Twelve Companies Raising Dividends To Their Investors

As part of my monitoring process, I review the list of dividend increases every week. I use this exercise to monitor developments in the companies I own. I also use this process to identify companies for further research. The process I use to look at companies is the same process I use to evaluate dividend growth stocks quickly.

In general, I look for:

1) A ten-year streak of annual dividend increases
2) A history of earnings growth, to support dividend growth
3) An adequate dividend payout ratio, in order to evaluate dividend safety
4) An adequate valuation, to avoid overpaying for stocks

In my review of weekly dividend increases, I focus on the companies with at least a ten year streak of annual dividend increases. I also excluded companies with token dividend increases, such as Microchip Technologies (MCHP) and Healthcare Services Group (HSCG).

After that, I focused on comparing the most recent dividend increase to the ten year average, followed by a review of the trend in earnings per share. This was all followed by a review of whether the stock is price well today.

The companies that raised dividends over the past week, which I ended up reviewing include:

Avista Corporation (AVA) operates as an electric and natural gas utility company. It operates through two segments, Avista Utilities and AEL&P. The company raised its quarterly dividend by 4% to 38.75 cents/share. This marked the 17th consecutive annual dividend increase for this dividend achiever. Over the past decade, Avista has been able to boost dividends at an annualized rate of 8%. The company has managed to grow earnings from $1.36/share in 2008 to $2.07/share in 2018. Avista is expected to earn $2.19/share in 2019. Currently, the stock is fairly valued at 18.80 times forward earnings and spot a dividend yield of 3.80%. The stock may be worth a second look if it dips to 15 – 16 times forward earnings.

CSX Corporation (CSX) provides rail-based transportation services in the United States and Canada. The company raised its quarterly dividend by 9.10% to 24 cents/share. This marked the 15th consecutive annual dividend increase for this dividend achiever. In addition to that, the company announced a $5 billion stock buyback. CSX has been able to boost dividends at an annualized rate of 13.10% during the past decade. The company has managed to grow earnings from $0.96/share in 2009 to $3.84/share in 2018. CSX is expected to earn $4.25/share in 2019.

Right now the stock is attractively valued at 16.20 times forward earnings and yields 1.40%. It may be worth adding to my list for future analysis.

Eversource Energy (ES), a public utility holding company, engages in the energy delivery business. The company operates in three segments: Electric Distribution, Electric Transmission, and Natural Gas Distribution. The company raised its quarterly dividend by 5.90% to 53.50 cents/share. This marked the 21st annual dividend increase for this dividend achiever. Over the past decade, this utility has rewarded shareholders with an average dividend raise of 9.40%/year. The company has managed to grow earnings from $1.67/share in 2008 to $3.11/share in 2017. Eversource Energy is expected to generate $3.28/share in 2018. The stock is overvalued at 21.40 times earnings and spots a dividend yield of 3.20%. Despite being a utility that grows, I would hate to pay too much for it. Perhaps it may be worth adding to my list for further review on dips below $65/share.

3M Company (MMM) operates as a diversified technology company worldwide. Last week, the company raised its quarterly dividend by 5.90% to $1.44/share. This marked the 61st year of annual dividend increases for this dividend king. During the past decade, 3M has managed to grow annual dividends at a rate of 10.50%/year. Between 2009 and 2018, 3M managed to boost earnings per share from $4.52 to $9.18/share. 3M is expected to generate $10.67/share in 2019. Currently, the stock is fairly valued at 18.70 times forward earnings and yields 2.80%.

Archer-Daniels-Midland Company (ADM) procures, transports, stores, processes, and merchandises agricultural commodities, products, and ingredients in the United States and internationally. It operates through four segments: Carbohydrate Solutions, Nutrition, Oilseeds, and Origination. The company raised its quarterly dividend by 4.50% to 35 cents/share. This marked the 44th year of annual dividend increases for this dividend champion. Over the past decade, ADM has managed to grow dividends at an annual rate of 9.90%/year. I expect dividend growth to slow down, given the slow growth in earnings per share over the past decade. Between 2008 and 2018 earnings per share grew only from $2.79 to $3.19. This is after reducing the number of shares outstanding from 646 million in 2008 to 559 million in 2018. The company is expected to earn $3.65/share in 2019. Right now it is attractively valued at 11.70 times forward earnings and yields 3.35%. The lack of earnings growth is concerning to me, which is one reason why I am not interested in adding to my exposure, despite low valuation and safe dividend.

Church & Dwight Co., Inc. (CHD) develops, manufactures, and markets household, personal care, and specialty products. The company operates through three segments: Consumer Domestic, Consumer International, and the Specialty Products Division. The company raised its quarterly divided by 4.60% to 22.75 cents/share. This marked the 23rd year of annual dividend increases for this dividend achiever. The company has managed to grow its dividends by 26.20%/year over the past decade. The strong dividend growth was possible due to the expansion in the dividend payout ratio during the past decade. It was also helped by strong earnings growth over the past decade. Between 2008 and 2018, Church & Dwight managed to grow earnings from $0.69/share to $2.27/share. The company is expected to earn $2.48/share.

