In general, we want dividend growth stocks which have raised distributions for at least a decade, which was possible due to growth in earnings per share, and we want those at an attractive valuation. The quick review of each dividend raiser is focused on these general points of interest.
McDonald’s Corporation (MCD) operates and franchises McDonald’s restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, Latin America, and internationally.
The company hiked its quarterly dividend by 7.40% to $1.01/share. This marked the 42nd consecutive annual dividend increase for this dividend champion. As a McDonald's shareholder, I am lovin' it! I celebrated the dividend increase with the two cheeseburger number two meal at my local establishment. McDonald’s has managed to boost dividends at a rate of 13.70%/year over the past decade. This was supported by an increase in earnings from $1.93/share in 2007 to $5.44/share in 2016. The company is expected to earn $6.52/share in 2017. Currently, the stock is overvalued at 24.40 times forward earnings and yields 2.50%. McDonald's would be a better value on dips below $130/share, and an even better one on dips below $109/share. I came up with these values by multiplying the forward earnings for 2018 by 20 and the earnings for 2016 by 20.
Microsoft Corporation (MSFT) develops, licenses, and supports software products, services, and devices worldwide.
The company hiked its quarterly dividend by 7.70% to 42 cents/share. This marked the 16th consecutive annual dividend increase for this dividend achiever. Microsoft has managed to boost dividends at a rate of 14.80%/year over the past decade. This was supported by an increase in earnings from $1.87/share in 2008 to $2.71/share in 2017. The company is expected to earn $3.22/share in 2018. Currently, the stock is overvalued at 23.10 times forward earnings and yields 2.20%. Microsoft would be a better value on dips below $64/share, and an even better one on dips below $54/share. I came up with these values by multiplying the forward earnings for 2018 by 20 and the earnings for 2016 by 20.
W. P. Carey Inc. (WPC) is a real estate investment trust that invests in commercial properties that are generally triple-net leased to single corporate tenants including office, warehouse, industrial, logistics, retail, hotel, R&D, and self-storage properties.
This Real Estate Investment Trust hiked its quarterly dividend to $1.005/share. This marked the 20th consecutive annual dividend increase for this dividend achiever. It also marked the fourth dividend increase over the past year. W. P. Carey has managed to boost dividends at a rate of 8.10%/year over the past decade. The rate of dividend growth increased after the company converted to REIT status in 2012, and since then has slowed down. FFO/share increased from $3.34/share in 2007 to $4.86/share in 2016. Currently, the REIT is attractively valued at 14.10 times FFO and yields 5.90%.
Relevant Articles:
- How to value dividend stocks
- Five Things to Look For in a Real Estate Investment Trust
- Why do I use a P/E below 20 for valuation purposes?
- Dividend Achievers Offer Income Growth and Capital Appreciation