Saturday, March 4, 2023

Eight Companies Working Hard For Their Stockholders

 As part of my monitoring process, I review the list of dividend increases every week. This is helpful as a method to observe recent developments in companies I own. This process is helpful in identifying companies for further research, which may be exhibiting certain characteristics that look promising.

I usually focus on companies with at least a ten year streak of annual dividend increases, in order to focus my attention to companies that can establish and maintain a streak throughout a full economic cycle.

The next steps involve evaluating the rate of increase relative to the historical average, in an effort to determine consistency. Usually, I end up observing a dividend growth rate that is accelerating or decelerating.

I also try to review trends in earnings, and looks at valuation, in order to determine if a company is worth pursuing further.

There were several companies raising dividends last week. The companies include:

This list is not a recommendation to buy or sell any securities. It is just a list of companies for further research. It is also a list to update my existing observations on companies I own or plan to own at the right price. I analyze companies before buying the,

If I were to evaluate the companies on this list, I would leverage my screening criteriawhich I first outlined in 2010.

Notably I would look for the following:

1) Ten years of annual dividend increases
2) Earnings per share that are increasing over the past decade
3) Dividend Payout Ratio below 60% ( however I am willing to make exceptions for REITs, MLPs, Utilities and Tobacco companies)
4) Dividend growth rate that exceeds the rate of inflation ( however this also needs to take into account the rate of earnings and dividend growth)
5) A P/E ratio below 20

Since I have some experience evaluating dividend companies, I also modify my criteria based on the environment we are in and the availability of quality companies. If I see a company with a strong business model and certain characteristics that I like, I may require a dividend streak that is lower than a decade. I have also found success in looking beyond screening criteria by purchasing stocks a little above the borders contained in a screen.

It is important to be flexible, without being too lenient.

Relevant Articles:

Popular Posts