Nine Companies Rewarding Shareholders With Raises

I review the list of dividend increases every week, as part of my monitoring process. This helps me in my review of existing positions and in uncovering potential companies for future research. 

This is just one venue I use to monitor companies. Other ways include screening the list of dividend aristocrats, champions or achievers, before delving into each individual company that looks promising.

I believe in familiarizing myself with as many promising companies as possible, in an effort to be able to act quickly if they sell at the right price. 

In order to compile the list of companies I mention today, I looked at companies that have raised dividends over the past week and also have managed to increase dividends for at least ten years in a row.

The companies meeting that criteria are listed below:

Aflac Incorporated (AFL) provides supplemental health and life insurance products. It operates through two segments, Aflac Japan and Aflac U.S. 

The company hiked quarterly dividends by 5% to $0.42/share. This was the 40th consecutive year of annual dividend increases for this dividend aristocrat. Over the past five years, the company has managed to increase dividends at an annualized rate of 12.96.

Commenting on the announcements, Aflac Incorporated Chairman and Chief Executive Officer Daniel P. Amos said: "I am pleased with the Board's action to increase the first quarter 2023 dividend. We treasure our record of 40 consecutive years of dividend increases, and our dividend track record is supported by the strength of our capital and cash flows. As an insurance company, our primary responsibility is to fulfill the promises we make to our policyholders. At the same time, we are listening to our shareholders and understand the importance of prudent liquidity and capital management. We remain committed to maintaining strong capital ratios on behalf of our policyholders and balance this financial strength with tactical capital deployment." 

The stock is selling for 13.55 times forward earnings and yields 2.37%. 

Automatic Data Processing, Inc. (ADP) provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO). 

ADP boosted quarterly dividends by 20% to $1.25/share. The increased cash dividend marks the 48th consecutive year in which this dividend aristocrat has increased distributions to shareholders. Over the past five years, the company has managed to increase dividends at an annualized rate of 12.78%.

I loved this part from the press release: Our dividend is a cornerstone to our long-standing commitment to shareholder-friendly actions, and we are pleased to be one of a select group of companies with such a track record," said Carlos Rodriguez

The stock sells for 30.76 times forward earnings and yields 2.01%.

Atmos Energy Corporation (ATO) engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. 

The company hiked quarterly dividends by 8.82% to $0.74/share. This marked the 39th year of consecutive annual dividend increases for this dividend champion. Over the past five years, the company has managed to increase dividends at an annualized rate of 8.73%.

I loved this part from the press release: "The increased regular cash dividend reflects the company's continued strong financial position"

The stock sells for 18.56 times forward earnings and yields 2.67%.

Becton, Dickinson and Company (BDX) develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products for healthcare institutions, physicians, life science researchers, clinical laboratories, pharmaceutical industry, and the general public worldwide. 

The company raised quarterly dividends by 4.60% to $0.91/share. This marked the 51st year of consecutive annual dividend increases for this dividend king. Over the past five years, the company has raised dividends at an annualized rate of 3.84%.

The stock is selling for 18.75 times forward earnings and yields 1.60%.

Lancaster Colony Corporation (LANC) engages in the manufacturing and marketing of food products for the retail and foodservice markets in the United States. It operates in two segments, Retail and Foodservice. 

The company increased quarterly dividends by 6.25% to $0.85/share. This marked the 60th year of consecutive annual dividend increases for this dividend king. Over the past five years, the company has managed to increase dividends at an annualized rate of 7.78%.

The stock sells for 33.12 times forward earnings and yields 1.67%.

Roper Technologies, Inc. (ROP) designs and develops software, and engineered products and solutions. 

The company hiked quarterly dividends by 10.08% to $0.68/share. During the past five years, Roper managed to hike dividends at an annualized rate of 12.12%.

The stock sells for 31.13 times forward earnings and yields 0.62%.

Innospec Inc. (IOSP) develops, manufactures, blends, markets, and supplies specialty chemicals in the United States, rest of North America, the United Kingdom, rest of Europe, and internationally.

