Saturday, March 11, 2023

Nine Dividend Stocks Rewarding Patient Shareholders With A Raise

 As a dividend growth investor, I look for solid companies to invest my hard earned money in. I look for companies that can grow earnings, and afford to raise dividends regularly. A long dividend streak is the indicator of quality, that places companies on my list for further research. A long dividend streak is not an accident, but the result of a long period of a solid company generating excess cashflows. A byproduct of this solid competitive advantage ultimately results in companies showering their investors with more cash dividends every single year. In my research I look at trends in earnings per share, dividends per share, dividend payout ratios and valuation. I try to evaluate qualitative as well as quantitative factors at play as well.

This is why I review the list of dividend increases every single week. This is a helpful monitoring tool for the companies I own, and for the companies I am interested in owning.

In the past week, there were several companies that raised dividends to shareholders. These companies have at least a nine year streak of annual dividend increases. The companies include:

This of course is just a list, not a recommendation.

I typically look for a ten year streak of consecutive annual dividend increases in those lists. I made an exception for this week, because I wanted to share the monstrous dividend increase by Dick's Sporting Goods - 104%. 

I also wanted to mention Lindt & Sprüngli, which raised its annual dividend by 8.33% to 1,300 Swiss Francs/share. This is the 28th year in a row that the company has increased the annual dividend. It is traded on the Swiss stock market, although the stock is also traded as an ADR on the OTC market in the US. The stock is expensive based on absolute share price and based on valuation however. 

When I review companies, I look at ten year trends in:

1) Earnings per share
2) Dividend payout ratio
3) Dividends per share
4) Valuation

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.

You may like this analysis of General Dynamics (GD) as an example of how I review companies.

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