Tuesday, June 1, 2021

Nine Dividend Growth Stocks Rewarding Shareholders With Raises

 As part of my monitoring process, I observe the list of dividend increases each week. I tend to focus my attention on the companies with at least a ten year history of annual dividend increases. My goal is to identify companies that can grow earnings and dividends for decades, and compound my net worth and income in the process. I am not interested in situations where I have to time my entry and exit correctly, and have to worry about the economic cycles too much.

This process helps me monitor existing holdings and to identify possible research opportunities for further investigation.

Over the past week, there were several companies that raised dividends to shareholders and had at least a ten year track record of annual dividend increases. The companies include:

Lowe's Companies, Inc. (LOW) operates as a home improvement retailer in the United States and internationally. 

The company raised its quarterly dividend by 33.30% to 80 cents/share, marking the 59th year of annual dividend increases for this dividend king. Lowe’s has managed to increase dividends at an annualized rate of 18.90% over the past decade.

Lowe’s has managed to grow earnings from $1.43/share in 2012 to $7.75/share in 2021.

The company is expected to earn $10.94/share in 2022.

The stock is selling for 17.81 times forward earnings and yields 1.64%.

American Tower (AMT), one of the largest global REITs, is a leading independent owner, operator and developer of multitenant communications real estate with a portfolio of approximately 181,000 communications sites.

American Tower increased its quarterly dividend by 2.40% to  $1.27/share.  The company has raised dividends every single quarter since 2012. The current dividend is 15.45% higher than the dividend paid during the same time last year. This REIT has managed to increase annual dividends for 10 years in a row. Over the past five years, it has managed to boost distributions at an annualized rate of 19.10%.

The REIT is expected to earn $9.33/share in FFO for 2021.

The stock is selling for 27.37 times forward FFO and yields 1.99%.

Sysco Corporation (SYY) markets and distributes a range of food and related products primarily to the foodservice or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally. It operates through three segments: U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other. 

Sysco increased its quarterly dividend by 4.40% to $0.47/share. This is the 52nd consecutive annual dividend increase for this dividend king. Over the past decade, it has managed to increase dividends at an annualized rate of 6.10%.

“Sysco’s strategy is built upon its commitment to a balanced capital allocation strategy – investing for growth, while preserving our strong balance sheet and investment grade rating and returning value to our shareholders,” said Aaron Alt, Sysco’s chief financial officer. “The combined actions we are announcing today position Sysco for long-term growth and success.”

The company is expected to earn $1.34/share in 2021. Earnings seem to have been depressed by Covid-19, as it also earned 42 cents/share in 2020. For reference, between 2011 nad 2019, the company grew earnings from $1.96/share to $3.20/share.

The stock is selling for 60.49 times forward earnings and yields 2.32%.

Medtronic plc (MDT) develops, manufactures, distributes, and sells device-based medical therapies to hospitals, physicians, clinicians, and patients worldwide. It operates through four segments: Cardiac and Vascular Group, Minimally Invasive Therapies Group, Restorative Therapies Group, and Diabetes Group.

Medtronic hiked its quarterly dividend by 8.60% to $0.63/share. This marked the 44th consecutive year of an increase in the dividend for this dividend aristocrat. Over the past decade, Medtronic has managed to boost dividends at an annualized rate of 10%.

"We're pleased to be able to increase our dividend by 9% during the pandemic," said Martha. "Today's dividend increase is a strong sign of our commitment to providing robust returns for our shareholders and of the confidence that our Board of Directors has in Medtronic's financial strength and future growth opportunities."

The company is expected to earn $5.68/share in 2021. Between 2011 and 2020, Medtronic’s earnings went from $2.86/share to $3.54/share. When analyzing a company like Medtronic however, you need to dig further and remove certain items, in order to gain a true understanding of its earnings power.

The stock is selling for 22.27 times forward earnings and yields 1.99%.

