One way to monitor dividend growth investments is by checking the weekly list of dividend increases. I also find helpful to monitor the annual raises for dividend growth stocks that are on my list for further research. It is great to see companies I have bought reward me with rising dividend income many years after I had made the decision to invest in the first place. With dividend growth investing, you do all the work in stock selection upfront. After that, a well-diversified portfolio should shower its owner with a growing stream of dividend income for decades.
Over the past week, several companies raised their quarterly dividends. The companies include:
Target Corporation (TGT) operates as a general merchandise retailer. The company boosted its quarterly dividend by 7.10% to 60 cents/share. This dividend champion has raised dividends for 49 years in a row. The ten year dividend growth rate is 19.60%/year. Target trades at 13.20 times forward earnings and yields 3.50%. Check my analysis of Target for more details.
UnitedHealth Group Incorporated (UNH) operates as a diversified health and well-being company in the United States. The company boosted its quarterly dividend by 25% to 60 cents/share. This dividend stock has raised dividends for 7 years in a row. The ten year dividend growth rate is 62.10%/year. Such a high rate of dividend growth is normal for companies in the first phase. UnitedHealth Group trades at 17.60 times forward earnings and yields 1.80%. Check my analysis of UnitedHealth for more details. This company has a lot of promise for patient long-term investors.
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 boosted its quarterly dividend by 9.10% to 24 cents/share. This dividend achiever has raised dividends for 17 years in a row. The ten year dividend growth rate is 17.30%/year. Casey’s trades at 20.50 times forward earnings and yields 0.80%. I have been happy to own Casey's since I uncovered this stock in 2012. I believe that this company still has room for further growth.
FedEx Corporation (FDX) provides transportation, e-commerce, and business services in the United States and internationally. The company boosted its quarterly dividend by 60% to 40 cents/share. This dividend achiever has raised dividends for 15 years in a row. The ten year dividend growth rate is 11.20%/year. FedEx trades at 14.90 times forward earnings and yields 1%. I have not been a fan of Fedex or rival United Parcel Services (UPS) due to the lack of growth in earnings per share over the past decade.
C. R. Bard, Inc. (BCR), together with its subsidiaries, designs, manufactures, packages, distributes, and sells medical, surgical, diagnostic, and patient care devices worldwide. The company boosted its quarterly dividend by 8.30% to 26 cents/share. This dividend champion has raised dividends for 45 years in a row. The ten year dividend growth rate is 6.30%/year. C. R. Bard trades at 22.20 times forward earnings and yields 0.50%.
Sometimes, dividend increases also remind me of mistakes of omission I may have made. Mistakes of omission are situations where I have liked a certain company, but never really pulled the trigger on it due to stubbornness on my part. In retrospect it is easy to give myself a hard time, since I have over eight years of experience writing and analyzing dividend growth stocks. Some of the lessons I have learned after those years are easy see in retrospect.
One such mistake is C. R. Bard, which has always had a low current yield. However, the company has consistently been able to grow earnings and dividends, and delivered exceptional returns to its shareholders. Earnings per share went from $2.55 in 2006 and are scheduled to exceed $10 in 2016. The reason I never bought the stock was due to the low current yield. Please learn from my mistake and do not forget the "growth" part of the dividend growth strategy.
Full Disclosure: Long CASY, TGT, UNH
Relevant Articles:
- How to read my weekly dividend increase reports
- Mistakes of Omission Can Be Costlier than Mistakes of Commission
- How I Manage to Monitor So Many Companies
- Dividend Champions - The Best List for Dividend Investors
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Some retirement stock investors on SA seem interested in chasing yield and only want to collect the high dividend. IE, AT&T, VZ, Utes and care little about growth. There is nothing wrong with buying a company like BCR, DIS, COST, SBUX, NKE, etc. I am in my 70's and won't mind selling a few shares of one of these companies if needed to meet expenses. However, if the growth slows, then these stocks should be sold unless they start paying higher dividends.
ReplyDeleteChasing yield is dangerous and costly. It is growth in EPS that drives future DPS growth that truly creates long-lasting wealth and income growth for us. On the other hand, I have been put off a little by the slow growth in dividends by BCR as well. The rapid growth in EPS has more than compensated for the slow dividend growth however.
DeleteOne risk I have with high growth stocks is making sure I don't overpay dearly, right before growth starts slowing down and valuation multiples compress. This is one reason why I want some minimum yield for most of the investments I have made, in case this happens. When we get the next recession, this ensures at least some cash return flowing to my checking account, when everyone else is losing their head
I am not good at timing when things have slowed down temporarily versus determining that the slowdown is permanent. This is why I try to never try to outsmart the market by selling.
I've noticed that Casey's is receiving a lot of competition especially in Iowa from a private company Kwik Star which produces food products with prices well below grocery stores !
ReplyDeleteI'm a big fan and holder of UNH. I bought way back when in 2008 before it was even a dividend grower and have been rewarded very handsomely. I actually recently sold about 2/3rd of my share simply because I think it got a point where it was fairly valued($130 range) and it had become too big a portion of my portfolio so I wanted to diversify away from one company.
ReplyDeleteI still think long term they are a good bet as long as the government doesn't delve too deeply into health care(think socialized care) and their Optum unit is probably one of the most valuable units in the entire health care space with their growing PBM and their large role in the health care data space which is becoming more and more relevant and useful these days.