Monday, September 27, 2021

Six Dividend Growth Stocks Rewarding Shareholders With a Raise

As part of my monitoring process, I review the list of dividend increases every week. This exercise is helpful in monitoring the progress for existing holdings in my dividend growth portfolio. It is also a helpful exercise to uncover hidden gems for further research.

I like to review the press releases, and see if I can see something that jumps at me. The tone of press releases, the rate of change in dividends, when compared to historical averages and growth in fundamentals, gives me a very decent approximation if management is bluffing or is simply staying the course.

I usually focus on the companies that have managed to increase dividends for at least a decade. During the past week, the following companies raised dividends for their shareholders:

McDonald's Corporation (MCD) operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products and beverages, as well as breakfast menu.

McDonald’s increased their quarterly dividend by 7% to $1.38/share. This marked the 45th consecutive annual dividend increase for this dividend aristocrat. McDonald’s has managed to grow the dividends at an annualized rate of 8.40% over the past decade.

Earnings increased from $5.27/share in 2011 to $6.31/share in 2020.

The company is expected to earn $9.04/share in 2021.

The stock is selling for 27.07 times forward earnings and yields 2.26%.

Lockheed Martin Corporation (LMT) is a security and aerospace company that engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. It operates through four segments: Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space.

The company raised its quarterly dividend by 7.70% to $2.80/share. This was the 19th year of consecutive annual dividend increases for this dividend achiever.

Lockheed Martin has managed to grow dividends at an annualized rate of 14% over the past decade.

Earnings increased from $7.81/share in 2011 to $24.40/share in 2020.

The company is expected to earn $26.83/share in 2021.

The stock is selling for 12.83 times forward earnings and yields 3.25%.

Artesian Resources Corporation (ARTNA) provides water, wastewater, and other services in Delaware, Maryland, and Pennsylvania.

The company raised its quarterly dividend by 2.50% to 26.75 cents/share. This was the 25th consecutive annual dividend increase for this dividend champion. Artesian Resources has managed to grow the dividends at an annualized rate of 2.90% over the past decade.

Between 2011 and 2020, the company managed to grow earnings from 83 cents/share to $1.79/share.

Artesian Resources is expected to earn $1.75/share in 2021.

The stock sells for 22.10 times forward earnings and yields 2.7%.

Ingredion Incorporated (INGR) produces and sells starches and sweeteners for various industries. It operates through four segments: North America; South America; Asia Pacific; and Europe, Middle East, and Africa.

The company raised its quarterly dividend by 1.60% to 65 cents/share. This is the 11th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company managed to grow dividends at an annualized rate of 16.30%. However, the company has slowed down on the pace of annualized dividend growth in the past three years.

Between 2011 and 2020, Ingredion’s earnings went from $5.32/share to $5.15/share.

Ingredion is expected to earn $6.63/share in 2021.

The stock is selling for 13.39 times forward earnings and yields 2.93%.

Accenture plc (ACN) is a professional services company, provides strategy and consulting, interactive, and technology and operations services worldwide.

The company hiked its quarterly dividend by 10.20% to 97 cents/share. This is the 16th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to grow dividends at an annualized rate of 14.80%.

Between 2011 and 2020, the company managed to grow earnings from $3.39/share to $7.89/share.

The company is expected to earn $10.11/share in 2022.

The stock is selling for 33.92 times forward earnings and yields 1.13%.

The First of Long Island Corporation (FLIC) operates as the holding company for The First National Bank of Long Island that provides financial services to small and medium-sized businesses, professionals, consumers, municipalities, and other organizations.

The company raised its quarterly dividends by 5.13% to 20 cents/share. This is the 26th year of consecutive annual dividend increases for this dividend champion. Over the past decade, the company has managed to grow dividends at an annualized rate of 7.20%.

Between 2011 and 2020, the company managed to grow earnings from $0.98 share to $1.72/share

The company is expected to earn $1.83/share in 2021. 

The stock is selling for 11.05 times forward earnings and yields 3.77%.


