I review dividends increases every week, as part of my monitoring process. I typically focus my attention to companies that have raised dividends for at least a decade.
I like the signaling power of dividends. A company can only afford to grow a dividend for extended periods of time if it has been able to grow cashflows over that same period of time. You cannot easily grow cashflows, while also distributing more cash each year, without having some sort of a moat or competitive advantage. In other words, rising dividends are a trail of breadcumbs that signal to serious researchers that there are some good companies for review.
A long history of dividend increases is an end result of a quality business, with strong competitive advantages and strong history of generating cash flows. It is very likely that these are dependable and recurring cashflows as well, and this business enjoys a high rate of return on invested capital. The reason these businesses are able to generate so much excess cashflows is because they generate high returns on invested capital. In other words, they do not need a lot of capital to grow.
That being said, a long history of dividend increases is just the first step in the process. It merely puts a company on the map (or in my investable population). Further work is needed to screen, and evaluate companies one at a time, until a manageable list for investment at the right price is generated. Monitoring such a list is important as well, whether it's a current holding or a prospective one. Monitoring can also provide investors with lessons for further learning.
One of my monitoring processes is to evaluate companies that recently raised dividends that also have a ten year track of annual dividend increases.
Over the past week, there were nine such companies. The companies include:
Alerus Financial Corporation (ALRS) operates as the bank holding company for Alerus Financial, National Association that provides various financial services to businesses and consumers in the United States. The company operates through three segments: Banking, Retirement and Benefit Services, and Wealth.
The company raised quarterly dividends by 5% to $0.21/share. This is the 27th consecutive annual dividend increases for this dividend champion. Over the past decade, the company has increased dividends at an annualized rate of 7.74%.
The company's earnings went from $1.26/share in 2015 to $0.84/share in 2024.
The company is expected to earn $2.19/share in 2025.
The stock sells for 9.57 times forward earnings and yields 4.04%.
Flowers Foods, Inc. (FLO) produces and markets packaged bakery food products in the United States.
The company raised quarterly dividends by 3.13% to $0.2475/share. This is the 24th consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has increased dividends at an annualized rate of 6.95%.
The company's earnings went from $0.90/share in 2015 to $1.18/share in 2024.
The company is expected to earn $1.11/share in 2025.
The stock sells for 16.48 times forward earnings and yields 6.01%.
Lennox International Inc. (LII) designs, manufactures, and markets products for the heating, ventilation, air conditioning, and refrigeration markets in the United States, Canada, and internationally.
The company raised quarterly dividends by 13.04% to $1.30/share. This is the 16th consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has increased dividends at an annualized rate of 15.34%.
The company's earnings went from $4.16/share in 2015 to $22.67/share in 2024.
The company is expected to earn $22.86/share in 2025.
The stock sells for 25.14 times forward earnings and yields 0.92%.
Logitech International S.A. (LOGI) designs, manufactures, and markets software-enabled hardware solutions that connect people to working, creating, gaming, and streaming worldwide.
The company raised the annual dividend 8.62% to 1.26 CHF/share.
This is the 12th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the dividend has increased at an annualized rate of 17.77%/year.
The company's earnings went from $0.73/share in 2015 to $4.17/share in 2024.
The company is expected to earn $4.47/share in 2025.
The stock sells for 19.38 times forward earnings and yields 1.58%.
LyondellBasell Industries N.V. (LYB) operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and Polyolefins—Americas; Olefins and Polyolefins—Europe, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology.
The company raised quarterly dividends by 2.24% to $1.37/share. This is the 15th consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has increased dividends at an annualized rate of 6.92%.
The company's earnings went from $9.61/share in 2015 to $4.17/share in 2024.
The company is expected to earn $3.83/share in 2025.
The stock sells for 14.72 times forward earnings and yields 9.76%.
Medtronic plc (MDT) develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide.
The company raised quarterly dividends by 1.43% to $0.71/share. This is the 48th consecutive annual dividend increase for this dividend aristocrat. Over the past decade, the company has increased dividends at an annualized rate of 9.01%.
The company's earnings went from $10.51/share in 2015 to $28.39/share in 2024.
The company is expected to earn $25.20/share in 2025.
The stock sells for 18.77 times forward earnings and yields 1.96%.
Northrop Grumman Corporation (NOC) operates as an aerospace and defense technology company in the United States, the Asia/Pacific, Europe, and internationally.
The company raised quarterly dividends by 12.14% to $2.31/share. This is the 22nd consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has increased dividends at an annualized rate of 11.50%.
The company's earnings went from $2.51/share in 2015 to $3.63/share in 2024.
The company is expected to earn $5.64/share in 2025.
The stock sells for 14.36 times forward earnings and yields 3.51%.
Universal Corporation (UVV) engages in sourcing, processing, and supplying leaf tobacco and plant-based ingredients worldwide. It operates through two segments, Tobacco Operations, and Ingredients Operations.
The company raised quarterly dividends by 1.23% to $0.82/share. This is the 55th consecutive annual dividend increases for this dividend king. Over the past decade, the company has increased dividends at an annualized rate of 4.67%.
The company's earnings went from $4.33/share in 2015 to $4.81/share in 2024.
The company is expected to earn $5.02/share in 2025.
The stock sells for 11.59 times forward earnings and yields 5.53%.
Unum Group (UNM) provides financial protection benefit solutions in the United States, the United Kingdom, and Poland. It operates through Unum US, Unum International, Colonial Life, and Closed Block segment.
The company raised quarterly dividends by 9.52% to $0.46/share. this is the 17th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has increased dividends at an annualized rate of 9.74%.
The company's earnings went from $3.51/share in 2015 to $9.49/share in 2024.
The company is expected to earn $8.95/share in 2025.
The stock sells for 8.90 times forward earnings and yields 2.30%.
I like to review the most recent dividend increase against the history from the last decade. It is helpful to evaluate the trends in financials, such as earnings per share in order to gain an understanding whether dividend growth is based on solid fundamentals. I also like to review the current valuation. It tend to gather all that information to then think through the trade-offs between dividend yield and dividend growth, and how cyclical the business is.
Relevant Articles:
- Nine Dividend Growth Companies Confident In Their Prospects
