Monday, December 28, 2015

Dividend Kings for 2016

A dividend king is a company that has managed to increase dividends to shareholders for at least fifty years in a row. There are only a handful of these companies worldwide, most of them being US based. A company that has managed to increase dividends each year for over half a century has a stable business model that has endured a lot over a long period of time. As investors who want to live off dividends in retirement, we want to concentrate on quality businesses that operate in industries with significant competitive advantages. This will allow those businesses to grow earnings and pay higher dividends over time. Raising dividends for over half a century is no small accomplishment, and it is testament to the stability of the business model.

The purpose of this list is to learn about those companies, and study how they managed to grow dividends for such a long period of time. The intelligent dividend investor should refrain from purchasing any of those securities, without:

1) Understanding their business model
2) Determining whether they believe the business will be able to earn more over time
3) Determining if the business is available at an attractive valuation

The companies that are members of the dividend king list for 2016 include:



Name
Symbol
Industry
Consecutive Years of Rising Dividends
10 year Annual Dividend Growth
Forward P/E
Dividend Yield
10 year Annual EPS Growth
American States Water
AWR
Utility-Water
61
6.86%
    26.81
2.10%
7.24%
Dover Corp.
DOV
Machinery
60
11.52%
    16.07
2.87%
3.83%
Northwest Natural Gas
NWN
Utility-Gas
60
3.51%
    22.15
3.77%
0.60%
Emerson Electric
EMR
Industrial Equipment
59
8.35%
    14.48
4.26%
3.24%
Genuine Parts Co.
GPC
Auto Parts
59
7.11%
    18.21
2.94%
6.26%
Parker-Hannifin Corp.
PH
Industrial Equipment
59
15.96%
    15.35
2.69%
5.10%
Procter & Gamble Co.
PG
Consumer Products
59
9.22%
    20.83
3.39%
3.57%
3M Company
MMM
Conglomerate
57
9.33%
    19.43
2.79%
6.26%
Vectren Corp.
VVC
Utility-Electric/Gas
56
2.61%
    17.81
3.86%
2.61%
Cincinnati Financial
CINF
Insurance
55
4.70%
    17.30
3.17%
-0.15%
Coca-Cola Company
KO
Beverages-Non-alcoholic
53
8.95%
    21.36
3.11%
6.91%
Johnson & Johnson
JNJ
Drugs/Consumer Prod.
53
9.81%
    16.50
2.94%
5.97%
Lancaster Colony Corp.
LANC
Food/Consumer Prod.
53
6.41%
    26.24
1.81%
5.41%
Lowe's Companies
LOW
Retail-Home Improv.
53
26.14%
    22.26
1.52%
6.74%
Colgate-Palmolive Co.
CL
Personal Products
52
10.45%
    23.50
2.32%
8.62%
Nordson Corp.
NDSN
Machinery
52
11.05%
    16.54
1.52%
11.16%
Farmers & Merchants Bancorp
FMCB
Banking
51
5.43%
    15.50
2.46%
4.38%
Hormel Foods Corp.
HRL
Food Processing
50
14.42%
    26.89
1.47%
11.02%


There are two new additions to the list from 2015. The first addition is Hormel Foods (HRL) and the second addition is Farmers & Merchants Bancorp (FMCB). The second company claims to have raised dividends for 51 years in a row.  Based on my research of historical SEC filings, I could only verify dividend growth for the past 20 years ( since 1995 on page 23 )

I would expect that Tootsie Roll Industries (TR) becomes a dividend king in 2016. So far the company has managed to boost dividends for 49 years in a row.

There were no companies on the list that cut dividends or kept them unchanged. Since I first compiled the list of dividend kings in 2010, there has only been one company that stopped raising dividends – Diebold (DBD).

Full Disclosure: Long KO, LOW, CL, MMM, PG, EMR, GPC

Relevant Articles:

Dividend Kings List for 2015
Ten Dividend Kings raising dividends for over 50 years
Dividend Champions - The Best List for Dividend Investors
How to value dividend stocks
What drives future investment returns?

3 comments:

  1. That's what I call a healthy company list. And a great time to read your article as I am still on a buying quest, though slowly and very carefully considering P/E, P/B, P/O Ratio, ROE, ROIC,etc. I see that DBD is quite expensive right now. Which make me want to do the research on how the others in your list reveal their value vs cost. Thanks and Happy New Year

    ReplyDelete
  2. Long live the kings!
    Long CL, JNJ, KO, MMM

    ReplyDelete
  3. Very interesting Emerson Electric... I am more interested in MMM though, but this seems a bit overvalued to me right now.
    Thank you for the article,
    have a happy New Year.

    ReplyDelete

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