Relevant Articles:

- Five Dividend Growth Stocks Delivering Raises To Shareholders

- Three Dividend Growth Stocks In the News

- Three Dividend Growth Stocks Rewarding Shareholders With Higher Payouts

- Seven Dividend Growth Stocks Rewarding Shareholders With Raises





Wednesday, September 22, 2021

Changing your mind

I recently stumbled upon a transcript from the 2013 Berkshire Hathaway meeting. It is in response to the Stock Market Capitalization to GDP indicator, which Buffett had used in 1999 to state that the stock market is overvalued. 

Here’s the transcript:

In 1999, Buffett said that corporate profits are 6% of GDP in the US and that is not sustainable. Today, corporate profits are 10% of GDP (including profits generated outside the US by US corporations). Buffett said that over the last decade business has come back much stronger than he expected in terms of profit [is it because Buffett did not anticipate the gains technology can add to a firm’s profitability?] but employment has lagged behind. 

Munger’s response to the relationship between GDP and corporate profits was, "just because Warren thought of something 20 years ago, it does not become a law of nature. There is no natural correlation between the two [GDP and corporate profits]"

This is just fascinating. Basically, Buffett and Munger end up destroying their best ideas as they keep learning. This is why they have been so successful, and have managed to adapt to changing market conditions for 50 – 70 years.

They’ve also managed to adapt to an environment where they managed a few hundred thousand dollars in the 1950s to an environment where they manage hundreds of billion of dollars in 2020s.

They’ve done that by unlearning old ideas, and learning new ideas, after careful observation of their environment.

I will include a few other quotes on the topic, which I have found to be helpful:

Winston Churchill once said to a woman berating him for changing his position, “When the facts change, I change my mind. What do you do, madam?”

Charlie Munger has stated that: “Any year that you don’t destroy one of your best-loved ideas is probably a wasted year.”

It looks like the most difficult part of investing is unlearning.

Contrast this to perma-bears, who have been forecasting doom and gloom for years. In fact, many perma-bears have used the Market Capitalization to GDP as a reason to sell US stocks for over a decade. As a result, they missed out on one of the biggest and longest bull markets in US history.

Anyone that listened to them has missed out on one of the greatest bull markets in US history – the one since 2009. Many are still using this as an excuse to avoid US stocks. This goes hand in hand with folks who are proclaiming that stocks are in a bubble, by looking at Schillers CAPE. This indicator has been bearish on US stocks for decades as well. I would argue that investors are better off using forward earnings estimates, in an effort to value equities. The CAPE pays too much attention to past earnings, and also could be facing downward pressure on earnings due to one-time events that only temporarily depress earnings in a recession ( write-offs).

For example, Schiller's CAPE seems very high at 37 today. But it has been at an elevated level for over 30 years.

There was a brief exception between 2009 - 2012.  It was high in 2013 too, when I warned investors about the dangers of CAPE and using GDP to Market Capitalization.

Translation: If you listened to the Schiller CAPE, you would have been out of stocks for most of the past 30 years, with the exception of 2 years after the Global Financial Crisis.

Source: Multipl


People who relied on CAPE would have been out of the market for over 30 years.

By contrast, these are the forward earnings estimates for S&P 500. It looks like S&P 500 is expected to earn $201/share in 2021, and $220.35/share in 2022. At a current price of around $4,500, it does not look as expensive at 22.50 times forward earnings as the CAPE at 37 suggests.


Source: Yardeni

This is the total return performance on S&P 500 since January 1, 1990. If you thought that "stocks are high" for the past 31 years, you missed out on over 2,300% increase in equities. This is the difference between being able to retire and potentially provide for the next generations, and working all your life.

If you are wrong for so long, you should stop and try to understand what happened. That could help in learning from the mistake.

This is a good thing for me to worry about too. 

We all have some ideas that are probably plain wrong. We need to evaluate our investments in a cool manner, in order to identify opportunities for improvement. This is an ongoing process of course. If you plan to invest for the next 30 - 40 years for example, then you need to plan to try and improve over the next 30 - 40 years as well.

This means to keep learning and keep improving over time. A large part of the learning process would be discarding old beliefs, which are proven to be wrong. Holding on to them for too long would be costly.

Relevant Articles:

- These three ideas can jeopardize your investing success

- The work required to have an opinion




Monday, September 20, 2021

Five Dividend Growth Stocks Delivering Raises To Shareholders

As part of my monitoring process, I review the list of dividend increases every week. This helps me review companies I own. It also helps me identify companies I may be interested in.

