disclosure: Long MMM, ADM
- The Dividend Kings List Keeps Expanding
- Dividend Champions - The Best List for Dividend Investors
- Avoid Dividend Cutters at All Costs
- Does entry price matter to dividend investors?
- Dividend Growth Investing Gets No Respect
A common question I receive deals with the amount of money needed for retirement. This amount varies depending to personal situations. 1...
Last week I shared with you a list of nine dividend champions , which I believed were attractively valued. Today I am sharing with you a few...
Last month, I discussed with you reasons to have your own unique investment strategy . I reached the following conclusion: If you follow ...
I invest in dividend growth stocks in order to generate a rising stream of dependable dividend income. Dividend income is more stable , and ...
I recently read the following announcement from Vanguard : " Vanguard Dividend Growth Fund (VDIGX) is closed to new investors as of J...
It is important to understand the simple math behind early retirement. Your savings rate, and asset returns will determine how long it takes...
Every dollar that you have in your possession can be traced back to you exchanging your labor for money. The labor you provided was essentia...
This guest post was written by Joe Ferris, who is a long-time reader of the site. The author now manages money professionally and creates in...
The most common question or variation of a question I get concerns the amount of time to monitor my portfolio . This includes monitoring exi...
I invest in dividend growth stocks in order to generate a rising stream of dependable dividend income. Dividend income is more stable than c...