Dividend Growth Investor Newsletter

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Saturday, November 26, 2022

Four Companies Rewarding Thankful Shareholders With Raises

There were several companies over the past week which announced their intent to raise dividends to shareholders. It is always great to see companies that are able to extend their long streaks of annual dividend increases. I find dividend increases to be a good indicator of how company executives feel about the near-term business environment. It also shows their confidence in the company’s growth prospects. 

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.

I review these press releases as part of my monitoring process. For the purposes of this article, I narrowed the list of dividend increases down to a more manageable level.

I focused on companies that can afford to grow dividends for at least a decade. I figured that a company which has managed to boost dividends during a recession and an expansion, or even longer, is better suited for further research by a long-term dividend growth investor like me.

In my previews, I look at the most recent dividend increase, and compare it to the ten year average. While there are some year-over-year fluctuations in dividend growth, it is helpful to see if dividend growth is decelerating.

In addition, it is helpful to review trends in earnings and dividends, alongside dividend payout ratios. This is another indicator of dividend safety.

Last, but not least, I also try to review the valuation behind every company. I prefer to buy future dividend income at attractive valuations; overpaying for future dividend income is not a good business decision.

Over the shortened Thanksgiving week, we had six companies hiking distributions to their thankful shareholders. 

The companies include:

Hormel Foods Corporation (HRL) develops, processes, and distributes various meat, nuts, and food products to retail, foodservice, deli, and commercial customers in the United States and internationally. The company operates through four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. 

Hormel Foods increased its quarterly dividends by 5.80% to $0.275/share, marking the 57th consecutive annual dividend increase for this dividend king.

The company has managed to grow annual dividends at an annualized rate of 8.87% over the past five years.

The stock sells for 27.27 times forward earnings and yields 2.23%.


HP Inc. (HPQ) provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally. The company operates through three segments: Personal Systems, Printing, and Corporate Investments. 

HP increased quarterly dividends by 5% to $0.2625/share, marking the 13th consecutive year of annual dividend increases for this dividend achiever.

The company has managed to grow annual dividends at an annualized rate of 13.50% over the past five years.

The stock sells for 9.08 times forward earnings and yields 3.48%.


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

The company hiked its quarterly dividend to $0.63/share. This is a 3.30% increase from the prior quarterly dividend paid in the third quarter of 2022. It is also a 14.54% increase from the dividend paid during the same time last year.

The bank has consistently increased regular cash dividends for the past 27 years. In addition to that, it has managed to pay a special dividend in December, for the past 28 years. 

The special dividend is $0.63/share for 2022, which is down from the special dividend of $0.75/share paid for 2021. Overall annual dividend income paid in 2023 is set to exceed overall annual dividend income paid in 2022 however (including special dividends).

The company has managed to grow annual dividends at an annualized rate of 12.28% over the past five years.

The stock sells for 14.34 times earnings and yields 0.88%.


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

The company increased quarterly dividends by 4% to $0.2027/share. This dividend champion has increased dividends for 26 consecutive years.

The company has managed to grow annual dividends at an annualized rate of 4% over the past five years.

The stock sells for 33.06 times forward earnings and yields 1.78%.


Relevant Articles:

- Twelve Cash Machines Hiking Dividends Last Week






Sunday, November 20, 2022

Twelve Cash Machines Hiking Dividends Last Week

 I review the list of dividend increases every week, as part of my review process. I focus my attention on companies that raised dividends in the current week, and have at least a ten-year track record of annual dividend increases.

Only a company with a strong cash flow generating business can afford to grow dividends for a long period of time. Therefore, a business growing dividends for at least a decade is worth looking at for further research.

There were nine companies that fit the criteria. You can view the five companies in the table below:

Name

Ticker

New

Old

Increase

Streak

P/E

Yield

5 year Dividend Growth

Agilent Technologies

A

0.225

0.21

7.14%

12

28.82

0.62%

11.02%

Brown-Forman

BF.B

0.2055

0.1885

9.02%

39

35.66

1.18%

5.70%

C.H. Robinson

CHRW

0.61

0.55

10.91%

25

12.19

2.51%

3.23%

DTE Energy

DTE

0.9525

0.885

7.63%

14

19.03

3.32%

7.10%

Griffon

GFF

0.1

0.09

11.11%

12

9.94

1.11%

9.46%

KeyCorp

KEY

0.205

0.195

5.13%

12

8.72

4.41%

17.84%

Matthews

MATW

0.23

0.22

4.55%

29

9.87

3.07%

6.89%

MDU Resources

MDU

0.2225

0.2175

2.30%

32

16.92

2.91%

2.53%

Motorola Solutions

MSI

0.88

0.79

11.39%

13

25.77

1.34%

11.61%

Nike

NKE

0.34

0.305

11.48%

21

35.69

1.29%

12.04%

Royal Gold

RGLD

0.375

0.35

7.14%

22

31.52

1.42%

5.46%

WesBanco

WSBC

0.35

0.34

2.94%

13

13.05

3.52%

6.64%


This is a list of companies for further review. Most seem attractive as businesses, but that doesn’t mean that they should be invested in at any price, regardless of valuation.