When I review the list of dividend increases for the week, I usually focus my attention on the companies that raised dividends for at least a decade. The next step involves doing a quick review of fundamentals, which is documented in this type of article.

I look at trends in earnings per share, dividends per share in order to get an idea of how sustainable the current dividend is. It also helps me get an idea whether dividend growth is supported by growth in earnings, which can help me in deciding the likelihood of future dividend growth.

In general, I also look at valuation as well. I look at P/E ratios in conjunction with earnings and dividend growth. Companies with more dependable earnings get more points than companies whose earnings are more cyclical and harder to depend on.

Now that we got this out of the way, it is time to present the list of companies that 1) Raised dividends last week and 2) have managed to increase dividends annually for at least a decade.

The companies include:

Microsoft Corporation (MSFT) develops, licenses, and supports software, services, devices, and solutions worldwide.

Microsoft raised its quarterly dividend by 10.70% to 62 cents/share. The board of directors also approved a new share repurchase program authorizing up to $60 billion in share repurchases.

This is the 17th year of consecutive annual dividend increase for this dividend achiever. Over the past decade, Microsoft has managed to increase dividends at an annualized rate of 14.30%.

Between 2012 and 2021, Microsoft managed to grow earnings from $2/share to $8.05/share.

Microsoft is expected to earn $8.79/share in 2022.

The stock is selling for 34.71 times forward earnings and yields 0.81%

Texas Instruments Incorporated (TXN) designs, manufactures, and sells semiconductors to electronics designers and manufacturers worldwide. It operates in two segments, Analog and Embedded Processing.

Texas Instruments increased its quarterly dividend by 13% to $1.15/share.

This marked the 18th consecutive of dividend increases for this dividend achiever. Over the past decade, Texas Instruments has managed to increase dividends at an annualized rate of 22.50%.

Between 2011 and 2020, Texas Instruments managed to grow earnings from $1.88/share to $5.97/share.

Texas Instruments is expected to earn $8.01/share in 2021.

The stock sells for 24.58 times forward earnings and yields 2.34%.

Philip Morris International Inc. (PM) manufactures and sells cigarettes, other nicotine-containing products, smoke-free products, and related electronic devices and accessories.

Philip Morris International raised its quarterly dividend by 4.20% to $1.25/share. This marked the 13th year of consecutive annual dividend increases for this international dividend achiever. Over the past decade, Philip Morris International has managed to boost dividends at an annualized rate of 7.10%.

Between 2012 and 2021, Philip Morris International managed to grow earnings from $4.85/share to $5.16/share.

Philip Morris International is expected to earn $6.09/share in 2021.

The stock sells for 16.90 times forward earnings and yields 4.86%.

Realty Income, (O) The Monthly Dividend Company, is an S&P 500 company dedicated to providing stockholders with dependable monthly income.

The REIT hiked its monthly dividend to 23.60 cents/share. This was the 112th dividend increase since going public in 1994. The recent dividend is only 0.85% higher than the dividend paid during the same time last year. Over the past decade however, Realty Income has managed to grow dividends at an annualized rate of 4.90%. Realty Income is a dividend aristocrat, which has managed to increase dividends annually since 1995.

Between 2012 and 2020, Realty Income managed to grow FFO/share from $1.98 to $3.31.

Realty Income is expected to generate $3.46/share in FFO.

The REIT is selling for 19.78 times forward FFO and yields 4.14%. Check my analysis of Realty Income for more information about the REIT.

Fifth Third Bancorp (FITB) is a diversified financial services company headquartered in Cincinnati, Ohio, and the indirect parent company of Fifth Third Bank, National Association, a federally chartered institution.

Fifth Third Bancorp raised its quarterly dividend by 11.10% to 30 cents/share. This is the eleventh year of annual dividend increases for this dividend achiever.

Between 2012 and 2021, Fifth Third Bancorp managed to grow earnings from $1.18/share to $1.83/share.

Fifth Third Bancorp is expected to earn $3.63/share in 2021.

The stock is selling for 11.12 times forward earnings and yields 2.97%.

