Four Dividend Increases In a Time of Tariffs

The last two weeks have been a little turbulent. Those tariff news really seem to have spooked markets worldwide. 

Luckily, we are Dividend Growth Investors, so we stay the course, because we are paid to hold. Those of us in the accumulation phase get excited during market declines, because that means that future income is available on sale. This is where having a ready list of companies can be helpful when we get the big sale on stocks.

Those of us in the retirement phase can simply sit back, relax, and enjoy the growing stream of dividends from their diversified portfolios. 

As many of you know, I review the list of dividend increases every week. Last week, we had several companies that raised their annual dividends, like clockwork. Dividend increases from these consistent dividend payers signals confidence in their business models. Some of these companies have paid and increased dividends for many decades, withnessing cold wars, inflations, wars, oil shocks, embargoes, and possibly a ton of other bad events. Yet, they have adapted and thrived. 

Selling a branded product or service, and having strong competitive advantages and a good culture probably helped too.

Either way, there were four companies that raised dividends last week, which also have managed to increase dividends for at least ten consecutive years. Those companies include:

Agree Realty Corporation (ADC) is a publicly traded real estate investment trust that is involved in the acquisition and development of properties net leased to industry-leading, omni-channel retail tenants.

The company raised its monthly dividend by 1.20% to $0.2560/share. This represents a 2.40% increase over the dividend paid during the same time last year.  This is the 13th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, it managed to grow dividends at an annualized rate of 5.82%.

The REIT managed to grow Funds from Operations (FFO) from $2.40/share in 2015 to $3.78/share in 2024. 

The REIT expects to generate $4.23/share in FFO in 2025.

The stock sells for 17.70 times forward FFO and yields 4.05%. 

Aon plc, (AON) is a professional services firm, which provides a range of risk and human capital solutions worldwide.

The company raised quarterly dividends by 10.40% to $0.745/share.

This is the 14th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, it managed to grow dividends at an annualized rate of 11.06%.

The company managed to grow earnings from $4.93/share in 2015 to $12.55/share in 2024.

Aon is expected to earn $17.18/share in 2025.

The stock sells for 21.90 times forward earnings and yields 0.79%.

Fastenal Company (FAST) engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, and internationally. 

Fastenal raised its quarterly dividends to $0.44/share. This is a 2.30% increase over the dividend paid in Q1, 2025. This is also a 12.82% increase over the dividend paid during the same time last year.

This dividend aristocrat company has increased annual dividends for 26 years in a row. Over the past decade, it managed to grow dividends at an annualized rate of 12.05%.

The company managed to grow earnings from $0.89/share in 2015 to $2.01/share in 2024.

The company is expected to earn $2.16/share in 2025.

The stock sells for 37.25 times forward earnings and yields 2.13%.

The Procter & Gamble Company (PG) engages in the provision of branded consumer packaged goods worldwide. The company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. 

The company raised quarterly dividends by 5% to $1.0568/share. This marked the 69th consecutive annual dividend increase for this dividend king. Over the past five years, P&G has managed to increase dividends at an annualized rate of 6.18%. The ten year average is 4.57%.

Earnings per share have increased from $4.19 in 2014 to $6.18 in 2024. The company is expected to generate $6.89/share in earnings in 2025.

The stock sells for 23.25 times forward earnings. The stock yields 2.67%. Check my review of Procter & Gamble here.

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Compounding Dividends For The Long Run

The stock market has been turbulent the past month or so. 

As a dividend growth investor, I usually ignore the ups and downs of the market. Stocks can go up, stocks can go down, but my dividends are paid on time, and increased too. Getting paid to hold is definitely a great strategy to stay invested and ignore the noise.

I recently saw some interesting research on dividends from Hartford Funds on the power of dividends.

Going back to 1960, they found that reinvested dividends accounted for 85% of historical stock market returns. Reinvesting those growing dividends into more stock definitely turbocharges the power of compounding.

A $10,000 investment in S&P 500 in 1960 turned to $982,000 by 2024. If you reinvested those dividends however, your total amounts to $6.42 Million. Compounding dividends matter.

It's fascinating to see how dividends impacted returns decade by decade. 

Dividends have contributed roughly a third of returns on average per year. During a bull market, dividends have a lower contribution, and everyone seems to forget about them. During a bear market or a flat market however, dividends shine and provide staying power for the patient long-term investor. 

While share prices can fluctuate up and down, and are difficult to forecast, dividends are much more stable, predictable and easier to rely on. This is why dividends are the perfect source of income for retirees. Plus they are tax-advantaged versus other sources of income and tend to grow above the rate of inflation over time as well.

You can see that during the 1970s and 2000s, when stock prices went largerly nowehere, dividends contributed a lions share of total returns for investors. During massive bull markets, dividends still contributed and held their own.

