Monday, April 27, 2015

Four Quality Dividend Machines Hiking Distributions

Over the past week, there were four quality dividend paying companies, which announced that they are raising dividends for their shareholders. As a long-term shareholder, I like it when I am essentially paid to hold companies. I like it even better when that company I own regularly increases the amount of cash they send my way. I also view the near term rate of change in dividend hikes as a management indication about their expectations for earnings growth. One of the easiest ways for a time-starved investor like myself to monitor those dividend hikes on companies I own is my broker Interactive Brokers. I receive notifications about dividend payments that were just approved, and quarterly results that are about to be released.

In the past week, there were four companies that raised dividends, which also attracted my attention. I have shares in the first three. The last one is a company I have been monitoring.

Unilever (UL) increased its quarterly dividend by 6% to 30.20 eurocents/share. This marked the 20th consecutive annual dividend increase for this international dividend achiever. The ten year dividend growth rate is 6.20% /year. The stock slightly overvalued at 21.80 times forward earnings and yields 2.90%. Check my analysis of Unilever.

Ameriprise Financial, Inc. (AMP), through its subsidiaries, provides various financial products and services to individual and institutional clients in the United States and internationally. The company raised its quarterly dividends by 15.50% to 67 cents/share. This marked the tenth consecutive dividend increase for this dividend achiever. The five year annual dividend growth is 27.20%/year, which is normal for companies in the initial phases of dividend growth. The shares are selling for 13.10 times forward earnings and yield 2.10%. Check my analysis of Ameriprise Financial. I decided to make a small addition to my position last week.

Johnson & Johnson (JNJ), together with its subsidiaries, researches and develops, manufactures, and sells various products in the health care field worldwide. It operates in three segments: Consumer, Pharmaceutical, and Medical Devices. The company raised its quarterly dividend by 7.10% to 75 cents/share. This marked the 53rd consecutive annual dividend increase for this dividend king. The ten year dividend growth is 9.70%/year. The shares are selling for 16.50 times forward earnings and yield 3%. Unfortunately, Johnson & Johnson is one of my largest positions, which is why I may refrain from putting more capital there. Check my analysis of Johnson & Johnson.

Costco Wholesale Corporation (COST), together with its subsidiaries, operates membership warehouses. The company raised its quarterly dividend by 12.70% to 40 cents/share. This marked the 12th consecutive annual dividend increase for this dividend achiever. The ten year dividend growth rate for Costco is 16.40%/year. The stock is over valued at 28.30 times forward earnings and yield 1.10%. I have been following Costco for several years and really like the business, but I never really saw a good valuation to initiate a position in it.

Full Disclosure: Long AMP, JNJ, UL

Relevant Articles:

How to read my weekly dividend increase reports
International Dividend Stocks – Pros and Cons
How to Manage Your Dividend Portfolio
How to stay motivated on your road to financial independence
Margin of Safety in Dividends

5 comments:

  1. Just a note, I think you missed the times earnings amount on the last three. Agree with J&J and UL.. great companies, but hard to initiate a position with current valuations.

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  2. UL's dividend really shows the increase in the value of the US dollar. Last year, in US dollars, the dividend was $0.3938. This year it is only $0.319.

    Long AMP, COST, JNJ, UL

    ReplyDelete
    Replies
    1. Yes, the dollar is strong. But in a few years it might weaken again - long-term I see currency moves as a wash. Retirees should travel to Europe now, especially since the Euro is weaker.

      Either way, I will continue watching COST for decent entry prices..

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  3. Costco is never at a good low valuation. I bit the bullet and started staggered buying 10 years ago, it always felt very expensive but the shares I bought originally are now at a P/E of about 10 and my average price is half today's price. Costco is now giving special dividends from time to time, they are juicy. This was the second year they do this.

    Starbucks and Whole Foods are in the same spirit, rarely there is a good opportunity. Buying in small steps in the course of years, as a process, lends you some safety.

    --peter m.

    ReplyDelete

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