Ten Dividend Growth Stocks Raising Dividends Last Week

I review the listings of dividend increases every week, as part of my monitoring process. This exercise helps me review existing holdings and also identify companies for further research.

I focus my attention on the companies that have managed to increase dividends for at least ten years in a row, in order to identify consistent dividend growth companies. 

This exercise is also helpful, because it shows the quick review I do before deciding if a company is worth a more thorough review. Notably, this exercise results in three outcomes:

1) Company is not attractive from a fundamentals perspective. So I basically do nothing.

2) Company is attractive from a fundamentals perspective, but seems overpriced. So I basically put it on a list for potential acquisitions, assuming my ideal price hits. I try to familiarize with these companies during downtime, in order to be able to act if/when they become attractively priced.

3) Company is attractive from a fundamentals perspective and seems attractively priced today. I would prioritize this company for research today. Depending on findings, there is a high chance I may add it if I understand it well.

This is just a general framework I use when evaluating dividend growth stocks in general. That applies for screening companies as well as more manual processes such as reviewing the list of dividend increases every week.

The list of ten companies listed below includes the companies that raised dividends last week, and also have a ten year track record of annual dividend increases.

ChoiceOne Financial Services, Inc. (COFS) operates as the bank holding company for ChoiceOne Bank that provides banking services to corporations, partnerships, and individuals in Michigan.

The company raised quarterly dividends by 3.80% to $0.27/share. This was the 12th consecutive annual dividend increase for this dividend achiever. The company has managed to increase dividends at an annualized rate of 8.30%/year during the past decade.

The company managed to grow earnings from $1.40/share in 2013 to $3.15/share in 2022. ChoiceOne Financial Services is expected to earn $2.79/share in 2024.

The stock sells for 8.96 forward earnings and yields 4.19%.

Graco Inc. (GGG) designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide.

The company increased quarterly dividends by 8.50% to $0.255/share. This was the 26th consecutive annual dividend increase for this dividend champion. The company has managed to increase dividends at an annualized rate of 10.80%/year during the past decade.

The company has also managed to grow earnings from $1.15/share in 2014 to $2.73/share in 2023. Graco is expected to earn $3.03/share in 2024.

The stock sells for 26.66 times forward earnings and yields 1.16%.

Merck & Co., Inc. (MRK) operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health.

The company increased quarterly dividends by 5.50% to $0.77/share. This was the 12th consecutive annual dividend increase for this dividend achiever. The company has managed to increase dividends at an annualized rate of 5.10%/year during the past decade.

The company has also managed to grow earnings from $1.49/share in 2013 to $4.73/share in 2022. Graco is expected to earn $8.44/share in 2024.

The stock sells for 12.14 forward earnings and yields 2.98%.

McCormick & Company, Incorporated (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. It operates in two segments, Consumer and Flavor Solutions. 

The company increased quarterly dividends by 7.70% to $0.42/share. This marks the 38th consecutive year that the Company has increased its quarterly dividend.  This dividend aristocrat has managed to increase dividends at an annualized rate of 9.10%/year during the past decade.

Brendan M. Foley, President & CEO, said, "With our relentless focus on growth, performance and people, and the continued execution of our proven strategies, we are well positioned to deliver sustainable long-term growth and build shareholder value. We remain committed to our long history of returning cash to shareholders and I am pleased to announce another dividend increase."

The company managed to grow earnings from $1.47/share in 2013 to $2.54/share in 2022. McCormick is expected to earn $2.64/share in 2024.

The stock sells for 24.56 times forward earnings and yields 2.55%.

Raymond James Financial, Inc. (RJF) is a diversified financial services company, provides private client group, capital markets, asset management, banking, and other services to individuals, corporations, and municipalities in the United States, Canada, and Europe.

The company increased quarterly dividends by 7.10% to $0.45/share. This was the 11th consecutive annual dividend increase for this dividend achiever. The company has managed to increase dividends at an annualized rate of 14.60%/year during the past decade.