That being said, average dividends yields have been decreasing in the US. Notably, that's an end result of share prices rising too fast in the past 15 years, but also an increase in the way that companies distribute excess cashflow to shareholders. Notably, since the 1980s companies are "returning cash" increasingly through share buybacks and less through dividends.

This is a chart of S&P 500 dividend yields over the past 50 years:

You can see dividends yields are the lowest since late 2021. In late 2021 dividend yields were lowest since 2000..

You can see that since the 1990s, the amount of share buybacks has increased faster than dividends. However, dividends are much more stable and upwards moving up while buybacks are much more volatile and cyclical. Companies tend to do them when they are flush with cash, but share prices are higher, and tend to discontinue them when the share prices are low, but the outlook is murky.

The Hartford Funds also found out that higher yielding companies tended to deliver great performance over the past 90+years:

That's definitely fascinating, and interesting to observe on a decade-by-decade basis.

Last but not least, it's fascinating to observe the performance of dividend growth stocks. Those are the companies that tend to raise dividends to shareholders.

Long-time readers know the research from Ned David Research, which shows that dividend growth stocks rock, relative to companies that do not pay dividends, those that cut dividends and those that have high yields.

I still view a solid track record of dividend increases as a sign of a quality business with good management. However, I do look under the hood to understand what I get into, and I am selective. I focus on substance over form.

As far as the future is concerned, I believe US Equities will likely keep growing earnings over time, which would fuel dividend increases over time as well. This would likely lead to growth in share prices as well, although those do tend to oscilate up and down, above and below any estimates of intrinsic value. I do believe one needs to be careful about what they buy, as not every company can be safely bought and held. Plus, you need to evaluate valuation as even the best company in the world is not worth massively overpaying for. If you do, you may not make much in terms of money, even if you were right about the fundamentals.

Procter & Gamble (PG) Increases Dividends for 69th Consecutive Year

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. Procter & Gamble is a member of the elite dividend kings list, which includes companies that have managed to raise annual dividends for at least 50 years in a row. That's not a small feat.

The company increased quarterly dividends by 75% to $1.0568/share yesterday. This dividend increase marked the 69th consecutive year that P&G has increased its dividend and the 135th consecutive year that P&G has paid a dividend since its incorporation in 1890. (Source)

Management states that this dividend increase reinforces their commitment to return cash to shareholders, many of whom rely on the steady, reliable income earned with their investment in P&G.

The table below shows the year that the company raised dividends, the new increased quarterly dividend payment for that year, and the rate of dividend increase for the year. It focuses on the past 35 years of dividend increases for Procter & Gamble:

Over the past five years, P&G has managed to increase dividends at an annualized rate of 6.18%. The ten year average is 4.57%.

Earnings per share have increased from $4.19 in 2014 to $6.18 in 2024. The company is expected to generate $6.89/share in earnings in 2025.

That being said, the core business is very stable, which means that long-term earnings power should not be affected. However, earnings per share have not grown by much over the past decade. The slowdown in dividend growth is a direct result of the slowdown in earnings per share growth. 

In the past decade, the dividend payout ratio increased from 58% in 2014 to 62% in 2024. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.

Based on forward earnings, it appears that the forward dividend payout ratio is at 61%, which means that the dividend is sustainable.

The number of shares outstanding has been decreasing gradually over the past decade too.

It is interesting to look at the company's performance over the past decade for perspective. The stock sold for approximately $82/share a decade ago, had earned $4.19/share and paid a quarterly dividend of 64.36 cents/share, for an annual dividend yield of 3.10%. The P/E was at 19.60.

Fast forward to today, and the company is paying a quarterly dividend of  $1.0568/share, for a total yield on cost of 5.15%. If we take dividend reinvestment into consideration, a $1,000 investment ten years ago would be generating $68.30 in annual dividend income today.

At the current price, the stock sells for 23.25 times forward earnings. The stock yields 2.67%. 

Two Recent Dividend Increases and Five Future Dividend Increases

Last week, there were nine companies that raised dividends in the US. Only two of those companies have managed to raise dividends for at least a decade however. The week before that, there were seven companies that raised dividends last week in the US. None of them have raised dividends for at least 5 years in a row however.

That's consistent with prior years however.

The companies that raised dividends last week that also have managed to raise dividends for at least a decade include:

Bank OZK (OZK) operates as a full-service Arkansas state-chartered bank that provides retail and commercial banking services in the United States. 

The bank raised quarterly dividends by 2.40% to $0.43/share. This is a 10.26% increase over the dividend paid during the same time last year. This is due to the fact that the company raises dividends every quarter. This dividend aristocrat has raised dividends for 29 years in a row. It has a ten year annualized dividend growth rate of 12.90%.

