Monday, December 7, 2020

Ten companies delivering value to their shareholders

A dividend increase shows a commitment to enhancing total shareholder returns through both strong business performance and returning cash to shareholders.

It is a testament to a diligent capital allocation and management framework, and it reinforces our commitment to deliver value for our shareholders. The increase in the dividend highlights the board of directors confidence in the company’s overall financial condition and its increasing earnings capacity. It usually shows that they are allocating capital with the best interest of shareholders in mind.

During the past week, there were several companies with established track records that rewarded their shareholders with a dividend increase. The companies include:

Eastman Chemical Company (EMN) operates as an advanced materials and specialty additives company worldwide.

Eastman Chemical increased quarterly dividends by 4.50% to 69 cents/share.

“I am pleased that for the 11th consecutive year, Eastman is increasing the dividend as part of our ongoing commitment to return cash to our stockholders,” said Willie McLain, senior vice president and chief financial officer. “This action reflects the Board’s confidence in our ability to deliver earnings growth and continue our record of generating strong cash flow, which has remained resilient even during the global pandemic.

Over the past decade, this dividend achiever has managed to grow dividends at an annualized rate of 11.10%.

Between 2010 and 2019, the company managed to boost earnings from $2.88/share to $5.48/share.

The company is expected to generate $5.86/share in 2020.

The stocks is selling at 17.50 times forward earnings and yields 2.70%.

RGC Resources, Inc. (RGCO) operates as an energy services company.

RGC Resources increased quarterly dividends by 5.70% to 18.50 cents/share

The indicated annual dividend is $0.74 per share, a $0.04 or 5.7% per share increase over the prior annual level. This dividend achiever has now increased the annual dividend 17 consecutive years. 

Paul Nester, President and CEO of RGC Resources, Inc., stated, “The 5.7% increase reflects our solid financial performance, confidence in our business strategy and our continued commitment to deliver shareholder return.”

Over the past decade, the company has managed to grow distributions at an annualized rate of 4.50%/year.

The company managed to increase dividends from 65 cents/share in 2010 to $1.08/share in 2019.

The company is expected to generate $1.46/share in 2020.

The stock is selling for 16.60 times forward earnings and yields 3.05%.

The Toro Company (TTC) designs, manufactures, and markets professional and residential equipment worldwide. 

Toro hiked quarterly dividends by 5% to 26.25 cents/share. This marked the 12th consecutive annual dividend increase for this dividend achiever. Toro Company has managed to grow dividends at an annualized rate of 19.60% during the past decade.

Toro managed to grow earnings from 69 cents/share in 2009 to $2.53/share in 2019.

The company is expected to generate $2.87/share in 2020.

The stock is selling for 31.60 times forward earnings and yields 1.15%.

Stryker Corporation (SYK) operates as a medical technology company. The company operates through three segments: Orthopaedics, MedSurg, and Neurotechnology and Spine. 

Stryker raised quarterly dividends by 9.60% to 63 cents/share. This marked the 28th consecutive annual dividend increase for this dividend champion. During the past decade, it managed to increase distributions at an annualized rate of 15.30%/year.

The company raised earnings from $3.19/share in 2010 to $5.48/share in 2019.

Stryker is expected to earn $7.18/share in 2020.

Hillenbrand, Inc. (HI) operates as a diversified industrial company in the United States and internationally. The company operates through three segments: Advanced Process Solutions, Molding Technology Solutions, and Batesville.  

Hillenbrand raised its quarterly dividend by 1.20% to 21.50 cents/share. This was the 14th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, Hillenbrand has managed to grow dividends at an annualized rate of 1.30%.

The company earned $1.71/share in 2011 and is expected to earn $2.85/share in 2021.

The stock is selling for 33.35 times forward earnings and yields 1.05%.

Nucor Corporation (NUE) manufactures and sells steel and steel products. It operates in three segments: Steel Mills, Steel Products, and Raw Materials.

Nucor increased its quarterly dividend by 0.60% to 40.50 cents/share. Over the past decade, Nucor has managed to grow dividends at an annualized rate of 1.30%.

Nucor has increased its regular, or base, dividend for 48 consecutive years – every year since it first began paying dividends in 1973.  Over the past ten years, this dividend champion has returned approximately $6 billion in capital to its stockholders in the form of base dividends and share repurchases.

Nucor grew earnings from 42 cents/share in 2009 to $4.14/share in 2019

The company is expected to earn $2.88/share in 2020.

The stock is selling for 19.50 times forward earnings and yields 2.87%.

Ecolab Inc. (ECL) provides water, hygiene, and energy technologies and services worldwide. The company operates through Global Industrial, Global Institutional, Global Energy, and Other segments.

Ecolab increased its quarterly dividend by 2.10% to 48 cents/share. 

This increase results in a new indicated annual cash dividend of $1.92 per share in 2021 and represents Ecolab’s 29th consecutive annual dividend rate increase. This streak of consecutive annual dividend increases makes Ecolab a dividend champion.

The current increase is the slowest in years. In the past decade Ecolab has managed to grow distributions at an annualized rate of 12.60%.

Between 2009 and 2019, Ecolab managed to grow earnings from $1.74/share to $5.33/share.

The company is expected to earn $4.04/share in 2020 and $5.33/share in 2021.

The stock is expensive. It sells for 55.80 times 2020 earnings and 42.30 times 2021 earnings. The stock yields 0.85%.

AXIS Capital Holdings Limited (AXS), provides various specialty insurance and reinsurance products worldwide. It operates through two segments, Insurance and Reinsurance.

Axis Capital raised its quarterly dividend by 2.40% to 42 cents/share

This is the 17th consecutive year the Company has increased dividends since its initial public offering in 2003. The company has managed to grow distributions at 7.20%/year during the past decade, but given the lack of earnings growth, we are seeing a decline in dividend growth.

The company has not managed to grow earnings since its IPO. Between 2009 and 2019, earnings went from $3.07/share to $3.34/share. 

Axis Capital is expected to lose $1/share in 2020 and earn $4.64/share in 2021.

The stock yields 3.15%, but I am unable to determine it’s valuation.

WEC Energy Group, Inc. (WEC) provides regulated natural gas and electricity, and nonregulated renewable energy services in the United States. The company operates through six segments: Wisconsin, Illinois, Other States, Electric Transmission, Non-Utility Energy Infrastructure, and Corporate and Other.

WEC Energy declared plans to raise is quarterly dividend by 7.10% to 67.75 cents/share in the first quarter of 2021. That would be the 18th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to increase dividends at an annualized rate of 13.30%.

WEC Energy grew earnings from $1.62/share in 2009 to $3.58/share in 2019.

The company is expected to generate $3.76/share in 2020.

The stock is selling for 24.80 times forward earnings and yields 2.90%.

Graco Inc. (GGG) designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide.

Graco increased its quarterly dividend by 7.10% to 18.75 cents/share. This marked the 24th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 9.70%.

Between 2010 and 2019, the company managed to grow earnings from 56 cents/share to $2/share.

The company is expected to generate $1.84/share in 2020.

The stock is selling for 36.40 times forward earnings. It yields 1,10%

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