The company managed to grow earnings from $2.27/share in 2014 to $8.16/share in 2023. Raymond James Financial is expected to earn $9.27/share in 2024.

The stock sells for 11.34 times forward earnings and yields 1.67%.

RGC Resources, Inc. (RGCO) operates as an energy services company. It sells and distributes natural gas to residential, commercial, and industrial customers in Roanoke, Virginia, and the surrounding localities. The company also provides various unregulated services.

The company raised quarterly dividends by 1.30% to $0.20/share. The Company has now increased the annual dividend 20 consecutive years.

The company managed to grow earnings from $0.67/share in 2014 to $1.14/share in 2023. RGC Resources is expected to earn $1.07/share in 2024.

The stock sells for 16.40 times forward earnings and yields 4.32%.

There were also four Canadian Banks that increased dividends over the past week as well. Each has managed to raise annual dividends for a decade as well. The numbers listed are in Canadian Dollars.

Canadian Imperial Bank of Commerce (CM) provides various financial products and services to personal, business, public sector, and institutional clients in Canada, the United States, and internationally. The company operates through Canadian Personal and Business Banking; Canadian Commercial Banking and Wealth Management; U.S. Commercial Banking and Wealth Management; Capital Markets and Direct Financial Services; and Corporate and Other segments. 

The bank raised quarterly dividends by 3.40% to $0.90/share. This was also a 5.88% increase over the dividend paid during the same time last year. It's also the 13th consecutive year of annual dividend increases for this Canadian Dividend Achiever.

Over the past decade, the company has managed to grow dividends at an annualized rate of 6.12%.

It has also managed to grow earnings from $3.94/share in 2014 to $5.16/share in 2023. Canadian Imperial Bank of Commerce is expected to earn $6.66/share in 2024.

The stock is selling for 8.42 times forward earnings and yields 6.42%

National Bank of Canada (NA) (NTIOF in US) provides various financial products and services to retail, commercial, corporate, and institutional clients in Canada and internationally. It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International.

The bank raised quarterly dividends by 3.90% to $1.06/share. This was also a 9.27% increase over the dividend paid during the same time last year. It's also the 14th consecutive year of annual dividend increases for this Canadian Dividend Achiever.

Over the past decade, the company has managed to grow dividends at an annualized rate of 8.90%.

It has also managed to grow earnings from $4.32/share in 2014 to $9.42/share in 2023. National Bank of Canada is expected to earn $9.41/share in 2024.

The stock is selling for 9.56 times forward earnings and yields 4.50%

Royal Bank of Canada (RY) operates as a diversified financial service company worldwide. 

The bank raised quarterly dividends by 2.20% to $1.38/share. This was also a 4.55% increase over the dividend paid during the same time last year. It's also the 13th consecutive year of annual dividend increases for this Canadian Dividend Achiever.

Over the past decade, the company has managed to grow dividends at an annualized rate of 7.76%.

It has also managed to grow earnings from $6.03/share in 2014 to $10.51/share in 2023. Royal Bank of Canada is expected to earn $11.72/share in 2024.

The stock is selling for 10.47 times forward earnings and yields 4.49%

The Toronto-Dominion Bank (TD) provides various financial products and services in Canada, the United States, and internationally. It operates through four segments: Canadian Personal and Commercial Banking, U.S. Retail, Wealth Management and Insurance, and Wholesale Banking.

The bank raised quarterly dividends by 6.30% to $1.02/share. It's also the 13th consecutive year of annual dividend increases for this Canadian Dividend Achiever.

Over the past decade, the company has managed to grow dividends at an annualized rate of 7.76%.

It has also managed to grow earnings from $4.15/share in 2014 to $5.61/share in 2023. The Toronto-Dominion Bank is expected to earn $8.26/share in 2024.

The stock is selling for 10.02 times forward earnings and yields 4.93%

Sources of Investor Returns: Visa Edition

 Investor returns are a function of:

1. Dividends

2. FCF/Share Growth

3. Change in valuations

The first two items drive the fundamental return for investors. The last item is the speculative return.

