Five Dividend Growth Stocks Rewarding Shareholders With A Raise

I review the list of dividend increases every week, as part of my monitoring process. This is a helpful step that helps me check for dividend increases for companies I own. I update my dividend portfolio spreadsheet with the new dividend rates, in order to see if my portfolio’s organic dividend growth rate is increasing above the rate of inflation.

I also use this process in order to identify hidden dividend gems for further research.

I started with the list of all dividend increases for the week, and then narrowed it down by focusing only on those companies that have managed to grow dividends for at least a decade. I came up with a list of five companies for today’s review. The next step involves a brief analysis of each company, analysis of trends in earnings and dividends, followed by a brief take on valuation. The goal is to analyze not only historical dividend growth, but try to determine if it was supported by growth in fundamentals. It is helpful to evaluate the latest dividend hike against the historical dividend growth. We are looking for companies that grow earnings, grow dividends and grow intrinsic values over time. However, we also want to get those companies only if the valuation is right. Even the best company in the world is not worth overpaying for.

The five dividend growth companies which raised dividends over the past week include:

Dividend Companies Showering Shareholders With More Cash

As part of my monitoring process, I review the list of dividend increases every week. I usually focus on companies that have managed to boost dividends to shareholders for at least a decade. It looks like this year may be classified as the year of higher dividend growth.

This is because of the new tax law, which went into effect this year. As a result of the lowering of corporate tax rates, companies are increasing the amounts of their regular dividends to shareholders, and are initiating new share buyback programs. Some companies are accelerating their dividend increases schedules, and therefore showering their shareholders with more cash. As shareholders in many prominent blue chips, we can hardly complain of course.

Over the past week, the following companies raised their dividends to shareholders:


The Sherwin-Williams Company (SHW) develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers primarily in North and South America, the Caribbean, Europe, and Asia. The company operates in four segments: Paint Stores Group, Consumer Group, Global Finishes Group, and Latin America Coatings Group. The company raised its quarterly dividend by 1.20% to 86 cents/share. This is the third dividend increase in a row of a penny per share. This increase follows 39 consecutive years of dividend increases for this dividend aristocrat. The company is prioritizing debt repayment over high dividend hikes, which seems prudent. The company has managed to hike its annual dividends at a rate of 10.40%/year over the past decade. The stock yields 0.90%. The company managed to grow its earnings per share from $4.70/share in 2007 to $15.07/share in 2017. Currently, the stock is overvalued at 26 times earnings and yields 0.90%. I would be interested in Sherwin-Williams on dips below $300/share.

Annual Market update for 2017

Good Morning,

I wanted to share the market commentary from a dividend growth investor friend of mine, who manages money. This is not a paid post, and I do not receive any compensation from him. Rather, I have interacted with Joe off and on over the past decade. He is one of those readers who have stuck around for a while, who I regularly discuss dividend investing with. Writing about investing can be a lonely pursuit, so it is definitely helpful to have someone and bounce off ideas. 

I am sharing this market commentary, which he shared privately with his clients, because a lot of his points resonate very well with me. While no two investors are alike, his strategy of finding quality dividend payers for the long term really hits home for me. The letter captures current market sentiment, investing strategy, lessons learned and general commentary. If I ever leave blogging to manage money full time, this is the type of letter I would be sharing with clients. 

Without further delay, this is the comment letter from Joe Ferris at Summer Fields Investments LLC: Source Of Letter

Dear Friends, 2017 was a remarkable year in the equity markets. The broader US stock market did not have any negative months in the year, giving it the distinction of being the strongest market, per that metric, in 90 years [1]. Furthermore, there was no correction greater than 3% in the year, which is unusual for equities. The graphic that I included over 6 months ago has proved to be correct, for now, as we have broken out, to the upside, of a long trading channel in the S&P. There are a number of reasons for this. Before the presidential election in November 2016, I thought that the Blue Team would win, and that minimum wage would be gradually raised, inflation would creep up, and goods and services would earn more revenues. This would put a higher floor in our companies' earnings, spurring the market to pay a higher multiple for our companies' earnings. Well, as we all know, the Red Team won, and now, minimum wage is being gradually raised [2], inflation is creeping up, and our company's goods and services are earning more revenues. It's funny how that happens. There is also the matter of the large corporate tax cut, which gives our companies more after-tax profits. The market has been excited by that. We have seen a number of US companies either attempt (in the case of Pfizer and Allergan) or execute (Medtronic, Johnson Controls, etc) foreign inversions in the past decade, so it makes sense to me that incentives should be provided for US companies to not pack up and run to lower tax regions. However, they should also have more regulations on tax avoidance, and that is indeed happening, with some companies getting rid of their tax shelters [3].