This would likely be the last post for me this week. I will look forward to the Thanksgiving raises from Hormel Foods, McCormick, York Water Company, South Jersey Industries and Hingham Institution for Savings.

Relevant Articles:

- Nine Companies Rewarding Shareholders With Raises

- Twenty Dividend Growth Stocks Raising Dividends Last Week

- 13 Dividend Growth Stocks Rewarding Owners With A Raise





Wednesday, November 16, 2022

24 Dividend Aristocrats For The Next 24 Years

The S&P Dividend Aristocrats Index includes the S&P 500 companies that have managed to increase annual dividends for at least 25 consecutive years. 

It is an elite list of quality companies that I have on my watchlist. To get there a company would have to get to become a member of S&P 500, AND also raise dividends for 25 years in a row. Only a quality company with a strong business model and the ability to grow business and generate a growing amount of excess cashflow can get a spot on this list. Success is not an accident.

There are only 64 such companies in the US today. You can see the list of these companies here.

As part of my monitoring process, I narrowed the list down to 24 dividend aristocrats for further research. I applied the following criteria:

1) I reviewed the earnings histories for each dividend aristocrat over the past decade. I removed the companies that didn't grow earnings sufficiently over the past decade. I also removed companies where earnings per share has been flatlining over the past few years. Rising earnings per share are the fuel behind future dividend increases. For REITs I looked at FFO/share.

2) I reviewed the valuation for the remaining companies and removed those that have a P/E ratio above 25. This corresponds to an earnings yield of 4%, which is roughly on par with US Treasuries.

3) The next step I took was to remove companies which had very small recent dividend increases.  This included Dover, Emerson Electric, 3M, Realty Income, Stanley Black & Decker. 

4) Next, I focused on companies with a payout ratio below 65%. Dividend safety is of paramount importance. I calculate an adequate margin of safety in dividends through the dividend payout ratio.

5) I focused on companies with 5 year annualized dividend growth exceeding 3%/year. This is roughly in line with historical inflation trends. 

This leaves me with a list of 24 dividend aristocrats for research:

Name

Ticker

Consecutive Annual Dividend Increases

Forward P/E

Dividend Yield

Forward Payout Ratio

5 year Annualized Dividend Growth

AbbVie Inc.

ABBV

50

10.85

3.94%

42.75%

17.93%

Abbott Laboratories

ABT

50

20.01

1.81%

36.22%

11.60%

Archer-Daniels-Midland

ADM

47

12.34

1.70%

20.98%

4.28%

Aflac Incorporated

AFL

40

13.36

2.28%

30.46%

9.72%

A. O. Smith Corporation

AOS

29

19.42

2.00%

38.84%

17.17%

Air Products and Chemicals

APD

40

25.33

2.25%

56.99%

11.49%

Atmos Energy Corporation

ATO

38

18.56

2.67%

49.56%

8.36%

Brown & Brown, Inc.

BRO

29

25.21

0.81%

20.42%

8.63%

Church & Dwight Co., Inc.

CHD

26

25.2

1.41%

35.53%

7.30%

Cincinnati Financial Corporation

CINF

62

25.66

2.51%

64.41%

5.56%

Essex Property Trust, Inc.

ESS

28

14.87

4.09%

60.82%

5.99%

Expeditors International of Washington

EXPD

28

12.51

1.20%

15.01%

7.71%

General Dynamics Corporation

GD

31

19.99

2.07%

41.38%

9.47%

Genuine Parts Company

GPC

66

21.82

2.01%

43.86%

4.57%

W.W. Grainger, Inc.

GWW

51

20.1

1.17%

23.52%

5.76%

Illinois Tool Works Inc.

ITW

48

24.22

2.31%

55.95%

15.07%

Johnson & Johnson

JNJ

60

16.85

2.67%

44.99%

5.87%

Lowe's Companies, Inc.

LOW

60

15.47

2.01%

31.09%

17.32%

The Procter & Gamble Company

PG

66

24.28

2.59%

62.89%

4.94%

Pentair plc

PNR

46

12.81

1.80%

23.06%

3.60%

PPG Industries, Inc.

PPG

51

21.76

1.91%

41.56%

7.70%

Sysco Corporation

SYY

52

20.35

2.32%

47.21%

8.21%

Target Corporation

TGT

55

21.56

2.49%

53.68%

6.38%

T. Rowe Price Group, Inc.

TROW

36

16.85

3.60%

60.66%

14.87%

Note: Data as of 11/11/2022. Data is from sources believed to be reliable.

While the titled of the article states 24 dividend aristocrats for the next 24 years, I would not treat it as a recommendation to buy. I view it as a list of companies for further research. I encourage readers to do their own due diligence before putting money to work.

This is a sample analysis of Air Products & Chemicals (APD) for more information on how I review companies.

Relevant Articles:

- Dividend Aristocrats List for 2022

- Rising Earnings – The Source of Future Dividend Growth

- How to determine if your dividends are safe