Relevant Articles:

- Three Dividend Growth Stocks In the News

- Six Dividend Growth Stocks Rewarding Shareholders With Raises

- Five Companies Rewarding Shareholders With a Raise

- Kroger and John Wiley Reward Shareholders With Dividend Increases




Tuesday, September 14, 2021

How Earl Crawley Built a $500,000 Dividend Portfolio on Minimum Wage

Today, I wanted to share the story of Earl Crawley, a parking lot attendant who accumulated a portfolio of dividend stocks worth $500,000, despite the fact that he never made more than $20,000/year.

This story is very inspirational, and teaches us a lot of lessons that are applicable to all of us, despite the cards we are dealt in life. It reminds me a lot of the story of Ronald Read, the Vermont Gas Station Attendant, who built a dividend portfolio worth $8 million.


Mr. Earl's Story

Earl Crawley was a 69 year old Baltimore parking lot attendant, when I first heard about him in 2008.

He had worked as a parking lot attendant for a bank for the previous 44 years. He had never made more than $20,000/year. Despite all of that, he had a dividend portfolio worth $500,000 and a fully paid off home.

Earl had a difficult childhood. When he was 4, he and his three sisters and brother were placed in St. Elizabeth's Orphanage on Argonne Drive after his mother contracted tuberculosis. It took nearly three years for his mother to get well and reunite the family. They rented an apartment on Saratoga Street near Lexington Market.

Earl had started working at the age of 13, but his mother took most of his income. He had dyslexia, which is why there were not many opportunities for him beyond some manual labor jobs such as mowing lawns, cleaning houses, being a parking lot attendant. He realized he had to save as much money as he can to overcome life's challenges.

After he got married, and had three children, he supported his family on $80/week in the 1960s. Money was tight, but he lived within his means by keeping costs low and working several jobs to make more income. Despite all obstacles, his frugal attitude helped him to save and invest. He had learned this resourcefulness from his mother, who was able to make ends meet with a limited income from low wage jobs.

How did this parking lot attendant manage to learn about bonds, dividend reinvestment plans and investing in the stock market?

One day, a well-meaning co-worker took Crawley aside and put a bug in his ear: You have a limited education. You better get some money because you won't go far here. That co-worker, became a friend and mentor, spurring the youthful handyman to learn more about the stock market.

His parking lot was close to a lot of financial institutions. Earl kept asking questions, and kept learning, picking the brain of anyone who engaged. Earl listened to bankers, lawyers, brokers, believed in the power of compounding & stocks for the long run.


Mr Earl's Investing Journey

His ultimate goal was to let the money work for him so he didn't have to.

Earl started with savings stamps, savings bonds and later graduated to investing regularly in a mutual fund. He started investing consistently $25/month in a mutual fund for 15 years.

By the late 1970s, his net worth reached $25,000.

By 1981 he started investing directly in blue chip, dividend paying stocks like IBM, Coca-Cola, Caterpillar. He bought a share or two, but kept buying consistently over time. He kept reinvesting his dividends, which increased his shares and dividend income.

By 2007 he had a portfolio worth $500,000, a fully paid off house and no debt

I would imagine that his portfolio generated between $15,000 and $20,000 in annual dividend income

At his income level that was probably tax-free or tax-deferred. That’s because his assets were split between a company 401 (k), an Individual Retirement Account and a taxable account. If you are under a certain income threshold, most of your assets would be non-taxable.


Mr Earl's Portfolio Holdings

Based on information I found about him, his portfolio seemed diversified in blue chip companies that paid a dividend. Examples include:

Coca-Cola (KO)

Caterpillar (CAT)

Bank of America (BAC)

IBM (IBM)

Colgate-Palmolive (CL)

Lockheed Martin (LMT)

Verizon (VZ)

AT&T (T)

Exxon-Mobil (XOM)

He couldn't afford to lose money in the stock market. This is why he focused on stable blue chip companies, which paid a dividend.

He has stated that when he first started out, he had to be conservative and take his time because he couldn't afford to lose money. He looks for companies with stability that pay dividends. While he does use his broker, many times he'll go where my spirit leads him.

He also held mutual funds in his IRA and 401 (k). He did have a good amount of employer stock in his 401 (k) too, which was accumulated through regular payroll deductions.

Earl is also paying it forward, by donating shares to others, teaching them about dividend reinvestment and the power of compounding. He shares his lessons with other members of his church, and starting an investment club.