It is important to understand where investor returns come from.

Let's illustrate this concept with an actual example, using Visa (V).

At the end of 2012, Visa $V stock sold at $37.90/share. The stock had a forward annual dividend of $0.33/share. 

The company generated $1.74/share in Free Cash Flow.

The stock had a low yield of 0.87%, and a Price to FCF of 21.78.

In 2022, Visa generated $8.58 in FCF/share. The trailing 12-month FCF is at $10.52/share. The stock has a forward annual dividend of $2.08/share.  

Visa yields 0.88% today. It sells for 22.50 times trailing FCF..

An investor who bought 1 share of Visa at the end of 2012, and reinvested dividends, would have 1.077665 shares today.

This $37.90 investment in Visa turned to $252.87

Going back to the formula for estimating returns, they are a function of:

1. Dividends

2. FCF/Share Growth

3. Change in Valuation Multiple

For Visa, between 2012 and today, the majority of returns in this case came from growth in FCF/Share from $1.74 to $10.52.

This drove growth in dividends, though dividends accounted for a smaller return than growth in FCF/Share.

The slight uptick in valuation contributed a miniscule amount to returns.

Going forward however, any thing could happen. There are various outcomes/possibilities.

For example, the business may still grow at a high pace over the next decade (though probably not by 500%).

However, a contraction in the valuation multiple could depress returns over a short period of time such as a decade

For example, if Visa generated $25/share in FCF in 2034, that would be a 137% increase in FCF/Share

However, if the business sells for only 10 times FCF, the share price would be $250. So that would be not much further from here, because the speculative return would be negative.

In that case, dividends would likely provide a higher level of returns, as yields would be higher and there would be less of a need for growth to generate returns.

The total investment return would be higher than the share price, because of the DRIP.

If the business sells for 20 times FCF, share prices would likely be driven by FCF/growth and Dividend reinvestment for the rest. The speculative return would be negative, but won't have much of a noticeable impact.

It is fascinating to look at the past history of FCF/EPS, Dividends, Valuations, and try to project onto the future, while also thinking of various scenarios. Note, I am not predicting anything, just trying to show how change in one variable could have a drastic impact. 

For example, a business could operate at a steady rate of growth, but could generate great returns if the valuation multiple stays flat, but terrible returns if the valuation multiple shrinks. That's assuming we did a good job evaluating the fundamental characteristics of the business of course. 

So even if we did a good job of evaluating a business, we have no idea what the multiple would be in a decade for example. It's just good to be aware that various outcomes are possible. This keeps us humble, and searching for ways to protect ourselves from future ignorance. 

To me, this means diversification, and trying to avoid overpaying for a security. Sometimes, a security would get ahead of itself, and sell at a very high valuation. This depresses future returns, even if the business does as expected. On the other hand, the business may do well, while the security languishes for a long time. This increases future returns. It's therefore important to have some margin of safety. Easier said than done of course.

 It also means building out positions slowly and overtime, while checking my thesis. It also means limiting how much I invest in a security. Reinvesting dividends elsewhere, versus DRIP is another risk management tool, as is keeping investment costs low.

Having an exit plan set out before the investment is purchased can be helpful as well

Charlie Munger Quotes on Investing and Life

Charlie Munger died today at the age of 99. While that is sad news, the knowledge he shared with the world will live forever.

Charlie Munger was Warren Buffett’s business partner at Berkshire Hathaway. He was a successful lawyer, and investor, who was instrumental in helping Warren expand his investing horizon. Charlie is credited with encouraging Buffett to invest in high quality businesses, which compound over time. Before that, Buffett spent most his attention to statistically cheap stocks.

Charlie Munger is not studied as well as Warren Buffett, which is a shame. It’s a shame because Charlie Munger has shared a lot of insightful lessons on investing, human nature and human biases, which could help many aspiring investors.

