Monday, March 22, 2021

Six Reliable Dividend Growth Stocks Rewarding Shareholders With Raises

I review the list of dividend increases weekly, as part of my portfolio monitoring process. I usually narrow the list down to companies with at least a ten year history of annual dividend increases.

The next involves reviewing each company in sufficient detail, in order to determine if dividend increases are based on solid fundamentals. This review includes looking at trends in earnings per share, dividends per share, payout ratios as good start. The goal is to determine the likelihood of future dividend increases.

The last review point includes valuation. In general, I try to avoid overpaying for companies. Valuation is more art than science however ( as is investing in general). This is why it is important to look at relative valuations and growth in the opportunity set, not just focus on absolute numbers.

These steps keep me in fighting shape, and help me monitor as many companies in the investable dividend growth universe in advance. This helps me to be prepared when the right opportunity at the right price comes along.

Over the past week, there were six companies which raised dividends to shareholders. Each company has a minimum ten year streak of annual dividend increases under its belt. The companies include:

Realty Income (O) increased its monthly dividend to 23.50 cents/share. That's a 1.73% increase over the dividend paid during the same time last year. Over the past decade, Realty Income has managed to increase dividends at an annualized rate of 4.90%. This dividend aristocrat has managed to grow dividends since 1994.



Between 2010 and 2020, Realty Income managed to grow FFO from $1.83/share to $3.31/share. Realty Income is expecting to generate FFO of $3.26 - $3.34/share in 2021.

The stock sells for 18.29 times FFO and yields 4.57%. Check my analysis of Realty Income for more information about the company.

WD-40 Company (WDFC) develops and sells maintenance products, and homecare and cleaning products in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.  The company increased its quarterly dividend by 7.46% to 72 cents/share. This marked the 12th consecutive year of dividend increases for this dividend achiever. Over the past decade, the company has managed to increase distributions at an annualized rate of 10.10%.

Between 2010 and 2020, the company grew earnings from $2.15/share to $4.40/share. WD-40 is expected to earn $5.51/share in 2021.

The stock sells for 53.87 times forward earnings and yields 0.97%.

Williams-Sonoma, Inc. (WSM) operates as an omni-channel specialty retailer of various products for home. The company raised its quarterly dividend by 11.32% to 59 cents/share. This marked the 16th consecutive annual dividend increase for this dividend achiever. Over the past decade the company has managed to increase dividends at an annualized rate of 13.60%.

Between 2011 and 2021, the company grew earnings from $1.83/share to $8.61/share. Williams-Sonoma is expected to earn $9.22/share in 2022.

The stock sells for 18.96 times forward earnings and offers a current yield of 1.35%

UDR, Inc. (UDR) is a leading multifamily real estate investment trust with a demonstrated performance history of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate communities in targeted U.S. markets. The REIT hiked its quarterly dividends by 0.69% to 36.25 cents/share. This marked the tenth consecutive year of annual dividend increases for UDR. Over the past decade, the REIT has managed to hike dividends at an annualized rate of 7%.

Between 2011 and 2020, FFO/share grew from $1.28 to $1.85. The REIT is expected to earn $1.95/share in 2021.

The stock sells for 22.26 times FFO and yields 3.35%

Horizon Bancorp, Inc. (HBNC) operates as the bank holding company for Horizon Bank that provides a range of commercial and retail banking services.  The company raised its quarterly dividend by 8.33% to 13 cents/share. This marked the tenth consecutive annual dividend increase for this newly minted dividend achiever. During the past decade, the company has been able to increase dividends at an annualized rate of 13.60%.

Between 2010 and 2020, the company grew earnings from $0.54/share to $1.55/share. Horizont Bancorp is expected to earn $1.45/share in 2021.

The stock is selling for 13.40 times forward earnings and yields 2.67%. 

Independent Bank Corp. (INDB) operates as the bank holding company for Rockland Trust Company that provides commercial banking products and services to individuals and small-to-medium sized businesses primarily in Massachusetts.  The bank hiked its quarterly dividend by 4.34% to 48 cents/share, marking the tenth consecutive annual dividend increase. It has managed to grow dividends at an annualized rate of 9.70% over the past decade.

The bank earned $2.12/share in 2011 and is expected to grow earnings to $3.95/share by 2021.

The stock is selling for 22.93 times forward earnings and yields 2.12%.


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2 comments:

  1. Great update. What do you think about Realty Income exposure to AMC and Regal cinemas? In your 2018 post, that accounted for 5.5% of their portfolio. Not sure cinemas will recover fully, even after the pandemic is under control.

    ReplyDelete
    Replies
    1. It's roughly within the same percentage today too

      This is why they diversify. Whether cinemas bounce back or not - we do not know that today, same thing we couldn't have imagined in January 2020 that we would have the pandemic and the lockdowns we have had over the past year. Some may argue that there is pent-up demand for people to go out and enjoy themselves after vaccine rollouts, and virus is under control.

      But they are not off the hook for paying contractual rent, although they could probably negotiate. Only bankruptcy may that debt be discharged.

      And these properties can always be sold, or repurposed.

      Delete

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