The company raised semi-annual dividends by 3.20% to $0.65/share. This is the second dividend increase this year, bringing the new payment 10.17% higher than the payment in the same time last year. This marked the 10th year of consecutive annual dividend increases for this newly minted dividend achiever. Over the past five years, the company managed to boost dividends at an annualized rate of 11.60%

The stock sells for 17.29 times forward earnings and yields 1.20%.

Assurant, Inc.(AIZ) provides lifestyle and housing solutions that support, protect, and connect consumer purchases in North America, Latin America, Europe, and the Asia Pacific.

The company raised quarterly dividends by 2.94% to $0.70/share. This marked the 19th year of consecutive annul dividend increases for this dividend achiever. Over the past five years, the company has managed to hike distributions at an annualized rate of 5.60%.

The stock sells for 12.09 times forward earnings and yields 2.18%.

Farmers & Merchants Bancorp (FMCB) operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals.

The company raised semi-annual dividends by 9.21% to $8.30/share. This marked the 57 year of consecutive annual dividend increases for this dividend king. The company has managed to raise dividends at an annualized rate of 3.31% over the past five years.

The stock sells for 10.91 times forward earnings and yields 1.70%.

This article shows a review I do once a week. It usually takes a few minutes a week for me, though writing it down for your enjoyment takes longer than that.

This of course is just one step in the process. If I find a company that looks promising, I would run it through my screening criteria, analyze the company, and establish a proper valuation target for accumulation. 

Relevant Articles:

- How to read my stock analysis reports

- My screening criteria for dividend growth stocks

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Snap-on Incorporated (SNA) Dividend Stock Analysis

Snap-on Incorporated (SNA) manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. It operates through Commercial and Industrial Group, Snap-on Tools Group, and Repair Systems & Information Group segments.

The company has managed to grow dividends for 12 years in a row. The last dividend increase occurred in November 2022, when Snap-on’s Board of Directors hiked its quarterly dividend by 14% to $1.62/share. Over the past decade, the company has managed to boost its dividends at an annualized rate of 14.70%.

Snap-on has managed to grow earnings per share significantly during the past decade. Between 2011 and 2021, earnings per share grew roughly three-fold from $4.71 to $14.92. The company is expected to generate $15.27/share in 2022 and $16.14/share in 2023. 

The number of shares outstanding has stayed in a rather constant range over the past decade. The past three years have been a positive surprise. I would expect more in share repurchases over the next decade, in order to juice up the slow-down in organic earnings per share growth. 

The dividend payout ratio has consistently stayed a little below 30% over the past decade, with the brief spike during the financial crisis and the Covid crisis. A consistent payout ratio is good to see, as it shows that earnings and dividends tend to move in lockstep over the long-term. A lower payout ratio also offers some added margin of safety to insulate the distributions during any temporary bumps in earnings during recessions. 

Currently, Snap-On is attractively valued at 16.50 times forward earnings, and yields 2.83%.

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13 Dividend Growth Stocks Rewarding Owners With A Raise

I review the list of dividend increases every week, as part of my portfolio monitoring process. I leverage several of my dividend investing resources for this effort.

I started by reviewing the list of all dividend increases for the week. There were 45 of them. I then narrowed the list down to the companies that have managed to boost dividends for at least ten years in a row. I also focused on companies that had a meaningful combination of yield and dividend growth.

The companies for this week’s review include:

This list is not a recommendation to buy or sell stocks. It is simply a list of companies that raised dividends last week. The companies listed have managed to grow dividends for at least ten years in a row.

The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.

This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.

Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.

Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.

For a sample analysis of Snap-On (SNA) click here

Relevant Articles:

- Six Dividend Aristocrats Expected to Boost Dividends in October 2022

- Twelve Dividend Growth Stocks Rewarding Shareholders With Raises

- Five Dividend Growth Stocks Rewarding Shareholders With A Raise Last Week

- Three Dividend Growth Stocks Increasing Shareholder Dividends

Simple Investing Principles to Follow

I have been overdosing on everything about Warren Buffett in the past two-three years. This has spilled over to learning more about Warren’s business partner Charlie Munger. Charlie Munger is big on the so called mental models, which are principles on how to live your life.

In this article, I have outlined several simple principles on investing, which I think should be the foundation of your investment strategy, whether you are a dividend investor or choose to do something entirely different.

The first concept you want to understand is the power of compounding. Compounding is the process where you earn money on the money you invested a certain amount of time ago. You start with an initial amount and have a certain rate of return, and you reinvest gains and dividends back into your portfolio. As a result, you are exponentially increasing your net worth and income.

The second simple principle to take into account is that over the past 200 years, the US stock market has been going up almost every decade. This is a phenomenon not just limited to the US however. A study of most other countries show that equities outperform all other assets over time. This is because stocks represent ownership of real businesses, which over time have more consumers, raise prices, bring new products and gain efficiencies and know-how on how to do things better, cheaper and faster. Reinvested earnings drive growth in the businesses, while reinvested dividends compound your net worth and income even faster. While there are occasional blips that could last for years, equities should be the main cornerstone behind your investment strategy. These occasional declines in share prices, no matter how severe, should not scare the individual investor. On the contrary, they should be seen as opportunities to acquire more equity interests in quality companies at discounted prices.

The third principle to remember is that stocks represent partnership interests in real businesses.  Stocks are not just some blips on a computer screen. While investor sentiment drives stock prices in the short-run, underlying fundamentals drive whether you are going to make or lose money from your investment in the long-run. Over time, growing earnings, dividends make businesses more valuable, hence you will see 52 week highs and all-time highs most of the time. As a result, as a part-owner in a business, your goal is to determine whether the business can earn more money over time. The rise in stock price and dividend will follow if earnings increase.

The fourth principle is diversification. It is important to realize that things can happen to a business that cannot be even considered as a problem today. If you spread your capital in at least 30 – 40 businesses over your lifetime, you would do just fine in the long-run, while protecting your principle in the process. Having exposure to different industries, countries is a must in protecting investment capital from the destructive forces of time.

The fifth principle you need to take in consideration is that increasing investment activity is bad for your returns. The goal of the investor should be to buy or create an equity portfolio, and then sit on it for decades. If you try to time the market by trying to sell at what looks like a top, and try to buy at what looks like a bottom, you might be unable to achieve your investment goals and objectives. In fact, studies have shown that increased levels of activity among individual investors are correlated with extremely low returns relative to their benchmark. In addition, did you know that if you had simply purchased the original 500 components of S&P 500 in 1957, and then did nothing for the next 50 years, you would have outperformed the S&P 500? Therefore, if a company you own spins-off a subsidiary, just hold on to the stock. From a tax efficiency perspective, you should do just fine.

The sixth important principle to ingrain in your memory is to be unemotional about your investments as much as possible. Most investors are terrible at investing, because they lack the emotional characteristics associated with dealing with rising and falling prices. They get excited when stock prices have been rising for a long period of time, but get depressed when stock prices start going down. These investors are always afraid that they are missing out, which is why they frequently change strategies to chase the next hot fad. You should not let emotions run your investments. The successful investor should have a plan, and stick to it through thick and thin. The best plan is to buy, hold and occasionally monitor your portfolio. Remember, it is time in the market that can lead to success, not timing the market.

Another important principal to remember is that entry price does matter. For dividend investors who focus on selecting individual stocks, there are always some attractively valued opportunities available. There were quality companies available at fair prices during the 1972 Nifty-Fifty Bubble, and the 1996 – 2000 Technology Bubble to name a few. Dearly overpaying even for the best companies is a mistake. This is because your initial dividend yield will be ridiculously low, and the price you paid would have all the growth for the next decade already baked into it. In the case of Coca-Cola and Wal-Mart investors, who overpaid in 1999 – 2000, earned low returns over the subsequent decade. This was despite the fact that the underlying businesses produced stellar operating results during the same time period. In addition, one should focus on the current and future ability of the business to generate profits, and not focus on profits that were generated 5 or 10 years ago. In the case of the Nifty-Fifty, the companies generated returns close to that of a stock market index. Of course, investors would have had to patiently hold for a quarter of a century in order to obtain this result. This was difficult, because the first decade was characterized with heavy losses that were more severe than losses experienced by blue chips stocks as a whole.

Relevant Articles:

- Buy and hold dividend investing is not dead
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- The Pareto Principle in dividend investing
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Twenty Dividend Growth Stocks Raising Dividends Last Week

Last week was one of the busiest for dividend increases since the first quarter. There were 54 companies that announced a dividend increase. If we are in a recession, apparently corporate America has not gotten the memo yet.

I review the list of dividend increases as part of my monitoring process. It helps me monitor existing positions, and identify companies for further research.

I usually focus on the companies that have managed to increase annual dividends for at least ten consecutive years. The companies that have raised dividends over the past week, and also have managed to increase dividends for at least ten years in a row are listed below. There were 20 such companies:

Name	Ticker	New	Old	Increase	Years Dividend Increases	5 year dividend growth	Forward P/E	Dividend Yield
AbbVie	ABBV	1.48	1.41	4.96%	50	17.93%	10.65	4.01%
American Electric Power	AEP	0.83	0.78	6.41%	13	5.74%	17.81	3.71%
Amphenol	APH	0.21	0.2	5.00%	11	15.68%	25.74	1.10%
Associated Banc-Corp	ASB	0.21	0.2	5.00%	11	11.05%	10.6	3.46%
Black Hills	BKH	0.625	0.595	5.04%	52	6.39%	16.13	3.80%
First Interstate Banc	FIBK	0.47	0.41	14.63%	13	13.26%	14.53	4.17%
Gorman-Rupp	GRC	0.175	0.17	2.94%	50	8.11%	28.03	2.55%
Getty Realty	GTY	0.43	0.41	4.88%	11	9.30%	13.67	5.46%
Hartford Financial	HIG	0.425	0.385	10.39%	13	10.36%	10.12	2.36%
Imperial Oil	IMO	0.44	0.34	29.41%	28	16.38%	6.6	1.87%
Middlesex Water	MSEX	0.3125	0.29	7.76%	50	6.52%	35.69	1.39%
Northeast Indiana Bancorp	NIDB	0.32	0.3	6.67%	28	6.05%	7.61	3.08%
People's	PPLL	0.6	0.58	3.45%	11	9.32%	7.62	3.39%
Rockwell Automation	ROK	1.18	1.12	5.36%	13	8.09%	27.21	1.84%
Standex	SXI	0.28	0.26	7.69%	12	11.06%	14.56	1.15%
Tompkins Financial	TMP	0.6	0.57	5.26%	36	4.35%	13.6	2.89%
UMB Financial	UMBF	0.38	0.37	2.70%	30	6.30%	9.7	1.89%
Visa	V	0.45	0.375	20.00%	14	17.94%	25.21	0.86%
West Pharmaceutical	WST	0.19	0.18	5.56%	30	7.09%	27.59	0.34%
Exxon Mobil	XOM	0.91	0.88	3.41%	40	3.21%	8.15	3.18%

This list is not a recommendation to buy or sell stocks. It is simply a list of companies that raised dividends last week. The companies listed have managed to grow dividends for at least ten years in a row.

The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.

This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.

Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.

Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.

For a sample analysis of AbbVie (ABBV), click here.

Relevant Articles:

- Six Dividend Aristocrats Expected to Boost Dividends in October 2022

- Twelve Dividend Growth Stocks Rewarding Shareholders With Raises

- Five Dividend Growth Stocks Rewarding Shareholders With A Raise Last Week

- Three Dividend Growth Stocks Increasing Shareholder Dividends