I review the list of dividend increasess every week, as part of my monitoring process. This exercise helps me review existing holdings and potentially identify companies for further research.
I typically focus my attention on companies that have managed to grow dividends for at least a decade. I am interested in identifying good companies to acquire at good prices and hold for decades.
The exercise of reviewing dividend increases is a very good quick overview of the process I use to review companies. I look for rising earnings per share, which are the fuel behind future dividend increases. I look for long streaks of annual dividend increases, because that's usually an indicator of a quality business with high ROIC that gushes cashflows. I also look at growth rates in dividends over time, as a gauge to how things are going.
Over the past week, there were three companies that increased dividends in the US, which also have a ten year track record of annual dividend increases under their belts. The companies include:
Home Bancorp, Inc. (HBCP) operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas.
The company increased quarterly dividends by 4% to $0.26/share. This is the tenth consecutive annual dividend increase for this dividend achiever. The five year annualized dividend growth rate is 7.09%.
Between 2014 and 2023, the company managed to grow earnings from $1.51/share to $5.01/share.
The company is expected to earn $4.15/share in 2024.
The stock sells for 10.80 times forward earnings and yields 2.23%.
Lincoln Electric Holdings, Inc., (LECO) designs, develops, manufactures, and sells welding, cutting, and brazing products worldwide. The company operates through three segments: Americas Welding, International Welding, and The Harris Products Group.
Lincold Electric increased quarterly dividends by 5.60% to $0.75/share. This is the 30th consecutive annual dividend increase for this dividend champion. The five year annualized dividend growth rate is 10.40%.
Between 2014 and 2023, the company managed to grow earnings from $3.22/share to $9.51/share.
The company is expected to earn $8.80/share in 2024.
The stock sells for 23.10 times forward earnings and yields 1.48%. I liked this company in general, but the slowdown in dividend growth rates is giving me second thoughts.
Prosperity Bancshares, Inc. (PB) operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers.
Prosperity Bancshares increased quarterly dividends by 3.60% to $0.58/share. This is the 27th consecutive annual dividend increase for this dividend achiever. The five year annualized dividend growth rate is 8.80%.
Between 2014 and 2023, the company managed to grow earnings from $4.32/share to $4.51/share.
The company is expected to earn $5.03/share in 2024.
The stock sells for 14.50 times forward earnings and yields 3.18%.
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