Monday, July 11, 2022

Three Notable Recent Dividend Increases

Once I invest in a Dividend Growth Stock, I do very little, and delegate the management of the business to management. I like the passive nature of dividend growth investing, where companies work tirelessly to grow revenues, earnings and reward shareholders with dividend increases. I do occasionally check in to see how they are doing, but would hold on to a security, for as long as the dividend is not cut. Adding money to a security is a more complex process for me, as I review valuations, growth expectations, payout sustainability, portfolio weights etc.

I have been away for the past three weeks, and just now getting into the weeds of dividend increases since then. I saw a few companies that raised dividends during that time. I decided to focus on three that are more widely held amongst dividend growth investors. 

The companies include:

The Kroger Co. (KR) operates as a retailer in the United States. The company operates combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. 

The company raised quarterly dividends by 23.8% to $0.26/share. This marks the 16th consecutive year of dividend increases for this dividend achiever. The company continues to expect, subject to board approval, an increasing dividend over time.

"This dividend increase reflects the Board of Directors' confidence in our strategy of Leading with Fresh, Accelerating with Digital," said Rodney McMullen, Kroger's Chairman and CEO. "Our business continues to generate strong and consistent free cash flow and has proven to be resilient in a variety of operating environments. The strength of our balance sheet provides significant financial flexibility to continue to invest in our business to drive growth. Looking ahead, we are well positioned to deliver total shareholder returns of 8 – 11% over time."

Over the past decade, Kroger has managed to increase dividends at an annualized rate of 13.80%.

The stock is selling for 12.29 times forward earnings and yields 2.17%. Check my analysis of Kroger for more information about the company.

General Mills, Inc. (GIS) manufactures and markets branded consumer foods worldwide. The company operates in five segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. 

The company raised its quarterly dividend by 5.90% to $0.54/share, underlining its commitment to driving strong returns for General Mills shareholders over the long term. General Mills and its predecessor company have paid dividends without interruption for 123 years.

The company lost its status of a dividend achiever in 2019, after failing to increase dividends. It raised dividends again in late 2020, didn't raise them in 2021 and is raising them in 2022. That being said, it's annual dividends are set to increase for third year in a row in 2022. Despite that, General Mills has managed to grow dividends at an annualized  rate of 5.22% over the past decade.

The stock is selling for 18.92 times forward earnings and yields 2.86%.

Enterprise Products Partners L.P. (EPD) provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products. The company operates through four segments: NGL Pipelines & Services, Crude Oil Pipelines & Services, Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services. 

This master limited partnership raised its quarterly distribution by 2.20% to $0.475/unit. This distribution represents a 5.6 percent increase over the distribution declared with regard to the second quarter of 2021. This distribution increase is the partnership’s 74th distribution increase since its initial public offering in 1998. This year will be the 24th consecutive year of distribution growth for this dividend achiever

Enterprise Product Partners has managed to grow distributions at an annualized rate of 4% over the past decade. This dividend achiever has managed to boost distributions at least once per year since 1999.

The partnership yields 7.61% today.

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- If you didn't get an 8.60% pay increase, you received a pay cut

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