The Best Dividend ETF In The Accumulation Phase

My site is read by readers from all walks of life. We have those with no experience investing, to those who have been through the ups and downs of the past half a century (and even longer). We also have a variety of readers, who are interested in the concept of dividend growth investing, but who do not have the time to go through the painful process of screening, monitoring, and assembling portfolios of individual companies.

One of the most frequently asked questions I receive comes from busy investors, who are short on time right now, but want to be able to generate rising dividend income for life. Most of those investors are looking for the best dividend ETF out there. In general I have not been a big fan of dividend ETFs, but I have somewhat reluctantly relaxed my attitude about it. After all, not everyone wants to be like me ( go figure).

What should a busy investor do with their money? How should they invest their hard earned money for their life goals (retirement, kids education etc)?

After thinking out loud for a few years, I have come out with one or two funds for busy dividend investors.

The catch: they are not marketed as dividend growth funds.

When evaluating the dividend ETF I am going to share with you today, I looked for the following traits:

1) A history of dividend increases
2) Low costs
3) Low portfolio turnover
4) A long history of real world performance

Ten Dividend Paying Companies Working Tirelessly For Their Owners

As a dividend growth investor, my goal is to generate a stream of income, which grows above the rate of inflation.

For the past decade that I have been doing that, my annual organic dividend growth has easily outpaced the historical rates inflation by a factor of 2 or more. In fact, the dividend increases by my portfolio have always been higher than the annual raises I receive at work.

I do not have to spend 40 - 60 hours per week placing cover sheets on TPS reports, nor do I need to waste time in pointless meetings that could have been resolved with a single email. Having a dividend portfolio is like having a tireless employee, who works 24 hours/day, seven days/week, 365 days/year, who shares all of their income with me. Their raises are much higher than what I could get for working extremely hard.

It is not wonder that I have fully embraced the power of dividend investing - I love getting paid and receiving regular raises, even if I do not work hard. Most of the work in building a dividend machine is done upfront. If I did my job of security selection well, I could afford to do nothing for years, and simply enjoy a rising stream of income from my diversified list of dividend paying companies. I would be paid for decades, for an investment decision made a long time ago.

As part of my monitoring process, I review the list of dividend increases every single week. I use this exercise to monitor existing holdings, and also to monitor companies I may be interested in down the road.

I isolated the companies which have a ten year track record of annual dividend increases. The companies include:

Should Dividend Investors Worry About Rising Interest Rates?

If you have followed any news stories over the past year, you might have been exposed to a lot of negative information about dividend paying stocks. I have rebutted some of them, such as the story about the end of the dividend craze. Others include the notion that rising interest rates are somehow so bad for dividend paying stocks, which it would put the end to dividend investing once and for all. The problem with those statements is that while interest rates affect the relative valuation of assets, they are just one input in valuation formulas.

I keep hearing that rising interest rates will mark the end of dividend growth investing. I am actually hoping that this talk results in lower entry prices for those investors like me who are in the accumulation age. But for other long term holders who are living off portfolios, I think that they should ignore this noise, and instead focus on enjoying the fruits of their growing income stream.

There are several reasons why I ignore this non-sense:

1) First of all, few people can predict interest rates with any accuracy. Actually, few people can actually predict anything with a reasonable success rate. I still remember how everyone was expecting hyper inflation in 2008 – 2009. I actually wrote an article about it at the time, and several readers told me how wrong I am, and how they were going to stop reading my website because of that. Before that, everyone was worried about the fall of the US dollar against other currencies, and by the fact that the World were running out of oil. So naturally, while I do agree that interest rates could start increasing over time, I cannot tell you what the timing and amount of this increase is going to be. Therefore the impact of rising interest rates might not affect companies as much as expected. Even if interest rates did increase, and cost of capital was raised for all of corporate America, it could impact the speculative companies with untested products or constant need of new capital to maintain operations. This could potentially deflate the ongoing bubble in some technology stocks today.

