The companies in the 2015 dividend kings list include:
Name
|
Symbol
|
Yrs Div Gro
|
10-yr Div Gro
|
Fwd P/E
|
Yield
|
10 year EPS
|
Analysis
|
American States
Water
|
AWR
|
60
|
5.62%
|
25.8
|
2.20%
|
15.23%
|
|
Dover Corp.
|
DOV
|
59
|
9.79%
|
15.6
|
2.20%
|
15.23%
|
|
Northwest Natural
Gas
|
NWN
|
59
|
3.69%
|
22.2
|
3.70%
|
3.42%
|
|
Genuine Parts Co.
|
GPC
|
58
|
6.23%
|
23.1
|
2.20%
|
8.04%
|
|
Parker-Hannifin
Corp.
|
PH
|
58
|
13.39%
|
16.2
|
2%
|
19.89%
|
|
Procter &
Gamble Co.
|
PG
|
58
|
10.59%
|
20.8
|
2.80%
|
8.04%
|
|
Emerson Electric
|
EMR
|
57
|
7.71%
|
15.6
|
3%
|
9.61%
|
|
3M Company
|
MMM
|
56
|
6.76%
|
21.9
|
2.10%
|
8.33%
|
|
Cincinnati
Financial
|
CINF
|
54
|
6.41%
|
19.8
|
3.40%
|
4.04%
|
|
Vectren Corp.
|
VVC
|
54
|
2.53%
|
20.1
|
3.30%
|
0.56%
|
|
Coca-Cola Company
|
KO
|
52
|
9.79%
|
20.7
|
2.90%
|
9.89%
|
|
Johnson &
Johnson
|
JNJ
|
52
|
10.84%
|
17.5
|
2.70%
|
7.20%
|
|
Lowe's Companies
|
LOW
|
52
|
29.19%
|
25.4
|
1.40%
|
6.32%
|
|
Colgate-Palmolive
Co.
|
CL
|
51
|
11.45%
|
23.6
|
2.10%
|
6.82%
|
|
Lancaster Colony
Corp.
|
LANC
|
51
|
6.92%
|
24.4
|
2%
|
2.04%
|
|
Nordson Corp.
|
NDSN
|
51
|
8.11%
|
18.5
|
1.10%
|
20.00%
|
It is very interesting that the dividend kings returned 14.10% in 2014 and 30.70%. In comparison, the S&P 500 returned 13.50% in 2014 and 32.305 in 2013.
There was one company that was taken from the list in 2014. Diebold (DBD) had managed to grow dividends for 60 years in a row. Unfortunately, the company failed to increase distributions in 2014, which violated the long history of consistent dividend growth. If Diebold starts growing dividends again 2015, it would take it until 2075, before it achieves the same level of accomplishment. Given the fact that earnings per share didn’t grow at all in the past decade, but followed an erratic pattern, I am not surprised that the dividend was left unchanged. Rising earnings per share are the essential fuel behind future dividend growth.
There were no additions in 2014 to the list. Based on my analysis of dividend streaks, it looks like there won’t be an addition until sometime in 2016, when Hormel Foods (HRL) and Tootsie Roll Industries (TR) reach dividend king status. Currently, each of those two companies has managed to grow dividends for 48 years in a row.
I believe the valuations are a little overstretched right now for many of the companies on the list. The only companies which meet my entry screen of valuation, growth and dividend sustainability include Johnson & Johnson and Emerson Electric. If I were willing to reduce the entry yield to 2%, I could add Dover and Parker Hannifin on the list for further research.
Other companies like Cincinati Financial (CINF) have decelerated their rate of dividend growth, which is slower than the ten year average. Coca-Cola (KO) is a great company I am holding on to, but the problem I am seeing is that it has been unable to grow earnings per share for several years in a row. Without earnings growth, dividends will not grow over time and the intrinsic value of the business cannot grow either. For certain companies like Colgate-Palmolive (CL), valuations are a little high above 25 times earnings. I also find it hard to justify purchasing a utility which has increased dividends by 3%/year at an entry yield below 4%. Investors who overpay even for the most stable companies with the widest of moats might be in for some poor returns in the first decade of their investment. Hopefully we would see a sustained correction in 2015, which will correct the excess we are seeing. Let's wait and circle back in early 2016 on that.
Full Disclosure: Long KO, JNJ, PG, LOW, CL, MMM, EMR,
Relevant Articles:
- The Dividend Kings List Keeps Expanding
- Dividend Champions - The Best List for Dividend Investors
- Dividend Champions Index – Five Year Total Return Performance
- S&P 8000 – The power of reinvested dividends in action
- How to be a successful dividend investor