Monday, December 1, 2014

Three Dividend Raises I am Thankful For

As part of my disciplined stock monitoring process, I review the list of dividend increases every month. This has helped me in identifying hidden dividend gems, identify companies in the initial phase of dividend growth or check whether my stock holdings are paying me more cash to hold on to them. The most rewarding part of dividend growth investing is when a company I have included many years ago, keeps earning more and sending me a higher dividend check each year. It is particularly interesting that my organic dividend growth has trounced inflation by a factor of two, and has been much higher than the annual raises I receive at my day job.

McCormick & Company (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. The Board of Directors of McCormick & Company declared an increase in the quarterly dividend from $0.37 to $0.40 per share on its common stock. This marked the 29th consecutive year that this dividend champion has increased its quarterly dividend. The company generates strong cashflows, and views increasing dividends as an important way to share its success as a business with shareholders. Management believes that the company’s long history of dividend increases demonstrates its commitment to building long-term value for its shareowners. In the past decade, McCormick has managed to increase dividends by 11.40%/year. Currently, the shares are slightly overpriced at 20.30 times forward earnings and a yield of 2.20%. Check my analysis of McCormick.

Becton, Dickinson and Company (BDX), a medical technology company, develops, manufactures, and sells medical devices, instrument systems, and reagents worldwide. This dividend champion increased its quarterly dividends by 10% to 60 cents/share. This marked the 43rd consecutive year in which the company has managed to boost dividends. This increase reflects the company’s confidence in its long-term outlook, as well as its ongoing commitment of returning value to shareholders. In the past decade, Becton Dickinson has managed to increase dividends by 17.60%/year. Currently, the shares are a little pricey at 20.80 times forward earnings and a yield of 1.70%. Check my analysis of Becton Dickinson.

Brown-Forman Corporation (BF.A) (BF.B) is engaged in the manufacture, bottling, import, export, marketing, and sale of alcoholic beverages. Brown-Forman announced that its Board of Directors increased its quarterly cash dividend on its Class A and Class B Common Stock by 8.6% to 31½ cents per share from the prior quarter’s 29 cents per share. This marked the 31st consecutive year in which the company has managed to boost dividends. In the past decade, Brown-Forman has managed to increase dividends by 10.20%/year. Currently, the shares are overvalued at 28.30 times forward earnings and a yield of 1.30%. Check my analysis of Brown-Forman. I will also discuss my thoughts on the company tomorrow, so please stay tuned.

All of those three dividend growth companies are slightly overpriced today. However, these are three quality companies, which could deliver consistently higher earnings, dividends and stock price appreciation to long-term shareholders who have a long-term view of those businesses. These are the type of businesses that can compound wealth and do the heavy lifting for long-term dividend growth investor. The goal of the dividend investor is to monitor businesses like those like a hawk, and take advantage of any temporary weakness in share prices order to initiate or add to their positions in those businesses at attractive valuations.

Full Disclosure: Long all companies listed above

Relevant Articles:

How to monitor your dividend investments
Buy and Hold means Buy and Monitor
Five World Class Dividend Stocks to Buy During the next dip
How to think like a long term dividend investor
How to read my weekly dividend increase reports

2 comments:

  1. my basis for BF-B is under $40 so I think I will be holding it for a long while.

    ReplyDelete
  2. Long BDX. I like MKC, but agree that the price is out of the buy range.

    ReplyDelete

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