Saturday, May 27, 2023

Eight Companies Rewarding Shareholders With a Raise

I review the list of dividend increases every week, as part of my monitoring process. This process helps me identify companies for further research. It's also one of the steps that helps me monitor existing investments.

Dividends offer a strong signaling value. An increased dividend reflects the board's confidence in the company's ability to generate strong earnings and cash flow. It reinforces a company's commitment to a sound capital allocation strategy centered on delivering shareholder value. Increasing the dividend is also indicative of consistent performance and the board's confidence in a company's long-term strategy and growth trajectory..

Over the past week, there were 21 companies that announced dividend increases. Eight of these companies had managed to increase dividends annually for at least ten years in a row. The companies include:

This of course is just a list of dividend increases from the past week, not a recommendation.

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 Lowe's (LOW) as an example of how I review companies.

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