There are two good books I have read about Charlie Munger. The first one is “Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger”, and the second is “Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition”.

Warren Buffett's partner at Berkshire Hathaway was a fountain of knowledge and wisdom

I have compiled 99 Charlie Munger quotes in celebration for his life:

1. The big money is not in the buying and the selling, but in the waiting.

2. Those who keep learning, will keep rising in life.

3. Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris – I wanted independence. I desperately wanted it.

4. There isn’t a single formula. You need to know a lot about business and human nature and the numbers… It is unreasonable to expect that there is a magic system that will do it for you.

5. There is no better teacher than history in determining the future… There are answers worth billions of dollars in a history book.

6. Envy is a really stupid sin because it’s the only one you could never possibly have any fun at. There’s a lot of pain and no fun. Why would you want to get on that trolley?

7. We have three baskets for investing: yes, no, and too tough to understand.

8. There are three ways to go broke: 'liquor, ladies and leverage'

9. Spend each day trying to be a little wiser than you were when you woke up. Day by day, and at the end of the day if you live long enough-like most people, you will get out of life what you deserve.”

10. I constantly see people rise in life who are not the smartest, sometimes not even the most diligent, but they are learning machines. They go to bed every night a little wiser than they were when they got up and boy does that help, particularly when you have a long run ahead of you.

11. Knowing what you don’t know is more useful than being brilliant

12. Live within your income and save so that you can invest. Learn what you need to learn

13. It’s remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent

14. “Take one simple idea and take it seriously.”

15. In my whole life, I have known no wise people who didn’t read all the time – none, zero.

16. A great business at a fair price is superior to a fair business at a great price

17. If you can get really good at destroying your own wrong ideas, that is a great gift

18. You’d be amazed at how much Warren reads–and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out

19. Develop into a lifelong self-learner through voracious reading; cultivate curiosity and strive to become a little wiser every day.

20. People calculate too much and think too little

21. Go to bed smarter than when you woke up

22. All I want to know is where I'm going to die so I'll never go there

23. I think that, every time you see the word EBITDA, you should substitute the words "bullshit earnings

24. We have three baskets: in, out, and too tough. … We have to have a special insight, or we’ll put it in the “too tough” basket.

25. Do the work on your desk. Do well with what you already have and more will come in.”

26. To get what you want, you have to deserve what you want. The world is not yet a crazy enough place to reward a whole bunch of undeserving people

27. It's not supposed to be easy. Anyone who finds it easy is stupid

28. When you mix raisins and turds, you still get turds

29. You don’t have to be brilliant, only a little bit wiser than the other guy on average, for a long time

30. Acknowledging what you don’t know is the dawning of wisdom

31. It takes character to sit with all that cash and to do nothing. I didn't get to the top where I am by going after mediocre opportunities

32. Being something and doing something that no one had done before are two different things

33. If you keep learning all the time you have a huge advantage

34. A majority of life's errors are caused by forgetting what one is really trying to do

35. The best thing a human can do is to help another human being know more

36. The habit of committing far more time to learning and thinking than to doing is no accident.

37. One of the greatest ways to avoid trouble is to keep it simple...the system often goes out of control

38. Opportunity comes to the prepared mind

39. I paid no attention to the territorial boundaries of academic disciplines and I just grabbed all the big ideas that I could

40. I try to get rid of people who confidently answer questions about which they don't have any real knowledge

41. I believe in the discipline of mastering the best that other people have ever figured out. I don't believe in just sitting down and trying to dream it all up yourself

42. Simplicity has a way of improving performance by enabling us to better understand what we are doing

43. You should avoid sloth and unreliability

44. envy, resentment, and self-pity are disastrous modes of thoughts. Self-pity gets fairly close to paranoia, and paranoia is one of the very hardest things to reverse.

