I review the dividend increases weekly, as part of my monitoring process. I haven't done this review so far in 2025, as there were too few individual increases from companies that have at least a ten year track record of annual dividend increases.
Why do I keep doing this review?
It is mostly to stay in fighting shape. It is also to monitor existing holdings and identify companies for potential review and acquisition.
But best of all, to show you the types of quick overview I use before determining if I want to put a company on my list for research or not.
In general, I look for companies that have managed to increase dividends for at least ten years in a row. This really narrows things down only to companies that have managed to raise dividends during a typical full economic cycle or two. A long history of annual dividend increases does not happen by accident. It is the end result of a company that typically has some sort of a competitive advantage, which allows it to grow the business, while also showering shareholders with more cash year after year.
But I don't stop at that.
I try to review trends in earnings per share over the past decade, in order to determine if that dividend growth is grounded in good fundamentals. Without growth in earnings per share over time, future dividend growth will be hard to come by.
Next, I also want to review the dividend payout ratio. In general, I want a payout ratio that is not too high, and not trending upwards above a certain range (say 60%). I want relative consistency between earnings growth and dividend growth (annualized).
I also look at the trend in dividends over the past decade. It's helpful to watch dividend growth rates over the past 5 or 10 years, and compare them to the most recent dividend increase or two. Dividends provide signaling mechanism, which distills management's near term sentiment regarding the economy and the business conditions affecting their enterprise.
Last but not least, I look at valuations. Valuations are part art, part science. I get to look at the P/E ratios, historical dividend growth rates, as well as near term EPS forecasts, and determine the trade-off of dividend yield and dividend growth that would make it into my portfolio.
Over the past week, there were three companies that managed to increase dividends AND also have a ten year track record of annual dividend increases under their belts. Those companies include:
Consolidated Edison, Inc. (ED) engages in the regulated electric, gas, and steam delivery businesses in the United States.
Consolidated Edison raised quarterly dividends by 2.40% to $0.85/share. This is the 51st consecutive annual dividend increase for this dividend king.
Over the past decade, the company has managed to grow dividends at an annualized rate of 2.80%.
Between 2014 and 2023, the company managed to grow earnings from $3.73/share to $7.24/share.
The company is expected to earn $5.35/share in 2024.
The stock sells for 17.50 times forward earnings and yields 3.55%
Fastenal Company (FAST) engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, Mexico, North America, and internationally.
The company raised quarterly dividends by 10.30% to $0.43/share. This is the 26th consecutive annual dividend increase for this dividend aristocrat. Over the past decade, the company managed to grow dividends at an annualized rate of 13.35%.
Between 2014 and 2023, the company managed to grow earnings from $0.89/share to $2.01/share.
The company is expected to earn $2.17/share in 2024.
The stock sells for 35 times forward earnings and yields 2.05%
Lakeland Financial Corporation (LKFN) operates as the bank holding company for Lake City Bank that provides various banking products and services in the United States.
The company raised quarterly dividends by 4% to $0.50/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 14.10%.
Between 2014 and 2023, the company managed to grow earnings from $1.77/share to $3.66/share.
The company is expected to earn $3.42/share in 2024.
The stock sells for 20 times forward earnings and yields 2.92%
