Monday, December 2, 2019

Six Companies Rewarding Their Thankful Shareholders With a Raise

Factors that boards of directors consider when setting the dividend include future earnings expectations, payout ratio and dividend yield relative to those at peer companies, as well as returns available on other income-oriented investments.

This is why I find it very helpful to review dividend increases every week for established dividend growth companies. To be included in this list, a company should have managed to reward shareholders with a dividend hike for at least ten years in a row.

Over the shortened Thanksgiving week, we had six companies hiking distributions to their thankful shareholders. I have had the first five of these companies consistently raising dividends during Thanksgiving week for the past several years that I have been writing these review. The companies include:

Hormel Foods Corporation (HRL) produces and markets various meat and food products in the United States and internationally. The company operates through five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other.

Hormel Foods increased its quarterly dividend by 10.70% to 23.25 cents/share, marking the 54th consecutive annual dividend increase for this dividend king. Hormel Foods has managed to increase distributions at an annualized rate of 15% over the past decade.

Between 2009 and 2019, Hormel managed to triple its earnings from 63 cents/share to $1.80/share.
Analysts expect Hormel to earn $1.76/share in 2020. It looks like earnings per share have plateaued for three years in a row if analyst projections are correct.

I believe that the stock price is overvalued at 25.30 times forward earnings. The stock yields 2.10%. I may consider it if it dips below $35/share. Check my analysis of Hormel for more information about the company.

Becton, Dickinson and Company (BDX) develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide.

The company’s dividend eked out a small 2.60% increase to 79 cents/share. Becton Dickinson has raised its dividend for the 48th consecutive year. In two more years, this dividend champion will be upgraded to the elite dividend king status. This is the second year in a row of small annual dividend hikes, following the debt-laden acquisition of C.R. Bard. Over the past decade, Becton Dickinson has managed to boost dividends at an annualized rate of 10.20%.

The company earned $5.49/share in 2010 and analysts expect Becton Dickinson to earn $12.57/share in 2020.

The stock seems just a tad overvalued at 20.60 times forward earnings and a dividend yield of 1.20%. The rate of dividend growth has slowed down, and if you want to review earnings per share, you would have to dig a little deeper into things such as purchase accounting adjustments and other items that the company deems as one-time events.

McCormick & Company, Incorporated (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. The company operates in two segments, Consumer and Flavor Solutions.

McCormick managed to hike its quarterly dividend by 8.80% to 62 cents/share. This marks the 34th consecutive year that this dividend champion has increased its quarterly dividend. McCormick has managed to boost dividends at annualized rate of 9% over the past decade.

The company earned $1.94/share in 2008, and managed to grow this to $4.74/share in 2018.
Analysts expect that McCormick will earn $5.35/share in 2019.

Unfortunately, this great company is overvalued at 31.60 times forward earnings and yields 1.50%. Check my analysis of McCormick for more information about the company.

Hingham Institution for Savings (HIFS) provides various financial products and services to individuals and small businesses in the United States.

The company increased its quarterly dividend to 41 cents/share, which is a 10.80% increase over the dividend paid during the same time last year. This dividend achiever has consistently increased regular quarterly cash dividends over the last twenty-four years. The bank also announced a special dividend in the amount of 60 cents/share. During the past decade, it has managed to increase dividends at an annualized rate of 5.50%.

The company managed to grow earnings from $2.96/share in 2008 to $13.90/share in 2018.
The stock is fairly valued at 13.80 times earnings and offers a dividend yield of 1.15%.

The York Water Company (YORW) impounds, purifies, and distributes drinking water. It also owns and operates three wastewater collection systems and two wastewater treatment systems.

The company raised its quarterly dividend by 4% to 18.02 cents/share. This is the twenty-third consecutive year that this dividend achiever has increased its dividend. During the past decade, York Water has managed to grow its distribution at an annualized rate of 3.20%.

York Water has stated that it has managed to pay dividends every year since 1816, but I have been unable to find any history on distribution payments that goes beyond 1912. If anyone from the company’s IR department is reading, I would love to see the data behind this claim.

Analysts expect the company to earn $1.14/share in 2019.

The stock is overvalued at 38.90 times forward earnings and sells at a dividend yield of 1.60%.

South Jersey Industries, Inc. (SJI) provides energy-related products and services. The company engages in the purchase, transmission, and sale of natural gas.

The company hiked its quarterly dividend by 2.60% to 29.50 cents/share. With this announcement, SJI has increased its dividend for 21 consecutive years. During the past decade, this dividend achiever has managed to boost distributions at an annualized rate of 7.60%.

Analysts expect that South Jersey Industries will generate $1.11/share in 2019.

The stock is overvalued at 28.10 times forward earnings and offers a dividend yield of 3.80%. Sadly, the dividend payout ratio is over 100%, which means that future dividend growth will be very hard to come by.

Relevant Articles:

Dividend Achievers Offer Income Growth and Capital Appreciation Potential
Ten Companies Rewarding Investors With Dividend Hikes Last Week
Nine Dividend Growth Stocks With Growing Yields on Cost
Eleven Dividend Growth Stocks For Further Research

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