As part of my monitoring process, I review recent dividend increases. The process of identifying dividend increases is manual, because it relies on information coming from a list of multiple sources. I usually focus my attention on companies which have managed to increase dividends to shareholders for at least ten consecutive years. This is then followed by a brief review of trends in fundamentals and valuation. I like to compare the recent increase against the ten year average, and then try to discern whether that growth is supported by the business.
Over the past week, I noticed three companies with a ten year record of annual dividend increases. The companies include:
Illinois Tool Works Inc. (ITW) manufactures and sells industrial products and equipment worldwide. It operates through seven segments: Automotive OEM; Food Equipment; Test & Measurement and Electronics; Welding; Polymers & Fluids; Construction Products; and Specialty Products.
The Board of Directors of Illinois Tool Works Inc. (ITW) increased the company’s quarterly dividend by 28.20 percent to $1.00 per share. This marked the 44th consecutive annual dividend increase for this dividend champion.
The company has managed to grow dividends by 11.60%/year over the past decade. Illinois Tool Works has managed to increase earnings per share from $3.27 in 2007 to $4.86 in 2017. The company is expected to earn $7.61/share in 2018, and $8.26/share in 2019.
The stock seems fairly priced at 18.30 times forward earnings. ITW yields 2.90% and has a well-covered dividend based on forward earnings.
International Flavors & Fragrances Inc. (IFF), manufactures flavors and fragrances for use in various consumer products. It operates through two segments, Flavors and Fragrances.
The Board of Directors of International Flavors & Fragrances (IFF) increased the company’s quarterly dividend by 5.80% to 73 cents/share.
“Increasing our dividend today reflects the Board’s confidence in the cash generation potential and financial strength of the Company,” said IFF Chairman and CEO Andreas Fibig. “IFF maintains a disciplined approach to capital allocation as we continue to accelerate growth through organic investments and strategic acquisitions, while returning significant capital to shareholders. “
This dividend achiever has been able to increase annual dividends for 16 years in a row. The company has managed to grow dividends by 11.70%/year over the past decade.
The company has managed to grow profits over the past decade from $2.81/share in 2007 to $3.72/share in 2017. International Flavors & Fragrances is expected to earn $6.24/share in 2018.
The stock is slightly overvalued at 21.50 times forward earnings. It yields 2.20%, and has a well covered distribution however.
Dover Corporation (DOV) provides equipment and components, specialty systems, consumable supplies, software and digital solutions, and support services worldwide. The company operates in four segments: Energy, Engineered Systems, Fluids, and Refrigeration & Food Equipment.
The Board of Directors of Dover increased its quarterly cash dividend to forty-eight cents per share, which was a 2% increase in the distributions. This is the 63rd consecutive year in which this dividend king has managed to increase its annualized cash dividend. The company has managed to grow dividends by 11%/year over the past decade.
While the current dividend hike seems very low, we should not forget that Dover recently spun-off its upstream oil and gas operations called Apergy (APY) in May. If Apergy initiates a dividend, the total dividend for legacy Dover shareholders would be much higher of course than the 2% increase from last week.
The company managed to boost earnings per share from $3.30 in 2007 to $5.15 in 2017. Dover is expected to earn $4.80/share in 2018, and $5.40/share in 2019.
Currently, the stock is attractively valued at 16.70 times forward earnings. The stock yields 2.34%, and has an adequately covered dividend.
Relevant Articles:
- Three Dividend Growth Stocks Rewarding Shareholders With A Raise
- Seven Dividend Paying Companies Rewarding Shareholders With A Raise
- Five Companies Committed to Increasing Returns To Shareholders
- 2018 Dividend Kings List
- Dividend Aristocrats for 2018 Revealed
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