45. Those of us who have been fortunate have a duty to give back. Whether one gives a lot as one goes along as I do, or a little and then a lot (when one dies) as Warren does, is a matter of personal preference

46. We recognized early on that smart people do very dumb things, and we wanted to know why and who, so that we could avoid them

47. Live within your income and save so you can invest. Learn what you need to learn

48. It's waiting that helps you as an investor and a lot of people just can't stand to wait. If you didn't get the deferred -gratification gene, you've got to work very hard to overcome that

49. All intelligent investing is value investing, acquiring more than you are paying for

50. A lot of people with high IQs are terrible investors because they've got terrible temperaments

51. The liabilities are always 100 percent good. It's the assets you have to worry about

52. the most famous composer in the world but was utterly miserable most of the time, and of the reasons was because he always overspent his income. This was Mozart. If Mozart couldn't get by with this kind of asinine conduct, I don't think you should try

53. We're not interested in taking a substantial chance of taking a lot of very decent people back to 'Go' so we can have one more zero on our net worth.

54. Mimicking the herd invites regression to the mean

55. You must force yourself to consider opposing arguments. Especially when they challenge your best-loved ideas

56. We both (Warren Buffett) insist on a lot of time being available almost every day to just sit and think. That is very uncommon in American business. We read and think.

57. Our game is to recognize a big idea when it comes along when one doesn't come along very often.

58. Ninety-nine percent of the troubles that threaten our civilization come from too optimistic, therefore we should have a system where the accounting is a way more conservative

59. We try to operate in a seamless web of deserved trust and be careful of whom we trust

60. Assume life will be really tough, and then ask if you can handle it. If the answer is yes, you've won

61. Just because you like it does not mean that the world will necessarily give it to you.

62. I would argue that passion is more important than brainpower

63. Is there such a thing as a cheerful pessimist? That's what I am

64. Remember that reputation and integrity are your most valuable assets and can be lost in a heartbeat

65. Always take the high road, it's far less crowded

66. You need patience, discipline, and agility to take losses and adversity without going crazy

67. No wise pilot, no matter how great his talent and experience, fails to use a checklist

68. There is no way you can live an adequate life without making mistakes

69. Invert, always invert: Turn a situation or problem upside down. Look at it backward

70. All I want to know is where I'm going to die, so I'll never go there

71. worldly wisdom" consists of a set of mental models framed as a latticework to help solve critical business problems

72. Good businesses are ethical businesses. A business model that relies on trickery is doomed to fail

73. If you’re going to live a long time, you have to keep learning — what you formerly knew is never enough. So if you don’t learn to constantly revise your earlier conclusions, and get better ones, you are — I always use the same metaphor — you’re like a one-legged man in an ass-kicking contest.

74. A majority of life's errors are caused by forgetting what one is really trying to do

75. I met the towering intellectuals in books, not in classroom, which is natural. My family was into all that stuff, getting ahead through discipline, knowledge, and self-control

76. Wall Street has too much wealth and political power

77. I've seen so much folly and stupidity on the part of our major philanthropic groups, including the world bank. I really have more confidence in building up the more capitalistic ventures like Costco

78. It's like the slaughter of the innocents. It makes the people who run Las Vegas seem like good people

79. Everywhere there is a large commission, there is a high probability of a rip-off

80. Some people are extraordinarily good at knowing the limits of their knowledge because they have to be

81. Part of what you must learn is how to handle mistakes and new facts that change the odds. Life, in part, is like a poker game wherein you have to learn to quit sometimes when holding a much-loved hand

82. The iron rule of nature is: You get what you reward for. If you want ants to come, you put sugar on the floor

83. Another thing, of course, is that life will have terrible blows in it, horrible blows, unfair blows. It doesn't matter. And some people recover and others don't

84. Confucious said that real knowledge is knowing the extent of one's ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome

85. Wisdom acquisition is a moral duty. It's not something you do just to advance in life...You are not going to get very far in life based on what you already know. You're going to advance in life by what you learn after you leave here

86. One solution fits all is not the way to go. All these cultures are different. The right culture for the Mayo Clinic is different from the right culture at a Hollywood movie studio. You can't run all these places with a cookie-cutter solution