This knowledge would hopefully compound, make his community better educated and hopefully wealthier. This knowledge would pay dividends for generations to come, hopefully breaking the cycle of poverty for many of his friends.


Seven Wealth Building Lessons from Mr. Earl

After reviewing some interviews with Mr Earl, and reading some articles about him, I have come with a list of several lessons that helped him accumulate his nest egg.

1. Live within your means

2. Try to always save some money

3. Invest regularly on a consistent schedule

4. Invest in blue-chip dividend paying stocks

5. Reinvest those dividends

6. Let your money work hard for you

7. Keep learning

I find stories like that very inspirational. It shows me that anyone can acquire wealth if they live within their means, save and invest prudently, and take advantage of the power of compounding over long periods of time.

One of the largest misconceptions people have is that they need to earn a high income, in order to save. The important thing is to be able to live within your means, and manage your income and your expenses at the same time. The different between income and expenses is the savings rate, which should be then invested in assets such as equities.  While earning a high income can help, too often we see highly compensated employees succumb to lifestyle inflation and spend their raises, and then some, on an expensive lifestyle. While earning a low income may seem like an obstacle to building wealth, it may teach folks to be resourceful and live a simpler life withot many wants. This can lead to a cheap lifestyle, that can help accumulate wealth. This is a counter-intuitive idea to many folks today. Yet, people like Mr Earl and Ronald Read, the millionaire gas station attendant, are living proof that you do not need a high income to accumulate a sizeable nest egg.

I believe that if there is a will, there is a way.

Resources about Mr Earl Crawley

I enjoyed viewing the following video of Mr. Earl from Moneytrack:




You can also learn more from this book about him, titled: Nickel and Dime Your Way To Wealth: Wealth Building On Any Income

There are a few articles I read about him, which were very helpful in learning about Mr. Earl Crawley's journey:





Monday, September 13, 2021

Why Dividend Growth Stocks Rock?

A dividend growth stock is a company that has managed to grow dividends for a certain number of years. Only a certain type of quality companies can afford to grow the business and shower its shareholders with a rising amount of cash for years if not decades.

I view long streak of consecutive annual dividend increases as a quality filter. It allows me to create a list of companies for further research. While I do examine each company I invest in, I do believe that Dividend Growth Investing has a strong merit.

There are several studies on the performance of Dividend Growth Stocks.

The first is the research from Ned David Research, which reviewed the performance of companies in the S&P 500 by dividend policy.



It shows that companies that grow dividends and initiated dividends have tended to deliver the best performance for companies in the S&P 500. Companies that paid dividends ended up delivering a better return than the equal weighted S&P 500 and non dividend payers. 

The worst performing groups over the past fifty years seem to be non-dividend paying stocks and dividend cutters and eliminators. 

The fascinating fact is that over the past decade, a lot of non dividend paying companies like Google, Facebook and Amazon ended up delivering great returns. Historically however, non-dividend paying companies were the ones that could not afford to pay a dividend, which is why their returns were not great. Perhaps the past decade is an aberration; or perhaps it is a shift in corporate policy for US corporations towards less dividends. 

The second is the research from S&P, which reviewed the performance of the Dividend Aristocrats. These are companies in the S&P 500, which have managed to grow dividends for 25 years in a row.



Since 1989, the list of dividend aristocrats has done better than S&P 500. However, there were ups and downs in it. The 1990s were not a good time to be a dividend growth investor, as rising stock prices and growth stocks did very well. This is why few investors cared about dividends in the 1990s. In the 2000s however, dividend aristocrat companies did very well. This continued in the 2010s.

Despite the rise in equities, and growth companies since 2010, dividend aristocrats have managed to do well. This is a testament to the quality aspect of dividend aristocrats. After all, only a certain type of exceptionally managed company with a strong moat can deliver the rising earnings per share to be able to grow dividends for at least a quarter of a century in the first place.

I personally always enjoyed the list of Dividend Champions, Contenders and Challengers, which was created by David Fish. It listed companies with 25, 10 and 5 year streaks of consecutive annual dividend increases. 

Sadly, Dave passed away in 2018. While the list is available for download at DripInvesting, there has been some uncertainty as to who will continue updating it in the future. 

Relevant Articles:


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