Your future retirement income is on sale

The stock market has finally started going down. This is great news for those investors, who are in the accumulation phase. When you are able to purchase shares are lower entry prices, you end up purchasing future dividend income on sale. Investors in the accumulation phase should therefore be praying for lower prices during their work careers.

Retirees should ignore stock price fluctuations and focus on their dividend checks. This is where it pays to focus on dividend dependability for each company you bought in the first place.

Intelligent dividend investors view stocks as partial ownership shares of real businesses. They do their research in uncovering those businesses, and then try to buy existing owners out at bargain prices. They can then sit back, monitor their business interests, and collect dividends one check at a time. After all, if you owned an apartment building next to a college that is always occupied, you won’t give a damn if their quoted valued fell by 5% - 10%- 20% in one single day. As long as you can rent your building out, you should do just fine by ignoring “quoted values”.

I am starting to get giddy for a change. While I have hit my objectives, I am still saving and investing. This is why I will continue buying one or twice per month, whenever I have money to invest. Some of my money is automatically invested through my 401 (k), while the rest is invested manually in my taxable accounts.

It is important to stick to the plan of earning money, saving money and investing money on a regular basis, and staying the course through thick or thin. As you can imagine, long-term investing is a marathon, not a sprint. This is why it is important to keep investing for years, while building out that cash machine.

You then need to be able to stay invested throughout your retirement years, while living off those dividends.

For my taxable accounts, I usually screen the list of dividend champions regularly, using the following entry criteria:

1) A ten year track record of annual dividend increases (being a dividend champion is more than enough)
2) Having a forward P/E at or below 20
3) Having a dividend payout ratio below 70%
4) Having earnings per share growth over the past decade
5) Having a more than nominal dividend growth over the past decade ( at least 3%/year)

I came up with the following list of thirty dividend champions for further research:

Eight Companies Giving Raises To Their Shareholders

As part of my monitoring process, I review the list of dividend increases every week. This process helps me to monitor the performance of existing holdings, while also identifying companies for further research. I focus my attention on companies that have raised dividends for at least a decade, in order to focus on the companies that have delivered during an average boom-bust economic cycle. I try to dig further into each dividend increase, by looking at trends in earnings per share, valuation and historical dividend growth, in order to determine if a company is worth researching any further. This process is a great addition to my monthly screening using my entry criteria. It is very helpful to check the pulse of dividend increases, which could be lost when analyzing averages.

Over the past week, there were eight companies that raised dividends to shareholders, and have managed to boost dividends for at least a decade. The companies include:

Commerce Bancshares, Inc. (CBSH) operates as the holding company for Commerce Bank that provides retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals and businesses. It operates through three segments: Consumer, Commercial, and Wealth.

The company raised its quarterly dividend by 4.40% to 23.50 cents/share, bringing the new dividend yield to 1.60%. This marked the 50th consecutive annual dividend increase for this newly minted dividend king. Over the past decade, the company has managed to boost its dividends at an annual rate of 4.40%/year. Between 2007 and 2017, Commerce Bancshares managed to grow earnings from $1.73/share to $2.77. Analysts expect the company to earn $3.39/share in 2018. The stock may be worth a closer look below $50 - $51/share.

Fourteen Dividend Aristocrats For Further Research

Last week, I shared with you the 2018 Dividend Aristocrats list. This is a good starting point in the research process. However, just because a company is on the list of dividend aristocrats, that doesn’t necessarily mean that it is a good investment to make today. Inclusion in an elite list of dividend stocks is like having a great resume – it lets you get a foot in the door for further evaluation, but nothing else.

Today, I will share with you a list of attractively valued dividend aristocrats for further research. I utilized forward earnings as much as possible, in an effort to screen out any one-time items affecting earnings. Those are not without their pitfalls of course, because analyst projections are typically on the optimistic side.

In order to come up with this list, I used my entry criteria.

1) P/E ratio below 20
2) Dividend Payout Ratio below 60%
3) Earnings per share growth over the past decade
4) At least a token annual dividend growth over the past decade

As a result of this screen, I came up with the following companies for further research: