Dividend growth stocks are the gift that keeps on giving. I like the fact that most of the work in selecting good dividend growth stocks is upfront in analyzing those investments. What follows next is a lifetime of dividend payments, distributed every quarter, which grow over time. My goal is to assemble enough dividend growth stocks in my portfolio, in order to start generating income to pay for my retirement. My dividend portfolio is a silent worker in my household, who works 24/7 for me, and who dutifully shares all of their income with me. This income is completely passive in nature, and it does not require me to wake up at 6 am every day, shuffle TPS reports all day long, and make sure I do not forget to put a coversheet on those same reports.
I like watching dividend growth investing at work – this is when the companies I own keep rewarding me with a higher dividend check for a decision I made years ago. There were several notable companies which raised their dividends to shareholders. The list includes:
Omega Healthcare Investors, Inc. (OHI) is a real estate investment trust which invests in healthcare facilities, primarily in long-term healthcare facilities in order to create its portfolio. The company increased its quarterly dividend to 55 cents/share. This increase represents a 7.80% increase over the distribution paid during the same time last year. Omega Healthcare Investors is a dividend achiever, which has managed to grow dividends for 13 years in a row. Over the past decade, this REIT has managed to boost dividends by 10.90%/year. This REIT currently yields 6.20%. Check my review of Omega Healthcare Investors for more details.
Kinder Morgan, Inc. (KMI) operates as an energy infrastructure and energy company in North America. The company operates through Natural Gas Pipelines, CO2, Terminals, Products Pipelines, Kinder Morgan Canada, and Other segments. The company increased its quarterly dividend to 49 cents/share. This represents a 14% increase over the distribution paid during the same time last year. In addition, the company is on track to reach annual dividend payments of $2/year in 2015. Kinder Morgan has managed to raise dividends every single year since it went public in 2011. The stock yields 5.20%.Since this is my largest position, I will not be buying more shares. However, I am bullish on the company and its plans to grow distributions over the foreseeable future.
ConocoPhillips (COP) explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids worldwide. Its portfolio includes shale and oil sands assets; lower-risk legacy assets in North America, Europe, Asia, and Australia. The company increased its quarterly dividend by 1.40% to 74 cents/share. ConocoPhillips is a dividend achiever, which has managed to grow dividends for 14 years in a row. Over the past decade, the company has managed to boost dividends by 15.20%/year. The stock yields 5.20%. Based on the expected earnings for 2015 of 31 cents/share, the company will be unable to cover distributions well. Even if you look at expected earnings for 2016 of $2.24/share, we could see that the company will be unable to cover dividends from earnings. As such, the defensive dividend growth investor like myself will hold but not add under current conditions. There is one energy company I want to buy, and it is not ConocoPhillips.
The J. M. Smucker Company (SJM) manufactures and markets branded food products worldwide. It operates through four segments: U.S. Retail Coffee; U.S. Retail Consumer Foods; U.S. Retail Pet Foods; and International, Foodservice, and Natural Foods. The company increased its quarterly dividend by 4.70% to 67 cents/share. J. M. Smucker is a dividend achiever, which has managed to grow dividends for 18 years in a row. Over the past decade, this company has managed to boost dividends by 9.60%/year. The stock sells for 18.90 times forward earnings and yields 2.50 %. I have analyzed the company before, but never really pulled the trigger on it.
National Retail Properties, Inc. (NNN) is a publicly owned equity real estate investment trust which acquires, owns, manages, and develops retail properties in the United States. The company increased its quarterly dividend by 3.60% to 43.50 cents/share. National Retail Properties is a dividend champion, which has managed to grow dividends for 26 years in a row. Over the past decade, this REIT has managed to boost dividends by 2.50%/year. This REIT currently yields 4.70%. While I like the business, and find it to be defensive and quality one, I do not like the low growth in distributions. As a result, I would take a pass on National Retail Properties as of today.
Cummins Inc. (CMI) designs, manufactures, distributes, and services diesel and natural gas engines, and engine-related component products. It operates through four segments: Engine, Distribution, Components, and Power Generation. The company increased its quarterly dividend by 25% to 97.50 cents/share. This marked the tenth consecutive annual dividend increase for Cummins. Over the past decade, the company has managed to boost dividends by 25.10%/year. The stock is selling at 12.90 times forward earnings and yields 3%. This is a company that I have not analyzed before. I will add it to my list for further research.
Full Disclosure: Long OHI, KMI, COP,
- The Energy Company I want to buy
- How to read my weekly dividend increase reports
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- Why Dividend Growth Stocks Rock?
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