Between 2015 and 2024, the company grew earnings from $2.10/share to $6.16/share.

The company is expected to earn $5.94/share in 2025.

The stock sells for 6.40 times forward earnings and yields 4.50%.

Trinity Bank, N.A. (TYBT) provides personal and business banking products and services in Texas.

The bank raised semi-annual dividends by 2.20% to $0.95/share. This is the 13th year of consecutive annual dividend increases for this dividend contender. Over the past decade, the company has managed to grow dividends at an annualized rate of 10.80%.

The company has managed to increase earnings from $2.91/share in 2014 to $7.36/share in 2023.

The stock sells for 11.40 times earnings and yields 2.23%.

As far as the rest of April, I expect that the following notable and consistent dividend growth payers to announce an increase to their quarterly dividends:

Ameriprise Financial (AMP) - I expect a ten cent raise in the quarterly dividned to $1.58/share. This will be the the 21st consecutive annual dividend increase for this dividend achiever.

Johnson & Johnson (JNJ) - I expect a 4 cent raise in the quarterly dividend to $1.28/share. This will be the 63rd consecutive annual dividend increase for this dividend king.

Costco (COST) - I expect a 13 cent raise in the quarterly dividend to $1.29/share. This will be the the 21st consecutive annual dividend increase for this dividend achiever.

Procter & Gamble (PG) - I expect a 5 cent raise in the quarterly dividend to $1.06/share. This will be the 69th consecutive annual dividend increase for this dividend king.

Traveler's (TRV) - I expect a 5 cent raise in the quarterly dividend to $1.10/share. This will be the the 21st consecutive annual dividend increase for this dividend achiever.

I came up with these estimates by lookiing at near term trends in earnings, the payout ratios and the latest trends in the dividend payments. My crystal ball is cloudy.

Thank you for reading!

In bear markets, stocks return to their rightful owners

 “In bear markets, stocks return to their rightful owners.” 

- J.P. Morgan

I love this quote. It summarizes a ton of insights into a simple, succint message. 

There is a lot to unpack here.

In short, it means that when stocks fall down in price, panicked sellers tend to dispose of their holdings in desperation. Perhaps they are scared of market declines due to being overextended or not knowing that stocks can decline in price. Those are both expensive lessons, and then some. 

The investors who take those shares from the panicked sellers are those who are patient and disciplined. The buyers are long-term investors, who stick to their plan, and buy when they have money to invest. These rightful owners are financially stable and buy cheap when there is blood on the streets. They are financially stable because they live below their means, have a long-term mindset, have their financial house in order, and as a result they have a surplus to invest every month. 

Those patient long-term investors with strong conviction often buy stocks at lower prices from panic-sellers, as seen in historical bear markets. It's a story as old as time. It's just that participants change.

Succumbing to emotions can be dangerous for investors, both when stocks are roaring high and when stocks are declining accross the board. 

In order to succeed at investing, you need to develop and stick to a disciplined strategy through thick or thin. 

Readers of this site stick to a strategy of dividend growth investing. Focusing on quality companies that have increased dividends for a long period of time, investing regularly at good valuations, and maintaining a long-term diversified portfolio are the winning ingredients to long-term success. Also, focusing on the dividend, and understanding the fundamental drivers behind them and their safety, while also looking for value, can greatly aid in the process of long-term value creation.

In addition, ignoring noise, but focusing on the stability of dividends is a good jedi mind-trick that keeps one calm and invested.

As a Dividend Growth Investor, I view share price declines as opportunities to acquire quality assets at a good price. Future income is available on sale when share prices drop. This is something you want to see in the accumulation phase. For each $1,000 that you invest, you are increasing forward annual dividend income by $20 - $40. That dividend income will likely grow above the rate of inflation over time. Reinvesting those dividends further turbocharges dividend income growth. You keep stacking to income streams, brick by brick, until you hit the coveted dividend crossover point. The dividend crossover point is the point at which dividend income exceeds expenses. You are financially independent, job optional, perhaps even an early retiree at that point.

If one is retired, then they are living off the dividends from a diversified portfolio. They can ignore the noise and enjoy the fruits of their labor. Those dividends are more stable, predictable and reliable than share prices, which makes them a perfect source of income for retirees. Dividends from diversified portfolios rarely decline, but they tend to grow above rate of inflation over time, and are taxed preferentially to other sources of income (e.g. fixed income, labor etc). Perhaps you also earn some social security and pension income too.  And perhaps even you have a paid off home.

In times like these I am happy to be a Dividend Growth Investor.

I focus on the dividend payments, which are much more stable, predictable and reliable than share prices.

The focus on dividends makes me do the work on fundamentals and valuation and helps me stay invested.

Anywho, I think that this too shall pass.

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