Monday, June 15, 2015

Seven Dividend Growth Stocks to Consider for Further Research

One of my favorite aspects of dividend growth investing is the ability to receive more passive dividend income, simply because I made the right decision years ago. It is amazing that simply because I had the foresight to identify quality dividend growth stocks, I get paid more with the passing of every single year. What is even more amazing is the fact that the rate of dividend growth is usually higher than the rate of salary increases I receive at my day job. I work hard to get my work done timely, and then receive a raise that pretty much keeps up with inflation. With dividend growth companies on the other hand, my money is working hard for me, and reward me with consistent dividend increases.

There were several dividend growth stocks, which announced that they are increasing their distributions to shareholders. I included the ones I own and the ones I find interesting for further research below:


Target Corporation (TGT) operates as a general merchandise retailer in the United States. The company raised its quarterly dividend by 7.70% to 56 cents/share. This marked the 48th consecutive annual dividend increase for this dividend champion . The ten year dividend growth rate is 20.30%/year. The stock currently sells for 17.30 times expected earnings and yields 2.60%. Check my analysis of Target.

Casey’s General Stores, Inc. (CASY), together with its subsidiaries, operates convenience stores under the Casey’s General Store name in 14 Midwestern states, primarily Iowa, Missouri, and Illinois. The company raised its quarterly dividend by 10% to 22 cents/share. This marked the 16th consecutive annual dividend increase for this dividend achiever. The ten year dividend growth rate is 17.60%/year. The stock currently sells for 20.60 times expected earnings and yields 1%. I last analyzed Casey’s a few years ago. I still like the growth story there, and would be interesting in potentially adding more to the stock when it is available below 20 times earnings. I should probably also put an analysis shortly.

Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. T raised its quarterly dividend by 10% to 77 cents/share. This marked the 22nd consecutive annual dividend increase for this dividend achiever . The ten year dividend growth rate is 12.80%/year. The stock currently sells for 17.70 times expected earnings and yields 3.50%. I last analyzed Caterpillar in 2012. I would put it on the list for further research.

C. R. Bard, Inc. (BCR) designs, manufactures, packages, distributes, and sells medical, surgical, diagnostic, and patient care devices worldwide. The company raised its quarterly dividend by 9.10% to 24 cents/share. This marked the 44th consecutive annual dividend increase for this dividend champion. The ten year dividend growth rate is 6.20%/year. The stock currently sells for 19 times expected earnings and yields 0.60%. I never analyzed C.R. Bard, due to its low yield and low dividend growth. I do like the growth in earnings per share, and should add it to my list for further research.

FedEx Corporation (FDX) provides transportation, e-commerce, and business services in the United States and internationally. The company raised its quarterly dividend by 25% to 25 cents/share. This marked the 14th consecutive annual dividend increase for this dividend achiever. The ten year dividend growth rate is 10%/year. The stock currently sells for 20.70 times expected earnings and yields 0.60%. Despite the low yield, I like the sector and would add the stock, along with competitor UPS to my list for further research.

Alexandria Real Estate Equities, Inc. (ARE), a real estate investment trust (REIT), engages in the ownership, operation, management, development, acquisition, and redevelopment of properties for the life sciences industry. The company raised its quarterly dividend by 10% to 77 cents/share. This marked the fifth consecutive annual dividend increase for this REIT . The ten year dividend growth rate is 1.50%/year, due to a dividend cut in 2009. The stock currently sells for 19.10 times Funds from Operations (FFO) and yields 3.40%. I believe the company is an interesting one to analyze, due to the niche rental market it serves.

Flowers Foods, Inc. (FLO) produces and markets bakery products in the United States. It operates through two segments, Direct-Store-Delivery (DSD) and Warehouse Delivery. The company raised its quarterly dividend by 9.40% to 14.50 cents/share. This marked the 14th consecutive annual dividend increase for this dividend achiever. The ten year dividend growth rate is 17.90%/year. The stock currently sells for 22.50 times expected earnings and yields 2.70%. I have not stumbled upon this company before. I would be interested in digging into much detail about Flowers Foods.

Overall, two of the companies listed above are holdings of mine, rewarding me with higher dividend income. The rest are candidates for further research. I believe it is paramount for dividend investors to spend the time and learn as much as possible about different businesses, and be prepared if the right opportunity strikes. Investment knowledge is like compound interest, as it accumulates over time.

Full Disclosure: Long TGT, CASY, short TGT puts

Relevant Articles:

Five Things to Look For in a Real Estate Investment Trust
The Four Percent Rule is Dependent on Dividend Yields
How to read my weekly dividend increase reports
Investors Should Look for Organic Dividend Growth
Dividend Investing for Financial Independence

7 comments:

  1. I had never heard of C. R. Bard before. Thanks for raising my attention to it. I am looking at some point to pull in some medical device exposure to my portfolio. The most likely one, to be honest, will be Smith & Nephew this side of the Atlantic. However, Bard looks of interest. Thanks a lot, DGI.

    ReplyDelete
    Replies
    1. I have been overlooking BCR due to its low dividend yield. Yet, it has delivered really good performance.

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    2. Yes, a lot of really very high-quality dividend growers get overlooked that way sadly! I have recently started trying to lower my scope for present dividend yield so that I catch some of those really appealing companies. It is hard to get the balance right in this regard!

      Definitely one to watch!

      Delete
  2. Can you post and update on what you think of BHP and Rio Tinto and possibly Total? I understand that they should not form the bedrock of a dividend portfolio given the nature of the pricing of their products. But given their depressed levels, do you think they now deserve inclusion?

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    Replies
    1. I am not a fan on BHP as a core holding. If I am not willing to hold something for 5 - 10 years, without the option to sell, I would not even consider the business. That doesn't mean it is a bad investment today however, it only means I won't invest in it. I also don't believe I have ever talked about Rio Tinto and Total on this site in detail. You might like this series of articles on how I analyze dividend investments.

      http://www.dividendgrowthinvestor.com/2014/03/how-to-be-successful-dividend-investor.html

      Best Regards,

      DGI

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  3. Hi DGI,

    Would you ever consider European dividend growth stocks? If so, I have a couple that might be something worth monitoring.

    Best regards
    Lars

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  4. Thanks for the list, there's a couple I've never heard of before including FLO which looks interesting to me.

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