LyondellBasell Industries N.V. (LYB) operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company operates in six segments: Olefins and Polyolefins—Americas; Olefins and Polyolefins—Europe, Asia, International; Intermediates and Derivatives; Advanced Polymer Solutions; Refining; and Technology.

The company increased its quarterly dividend by 7.60% to $1.13/share. This marked the tenth consecutive year of annual dividend increases for this newly minted dividend contender.  It has a five year annualized dividend growth rate of 6.70%.

The company is expected to earn $14.43/share in 2021. Between 2011 and 2020, its earnings went from $3.74/share to $4.24/share.

The stock is selling for 7.80 times forward earnings and yields 4%.

Unum Group (UNM) provides financial protection benefit solutions primarily in the United States, the United Kingdom, and Poland.

The company raised its quarterly dividend by 5.3% to $0.30/share. This is the 13th year of consecutive annual dividend increases for this dividend achiever. Over the past decade., the company managed to boost annual distributions at a rate of 12.50%.

Unum Group managed to grow earnings from 94 cents/share in 2011 to $3.89/share in 2020. The company is expected to earn $4.70/share in 2021.

The stock is selling for 6.59 times forward earnings and yields 3.68%.

Flowers Foods, Inc. (FLO) produces and markets packaged bakery products in the United States.

The company raised its quarterly dividend by 5% to 21 cents/share. This marked the 20th year of consecutive annual dividend increases for this dividend achiever. During the past decade, the company has managed to increase dividends at an annualized rate of 8.70%.

"The board is confident that the company's leading brands will drive growth in-line with our long-term financial targets," said Ryals McMullian, Flowers Foods president and CEO. "That expected growth and our strong cash flow enables the company to invest strategically and enhance our business while also continuing our long history of rewarding shareholders with a growing dividend."

Between 2011 and 2020, its earnings went from 60 cents/share to 72 cents/share. The company is expected to earn $1.15/share in 2021. 

The stock is selling for 21 times forward earnings and yields 3.49%.

Donaldson Company, Inc. (DCI) manufactures and sells filtration systems and replacement parts worldwide.

The company increased its quarterly dividend by 4.80% to $0.22/share. This marked the 35th consecutive year of annual dividend increases for this dividend champion. Over the past decade, the company has managed to raise dividends at an annualized rate of 13%.

Between 2011 and 2020, the company grew earnings from $1.43/share to $2/share. The company is expected to earn $2.22/share in 2021. 

The stock is selling for 27.73 times forward earnings and yields 1.43%.

Insperity, Inc. (NSP) provides human resources (HR) and business solutions to improve business performance for small and medium-sized businesses.

The company increased its quarterly dividend by 12.50% to 45 cents/share. This is the eleventh consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to raise dividends at an annualized rate of 19.90%.

Between 2011 and 2020, the company grew earnings from 58 cents/share to $3.54/share. The company is expected to earn $4.10/share in 2021. 

The stock is selling for 22.47 times forward earnings and yields 1.95%.

After reviewing this list, I am interested in researching more about Insperity (NSP). I have a position in Lowe’s (LOW), Medtronic (MDT), American Tower (AMT) and Sysco (SYY), so it was neat to see getting a raise. 

Ironically, I was expecting a raise from Clorox this week, but it never arrived. This is something I am monitoring on.

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3 comments:

  1. Lyb looks interesting why are you not interested in researching them further ?

    ReplyDelete
    Replies
    1. Perhaps because I view it as a cyclical company. So it may do very well in the current cycle where everyone expects a lot of inflation, so that may do well for it. But it may require more closer monitoring.

      The company was formed in 2007, then filed for bankruptcy protection in 2009. I think that was because of high debt and the financial crisis, but that's a red flag. Perhaps during the next recession they won't go bankrupt, but there is a high likelihood they will cut dividends.

      Delete
    2. Yes. I owned LYB for about 4 years and sold it last week because it has done well, but is cyclical. I did notice Chuck C. from FAST Graphs mentioned it last week, but it’s too risky now in my view.

      Delete

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