I review the list of dividend increases every week, as part of my monitoring process. This exercise helps in monitoring existing positions and potentially identifying companies for further research.
This exercise also provides a good overview of the types of reviews I make to determine if I should place a company on my list for further reviews.
In general, I require a long track record of annual dividend increases first. A long track record of annual dividend increases does not happen by accident. It is an indication of quality, competitive advantage and the ability to generate excess cashflows, in order to be able to shower shareholders with more cash for over a decade.
I also require growth in earnings per share over the past decade. Rising earnings per share provide the fuel behind future dividend growth. All of this can potentially drive growth in intrinsic value as well.
I also review trends in dividends per share and the dividend payout ratio as well. In terms of dividend growth, I check to see for consistency. I also review the latest dividend increase in comparison to the 5 and 10 year history.
I also want to see dividend increases that are fueled by earnings per share growth, rather than an expansion of the dividend payout ratio. In general, the lower the payout ratio the better. In addition, I want to see a dividend payout ratio that is in a range.
Last but not least, I review current valuation. This means looking at P/E ratio, along with historical dividend growth, while also taking into account how cyclical the business is.
This sounds like a lot of work. But after doing this for a while, it becomes second nature.
Over the past week, there were five dividend growth companies which raised dividends to shareholders. The companies include:
Agree Realty Corporation (ADC) is a publicly traded real estate investment trust focusing on the acquisition and development of properties net leased to industry-leading, omni-channel retail tenants. As of December 31, 2023, the Company owned and operated a portfolio of 2,135 properties, located in 49 states
This REIT raised monthly dividends by 1.20% to $0.25/share. This is the 12th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 6%.
Between 2014 and 2023, the REIT managed to grow FFO from $2.19/share to $3.59/share. The REIT is expected to generate $4.07/share in FFO in 2024.
The REIT sells for 13.94 times forward FFO and yields 5.34%
Aon plc (AON) is a professional services firm, which provides a range of risk and human capital solutions worldwide.
The company increased quarterly dividends by 9.80% to $0.675/share. This is the 13th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company managed to grow dividends at an annualized rate of 13.40%.
The company managed to increase earnings from $4.73/share in 2014 to $12.60/share in 2023.
The company is expected to earn $16.23/share in 2024.
The company sells for 19.16 times forward earnings and yields 0.88%.
Costco Wholesale Corporation (COST) engages in the operation of membership warehouses in the US and Internationally.
The company increased quarterly dividends by 13.70% to $1.16/share. This marked the 20th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company managed to grow dividends at an annualized rate of 12.63%.
Costco managed to grow earnings from $4.69/share in 2014 to $14.18/share in 2023. The company is expected to earn $16/share in 2024.
The stock sells for 45.78 times forward earnings and yields 0.64%.
The Procter & Gamble Company (PG) provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care.
The company raised quarterly dividends by 7% to $1.0065/share. This marks the 68th consecutive year that P&G has increased its dividend and the 134th consecutive year that P&G has paid a dividend since its incorporation in 1890. This dividend king has managed to grow dividends at an annualized rate of 4.67% over the past decade.
Procter & Gamble managed to grow earnings per share from $4.19 in 2014 to $6.07 in 2023.
The company is expected to earn $6.41/share in 2024.
The stock sells for 24.29 times forward earnings and yields 2.59%. Check my review of Procter & Gamble for more information about the company.
H.B. Fuller Company (FUL) formulates, manufactures, and markets adhesives, sealants, coatings, polymers, tapes, encapsulants, additives, and other specialty chemical products. It operates through three segments: Hygiene, Health and Consumable Adhesives; Engineering Adhesives; and Construction Adhesives.
The company increased quarterly dividends by 8.50% to $0.2225/share. This marks the 55th consecutive year in which this dividend king has increased its dividend.
Between 2014 and 2023 the company managed to grow earnings from $1/share to $2.67/share.
The company is expected to earn $4.29/share in 2024.
The stock sells for 18.08 times forward earnings and yields 1.15%.
Relevant Articles:
- Procter & Gamble (PG) Increases Dividends for 68th Consecutive Year