87. There's a tendency to think that our present politicians are much worse than we had in the past. But we tend to forget how awful our politicians were in the past

88. Most people are too fretful, they worry too much. Success means being very patient, but aggressive when it's time

89. You don't have to have the ability that quantum mechanics requires. You just have to know a few simple things and really know them

90. Don't drift into self-pity because it doesn't solve any problems

91. There is not more money to be made from law, but less time to enjoy it

92. If something is too hard, we move on to something else. What could be more simpler than that

93. The best armor of old age is a well-spent life perfecting it

94. I think that one should recognize the reality even when one doesn't like it; indeed, especially when one doesn't like it

95. "If you can’t stomach 50% declines in your investment, you will get the mediocre returns you deserve"

96. The first rule of compounding: Never interrupt it unnecessarily

97. The first $100,000 is a b!tch

98. To get there a person must consistently underspend his income. Getting wealthy, is like rolling a snowball. It helps to start on top of a long hill start early and try to roll that snowball for a very long time. It helps to live a long life.

99. To a man with a hammer, everything looks like a nail

Thank you for reading! 

You can read more about Charlie Munger below:

- -The first $100,000 is the hardest

- Charles Munger: A Lesson on Elementary, Worldly Wisdom As It Relates To Investment Management & Business

- “Damn Right: Behind the Scenes with Berkshire Hathaway Billionaire Charlie Munger”

- “Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger, Expanded Third Edition”.

- Warren Buffett and Charlie Munger on Leverage

- Warren Buffett and Charlie Munger on Short Selling

- Warren Buffett and Charlie Munger on Investing in Tobacco Stocks

Hormel Foods Dividend Stock Review

Hormel Foods Corporation (HRL) develops, processes, and distributes various meat, nuts, and food products to retail, foodservice, deli, and commercial customers in the United States and internationally. The company operates through four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. 

The company increased dividends by 2.70% to $0.2825/share. This marked the 58th consecutive annual dividend increase for this dividend king. Having the ability to grow dividends for 58 years in a row is not a small accomplishment. In fact there are less than 40 companies in the US which have accomplished that.

Unfortunately, this is the slowest pace of annual dividend increases for Hormel since 2009. I took a look at the annual dividend increases for Hormel, going back to 1990 to observe that. I find it helpful to review trends in dividend increases over time.

You can also see that the pace of annual dividend increases for Hormel has been decreasing over the past four years. This is why the 5 year annualized rate of dividend growth is 8.90%, while the ten year annualized rate of dividend growth is 13.20%.

I still like viewing the growth in annual dividends per share. However, we need to do some more digging beyond that (per usual).

First, we need to take a look at the trends in earnings per share over the past decade.  You can see that Hormel was able to grow earnings per share from $1/share in 2013 to a high of$1.91/share in 2018. For the next 4 - 5 years however, the company has been unable to increase earnings per share above $1.91/share. I am also including forward earnings estimates of $1.63/share for 2023.

If you take a step back, you may notice that the company has basically been unable to grow earnings per share in any meaningful way since it earned $1.68/share in 2016. Without growth in earnings per share, there is a natural limit to growth in dividends per share and growth in the intrinsic value of the company.

You can also observe the relationship between earnings per share, valuation and share prices over the past decade. The stock is basically where it was five years ago or so, mostly because earnings per share have been flat, and the valuation multiple shrank to a more reasonable level at around 20.

The share price was at $21.73 at the start of the study period, which translated to a P/E ratio of almost 22. By 2018, when we achieved record earnings for the decade, the share price was at $43.64, which translated to a P/E ratio of 23. 

At extreme highs in 2016 and 2022, the stock sold as high as 34 times earnings and 33 times earnings. That translates to as high as 27 - 30 times forward earnings.

