Dividend Growth Investor Newsletter

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Monday, January 29, 2024

27 Companies Rewarding Shareholders With Raises

I review the list of dividends increases as part of my monitoring process. This exercise helps me monitor existing holdings and potentially identify new companies for further research.

Last week was a very busy week for dividend increases. There were 59 companies in the US which managed to increase dividends to shareholders. This time of the year is typically a busy time for dividend increases in general.

I typically focus my attention on the companies that have managed to increase dividends for at least a decade, in order to identify companies that are more likely to keep growing those dividends in the future.

There were 27 companies that raised dividends last week, which have also managed to increase anual dividends for at least a decade.



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.

The next step is to check each business, in order to determine if it is worth further review. I would look at ten year trends in earnings per share, dividends per share, payout ratios, shares outstanding. I would try to understand what the business does, and make an assessment if the good times would continue, so that I can expect higher earnings, dividends and intrinsic values over time. I would look at the valuation relative to earnings and dividend growth, in order to determine if the business is fairly valued, if it looks promising too. 

Relevant Articles:


- Four Dividend Growth Companies Rewarding Shareholders With a Raise






Wednesday, January 24, 2024

Dividend Aristocrats List for 2024

The S&P Dividend Aristocrats index tracks companies in the S&P 500 that have increased dividends every year for at least 25 years in a row. The index is equally weighted, and rebalanced every quarter.


To qualify for membership in the S&P 500 Dividend Aristocrats index, a stock must satisfy the following criteria:

1. Be a member of the S&P 500
2. Have increased dividends every year for at least 25 consecutive years
3. Meet minimum float-adjusted market capitalization and liquidity requirements defined in the index inclusion and index exclusion rules below.

The group of companies in the Dividend Aristocrats index tend to generate reliable dividend income, and provide the potential for strong total returns. The list is well diversified across sectors.

There are a record 67 companies in the Dividend Aristocrats index for 2023.

For 2024, there were several changes. The index added:

- Fastenal (FAST)

The index removed:

- Walgreens (WBA).


The index also added KenVue, which was a spin-off from Johnson & Johnson later in 2023. The S&P Index Committee assigned the dividend history record of Johnson & Johnson to Kenvue. This is what they had done previously with Abbvie/Abbott in 2013. However, they didn't do this for Altria/Phillip Morris International/Kraft in 2007/2008.

The index also removed V.F. Corp (VFC) in early 2023, when the company cut dividends.

Since the inception of the index in 1989, the number of holdings has fluctuated from 26 to 68 holdings. This year marks the highest number of dividend aristocrats ever, on record. It is still not even half the number of Dividend Champions however.


The 2023 Dividend Aristocrats are listed below:

Symbol

Name

Sector

Years of Annual Dividend Increases

10 year Dividend   Growth

Dividend Yield

ABBV

AbbVie Inc.

Health Care

51

13.98%

4.00%

ABT

Abbott Laboratories

Health Care

51

13.80%

2.00%

ADM

Archer-Daniels-Midland Co

Consumer Staples

48

9.00%

2.49%

ADP

Automatic Data Processing

Information Technology

48

12.64%

2.40%

AFL

AFLAC Inc

Financials

42

8.99%

2.42%

ALB

Albemarle Corp.

Materials

29

5.21%

1.11%

AMCR

Amcor

Materials

28

#N/A

5.28%

AOS

Smith A.O. Corp

Industrials

30

18.16%

1.55%

APD

Air Products & Chemicals Inc

Materials

41

9.51%

2.56%

ATO

Atmos Energy

Utilities

40

7.86%

2.78%

BDX

Becton Dickinson & Co

Health Care

52

6.13%

1.56%

BEN

Franklin Resources Inc

Financials

44

11.99%

4.16%

BF.B

Brown-Forman Corp B

Consumer Staples

39

6.89%

1.58%

BRO

Brown & Brown

Financials

30

9.89%

0.73%

CAH

Cardinal Health Inc

Health Care

27

5.60%

1.99%

CAT

Caterpillar Inc

Industrials

30

7.89%

1.76%

CB

Chubb Ltd

Financials

30

5.39%

1.52%

CHD

Church & Dwight

Consumer Staples

27

6.89%

1.15%

CHRW

C.H. Robinson Worldwide

Industrials

26

5.71%

2.82%

CINF

Cincinnati Financial Corp

Financials

63

5.99%

2.90%

CL

Colgate-Palmolive Co

Consumer Staples

60

3.69%

2.41%

CLX

Clorox Co

Consumer Staples

46

5.83%

3.37%

CTAS

Cintas Corp

Industrials

41

20.57%

0.90%

CVX

Chevron Corp

Energy

36

4.47%

4.05%

DOV

Dover Corp

Industrials

68

5.30%

1.33%

ECL

Ecolab Inc

Materials

32

8.71%

1.15%

ED

Consolidated Edison Inc

Utilities

49

2.79%

3.56%

EMR

Emerson Electric Co

Industrials

67

2.31%

2.16%

ESS

Essex Property Trust

Real Estate

29

6.80%

3.73%

EXPD

Expeditors International

Industrials

29

8.69%

1.08%

FAST

Fastenal

Industrials

25

13.35%

2.16%

FRT

Federal Realty Invt Trust

Real Estate

56

3.84%

4.23%

GD

General Dynamics

Industrials

32

9.07%

2.03%

GPC

Genuine Parts Co

Consumer Discretionary

67

5.71%

2.74%

GWW

Grainger W.W. Inc

Industrials

52

7.36%

0.90%

HRL

Hormel Foods Corp

Consumer Staples

58

12.46%

3.52%

IBM

Intl Business Machines

Information Technology

28

6.01%

4.06%

ITW

Illinois Tool Works Inc

Industrials

49

13.07%

2.14%

JNJ

Johnson & Johnson

Health Care

61

6.14%

3.04%

KMB

Kimberly-Clark

Consumer Staples

51

4.46%

3.88%

KO

Coca-Cola Co

Consumer Staples

61

5.09%

3.12%

KVUE

Kenvue

 