Right now the stock is overvalued at 25.50 times forward earnings and spots a dividend yield of 1.40%. Church & Dwight may be worth a closer look on dips below $49/share.

Meredith Corporation (MDP) operates as a diversified media company in the United States, Europe, and Asia. It operates in two segments, National Media and Local Media. The company raised its quarterly dividend by 5.50% to 57.50 cents/share. This marked the 26th consecutive annual dividend increase for this dividend champion. Over the past decade, it has managed to boost distributions at an annual rate of 9.70%/year. The company’s earnings have increased from $2.83/share in 2008 to an estimated $2.93/share in 2019. The past decade has been challenging for a lot of traditional media companies. As a result, this small gain in earnings per share looks like a win. Without growth in earnings per share however, future dividend increases will be limited. Right now the stock is fairly valued at 17.90 times forward earnings and yields 4.40%. The forward dividend payout ratio is high at 78% today however, which further limits the potential for future dividend increases. I find the stock to be a hold in my opinion. I am unsure about initiating a position there.

Simon Property Group (SPG) is a global leader in the ownership of premier shopping, dining, entertainment and mixed-use destinations. The REIT owns properties across North America, Europe and Asia that provide community gathering places for millions of people every day and generate billions in annual sales. The REIT boosted its quarterly dividend by 2.50% to $2.05/share. The increase is a 5.10% year over year increase in the quarterly distribution. The year 2019 will be the tenth consecutive year of annual dividend increases for Simon Property Group. The REIT generated FFO/share of $12.13 in 2018. Simon Property Group estimates that FFO will be within a range of $12.30 - $12.40/share in 2019. In comparison, FFO/share was $6.75 in 2008. They REIT looks fairly priced at 15 times forward FFO and yields 4.45%. The FFO payout ratio also seems sustainable at 67%. While the low expected growth and the fact that dividends were cut in 2009 seem like a red flag, I will add this REIT to my list for further research.

Bemis Company, Inc. (BMS) manufactures and sells packaging products in the United States, Brazil, other Americas, Europe, and the Asia-Pacific. It operates through three segments: U.S. Packaging, Latin America Packaging, and Rest of World Packaging. The company raised its quarterly dividend by 3.20% to 32 cents/share. This marked the 36th consecutive year that Bemis has increased its dividend payment. The dividend increase is in line with the ten year average of 3.50%/year. Bemis has managed to grow earnings from $1.61/share in 2008 to $2.36/share in 2018. The company is expected to earn $2.79/share in 2019. However, Bemis is going to be acquired this year, which means that none of this may matter. It may be helpful if the deal doesn’t go through however. Bemis sells for 21.40 times earnings and yields 2.50%. The stock seems overvalued. However, this seems to be the price for a buyer to purchase the whole business.

Union Pacific Corporation (UNP) operates railroads in the United States. Union Pacific raised its quarterly dividend by 10% to 88 cents/share. This marked the 13th consecutive annual dividend increase for this dividend achiever. During the past decade, Union Pacific has managed to grow its dividends by 20.70%/year. This was supported by strong growth in earnings per share between 2008 and 2018 from $2.27 to $7.91. The company is expected to generate $9.06/share in 2019.

Right now, the stock is fairly valued at 17.80 times forward earnings and yields 2.20%.

Primerica, Inc. (PRI) distributes financial products to middle income households in the United States and Canada. The company operates in three segments: Term Life Insurance; Investment and Savings Products; and Corporate and Other Distributed Products. The company raised its quarterly dividend by 36% to 34 cents/share. This marked the tenth year of annual dividend increases for this newly minted dividend contender. The five year dividend growth rate is an annualized 17.80%. Primerica managed to grow earnings from $2.24/share in 2008 to $7.35/share in 2018. The company is expected to earn $7.21/share in 2019. Primerica has managed to reduce the number of shares outstanding from 75 million in 2008 to 44 million in 2018. Right now, the stock is fairly valued at 16 times earnings and spots a dividend yield of 1.15%.

Prudential Financial, Inc. (PRU) through its subsidiaries, provides insurance, investment management, and other financial products and services in the United States and internationally. It operates through U.S. Individual Solutions, U.S. Workplace Solutions, Investment Management, and International Insurance divisions. Prudential increased its quarterly dividend by 11.10% to $1/share. This marked the 11th year of annual dividend increases for the dividend achiever. Prudential has been able to grow dividends at an annualized rate of 20% over the past decade. This was possible due to the dividend cut in 2008, which makes dividend growth look better than what it should have been. The company managed to grow earnings from $7.61/share in 2007 to $9.50/share in 2018. Right now, the stock is fairly valued at 9.60 times earnings and yields 4.40%. Prudential may be worth adding to the list for further research.

Relevant Articles:

- Dividend Kings List for 2019
- Dividend Aristocrats List for 2019
- 2019 Dividend Champions List
- How to value dividend stocks