Even at the lows in 2017, the stock didn't sell materially below 20 times earnings. In my opinion, without growth in earnings per share, future dividends and growth in intrinsic value would be limited. You would likely see the stock in a range, with majority of gains driven by valuation multiple changes and whatever dividends that are paid to shareholders. My goal is to find companies that can grow earnings, dividends and intrinsic values over time, and buy them at a decent entry valuation. Timing valuation changes only is not a game I try to play.

If the company managed to grow earnings per share from here however, it may do well for shareholders who consider it today. 

Second, we need to take a look at trends in the dividend payout ratio. You can see that the dividend payout ratio was largely in a range below 40% - 45% before 2017 - 2018. You van see that the dividend payout ratio has been increasing to over 55% by 2022. At the same time earnings per share were basically flat over the last 4 - 5 years.

As a result, the growth in dividends per share since at least the past 4 - 5 years has been a direct result of the company paying a larger share of earnings as dividends. Unfortunately, there is a natural limit to the dividend payout ratio, so the closer you get to 100%, the lower the company's ability to grow dividends over time. The increase in the payout ratio basically explains why dividend growth has been decreasing. If the company is unable to grow earnings per share over time, it may even be unable to increase dividends at all, thus losing its status of a dividend king in a few years.

The forward dividend payout ratio is close to 69% right now, which seems high.

However, if the lack of increase in earnings per share is only temporary, and it resumes in the future, then the company would be able to grow dividends over time and reduce the payout ratio. We have to wait and see.

Next, I also took a look at the trends in shares outstanding for Hormel. You can see a slight increase in shares outstanding over the past decade to about 545 million shares.

Overall, the stock sells for 20 times forward earnings today and yields 3.45%. The dividend has a decent coverage rate today out of earnings. Unfortunately, the lack of earnings growth over the past five years or so gives me pause before considering buying today. If the company can manage to grow earnings per share out of this 5 year slump, then it would likely do well for shareholders.

Nine Cash Machines Hiking Dividends Last Week

 I review the list of dividend increases every week, as part of my review process. I focus my attention on companies that raised dividends in the current week, and have at least a ten-year track record of annual dividend increases.

Only a company with a strong cash flow generating business can afford to grow dividends for a long period of time. Therefore, a business growing dividends for at least a decade is worth looking at for further research.

There were nine companies that fit the criteria. You can view the five companies in the table below:

This is a list of companies for further review. Most seem attractive as businesses, but that doesn’t mean that they should be invested in at any price, regardless of valuation.

In reviewing the press releases for several of these companies, I liked the following snippets. These snippets showcase the commitment to dividend growth and the importance of it. 

Brown-Forman (BF.B): “We are proud to continue the long tradition of delivering excellent returns to our shareholders. This marks the 40th consecutive year of dividend increases and reinforces our confidence in Brown-Forman's long-term growth outlook.”

Nike (NKE): “Nike has a consistent track record of delivering strong cash flow and returns for shareholders and today’s announcement marks the 22nd consecutive year we have increased our dividend,” said John Donahoe, President & CEO, NIKE, Inc. “This dividend increase reflects our continued confidence in our strategies to generate sustainable, profitable growth, while investing for the future.”

Matthews International (MATW): "We continue to maintain a strong cash flow profile facilitating ongoing support of our long-term growth objectives.   This represents our 30th consecutive annual dividend increase since becoming a publicly-traded company.”

Royal Gold (RGLD): “Paying a growing and sustainable dividend continues to be a core strategic objective for Royal Gold,” commented Bill Heissenbuttel, President and CEO of Royal Gold. “We have paid a dividend since 2000, and despite volatility in the gold price we’ve increased our annual dividend every year since 2001. Our focus on consistently increasing our capital return to shareholders is unique in the precious metals sector, and Royal Gold is the only precious metals company in the S&P High Yield Dividend Aristocrats Index.”

This would likely be the last post for me this week. I will look forward to the Thanksgiving raises from Hormel Foods, McCormick, York Water Company, South Jersey Industries and Hingham Institution for Savings.

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