61

#N/A

1.91%

LIN

Linde plc

Materials

30

7.83%

1.24%

LOW

Lowe's Cos Inc

Consumer Discretionary

61

20.25%

1.98%

MCD

McDonald's Corp

Consumer Discretionary

48

7.16%

2.25%

MDT

Medtronic plc

Health Care

46

9.76%

3.35%

MKC

McCormick & Co

Consumer Staples

37

8.66%

2.46%

MMM

3M Co

Industrials

65

8.98%

5.49%

NEE

NextEra Energy

Utilities

29

10.98%

3.08%

NDSN

Nordson Corp

Industrials

60

15.36%

1.03%

NUE

Nucor Corp

Materials

51

3.33%

1.24%

O

Realty Income Corp.

Real Estate

31

3.57%

5.36%

PEP

PepsiCo Inc

Consumer Staples

51

8.13%

2.98%

PG

Procter & Gamble

Consumer Staples

67

4.67%

2.57%

PNR

Pentair PLC

Industrials

48

3.16%

1.27%

PPG

PPG Industries Inc

Materials

52

7.70%

1.74%

ROP

Roper Technologies, Inc

Industrials

31

15.26%

0.55%

SHW

Sherwin-Williams Co

Materials

45

13.76%

0.78%

SJM

J.M. Smucker

Consumer Staples

26

6.58%

3.35%

SPGI

S&P Global

Financials

50

12.39%

0.82%

SWK

Stanley Black & Decker

Industrials

56

4.98%

3.30%

SYY

Sysco Corp

Consumer Staples

53

5.86%

2.73%

TGT

Target Corp

Consumer Discretionary

56

10.68%

3.09%

TROW

T Rowe Price Group Inc

Financials

37

12.37%

4.53%

WMT

Wal-Mart

Consumer Staples

50

2.30%

1.45%

WST

West Pharmaceutical Services

Health Care

31

7.18%

0.23%

XOM

Exxon Mobil Corp

Energy

41

4.11%

3.80%

Note: Data as of 12/31/2023




Note: Data as of 12/31/2023


The index has generated strong total returns over time past decade. 

It tends to shine during bear markets, such as 2000 - 2003, 2007 - 2009 and 2022. I wanted to note that in 2008, the Dividend Aristocrats index declined by 21.88%. The S&P 500 however declined by 37%.


The dividend aristocrats index tends to shine during bear markets and low return environments. However, it also pulls its weight when we are in a bull market too. It is the best of both worlds really.

These are the returns since the launch of the Dividend Aristocrats Index in 1989:




You can see the performance of the Dividend Aristocrats Index versus S&P 500 since 1989. The S&P 500 dominated during the 1990's. However, the Dividend Aristocrats index did very well during the next decade. During the past decade, the Dividend Aristocrats Index has basically matched S&P 500 until early 2020. Over the past two years, it has trailed S&P 500 slightly. 





I first stumbled upon the Dividend Aristocrats index in late 2007, and instantly understood why dividend growth investing is such a powerful wealth generating tool. If someone had invested in the Dividend Aristocrats index after reading my review of the list at the beginning of 2008, they would have more than tripled their money. 


As I gained more experience however, I have gravitated more towards the Dividend Champions list, which was created by Dave Fish. The Dividend Champions list is more complete, as it doesn’t exclude companies due to low liquidity, or due to market capitalization below a certain threshold. In addition, I find that historically, the list of Dividend Champions has followed a more consistent approach than the list of Dividend Aristocrats. Sadly, Dave passed away last year. Luckily, another person has agreed to update it for the time being. You can view the 2024 Dividend Champions List here.

When I review the list of historical changes in the Dividend Aristocrats index, I see some inconsistencies in the way portfolio components are added or removed.

For example, the Dividend Aristocrats index removed Altria in 2007, after it spun-off Kraft Foods and as a result its dividend decreased. It could be argued that the dividend income for the investor was not decreased, because they kept getting a dividend from Altria as well as dividends from Kraft Foods.

The S&P committee seems to have rectified this issue, and have kept both Abbott and Abbvie after legacy Abbott Laboratories split in two companies in early 2013.

Ironically, Dave Fish had Altria listed as a Dividend Champion. However, he didn’t have Abbott nor Abbvie listed as a dividend champion ( they are listed as Dividend Aristocrats however).


This is why you need to perform your own checks as an investor.

In addition, I wanted to let you know that I would not purchase all companies from either lists blindly. I run my entry criteria screen to come up with a list of companies for further research. Before investing in any individual stock, I research it enough to gain some understanding of the business and its trends in fundamentals.

Relevant Articles:

Dividend Champions, Contenders & Challengers: The most complete list of US dividend growth stocks available
Dividend Aristocrats List for 2017
Dividend Aristocrats for Dividend Growth and Total Returns
Where are the original Dividend Aristocrats now?
Historical changes of the S&P Dividend Aristocrats
Why do I like the Dividend Aristocrats?
Dividend Aristocrats List for 2016