As part of my screening process, I look at the list of dividend champions every month. I have been doing this for a decade.
I believe that investors should focus on tools within their control. These things include their ability to stick to a strategy that will help them reach their goals, and save and invest money regularly. This is the recipe for successful dividend investing in a nutshell – stay the course, keep adding to your dividend machine and reinvest dividends in the accumulation phase.
Over the past two months, prices of many securities have finally started going lower. This is great news for those who are in the accumulation phase. This is because lower prices paid for stocks result in higher dividend yields and higher expected future returns. Therefore, the investors today should be praying for even lower prices. If you are retired, your only concern is the safety of the dividend payments, and enjoying the fruits of your labor.
I applied my entry criteria to the list of dividend champions, and came up with a list of companies worth further research.
My screening criteria include:
1) A company with a minimum 25 year track record of annual dividend increases
2) Forward P/E ratio below 20
3) Forward Dividend payout ratio below 60%
4) Annual dividend growth exceeding inflation over the past 5 and 10 years
5) Dividend growth generated by solid growth in earnings per share
My next step was to briefly review the trends in fundamentals for each of the companies, and taking out those that didn’t seem promising enough.
As a result of this review, I came up with the following list of 39 dividend champions for further research:
Wednesday, March 28, 2018
Monday, March 26, 2018
Raytheon Rewards Shareholders With Reliable Dividend Raises
Raytheon Company (RTN) develops integrated products, services, and solutions for defense and other government markets worldwide. It operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS); and Forcepoint.
Last week, the Board of Directors of Raytheon Company (RTN) increased the company's annual dividend payout rate by 8.8 percent, from $3.19 to $3.47 per share.
"With today's announcement, we have increased our annual dividend for 14 consecutive years," said Thomas A. Kennedy, Raytheon Chairman and CEO. "The dividend increase is a key part of our capital deployment strategy, and reflects our confidence in the company's growth outlook and our continued focus on creating value for shareholders."
Over the past decade, this dividend achiever has managed to boost dividends at an annual rate of 12%/year. At a rate of 12%/year, dividends per share double every 6 years, using the rule of 72.
Last week, the Board of Directors of Raytheon Company (RTN) increased the company's annual dividend payout rate by 8.8 percent, from $3.19 to $3.47 per share.
"With today's announcement, we have increased our annual dividend for 14 consecutive years," said Thomas A. Kennedy, Raytheon Chairman and CEO. "The dividend increase is a key part of our capital deployment strategy, and reflects our confidence in the company's growth outlook and our continued focus on creating value for shareholders."
Over the past decade, this dividend achiever has managed to boost dividends at an annual rate of 12%/year. At a rate of 12%/year, dividends per share double every 6 years, using the rule of 72.
Friday, March 23, 2018
W.P Carey (WPC): A High Dividend Dividend REIT For Current Income
W. P. Carey Inc. (WPC) is an independent equity real estate investment trust. The firm also provides long-term sale-leaseback and build-to-suit financing for companies. It invests in the real estate markets across the globe. The firm primarily 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.
W.P. Carey is a dividend achiever, which has managed to boost dividends for 20 years in a row. The most recent dividend increase was just last week, when the Board of Directors increased its quarterly cash dividend to $1.015 per share, equivalent to an annualized dividend rate of $4.06 per share. The attitude towards distributions was summarized quite well by the statement of W. P. Carey's CEO Jason Fox:
"W. P. Carey has delivered consecutive annual dividend increases since going public in 1998. We are proud of our long-standing track record of providing shareholders with stable and recurring income generation across all market cycles,"
In September 2012, this dividend achiever converted from a partnership form into a real estate investment trust. After this transformation, as well as merger with one of its privately managed REIT, dividend growth has been spectacular initially.Subsequently, it to slowed down and I expect it to be slow for the foreseeable decade.
The company not only invests in triple-net lease properties throughout the world, but it also managed privately held REITs. As a result, its sources of revenues are derived from the stable and recurring rents from those properties, which are usually leased to tenants under long-term leases. Those triple-net leases also allow for rent escalation over time. Under a triple-net lease, the tenant is required to pay all expenditures associated with maintaining and operating the property under lease.
W.P. Carey is a dividend achiever, which has managed to boost dividends for 20 years in a row. The most recent dividend increase was just last week, when the Board of Directors increased its quarterly cash dividend to $1.015 per share, equivalent to an annualized dividend rate of $4.06 per share. The attitude towards distributions was summarized quite well by the statement of W. P. Carey's CEO Jason Fox:
"W. P. Carey has delivered consecutive annual dividend increases since going public in 1998. We are proud of our long-standing track record of providing shareholders with stable and recurring income generation across all market cycles,"
In September 2012, this dividend achiever converted from a partnership form into a real estate investment trust. After this transformation, as well as merger with one of its privately managed REIT, dividend growth has been spectacular initially.Subsequently, it to slowed down and I expect it to be slow for the foreseeable decade.
The company not only invests in triple-net lease properties throughout the world, but it also managed privately held REITs. As a result, its sources of revenues are derived from the stable and recurring rents from those properties, which are usually leased to tenants under long-term leases. Those triple-net leases also allow for rent escalation over time. Under a triple-net lease, the tenant is required to pay all expenditures associated with maintaining and operating the property under lease.
Wednesday, March 21, 2018
CVS Health (CVS) Dividend Stock Analysis
CVS Health Corporation (CVS), together with its subsidiaries, provides integrated pharmacy health care services. It operates through Pharmacy Services and Retail/LTC segments. The Pharmacy Services Segment provides a range of pharmacy benefit management (PBM) solutions. The Retail Pharmacy segment includes retail drugstores, online retail pharmacy Websites and its retail healthcare clinics. This dividend achiever has paid a dividend since 1916 and increased it for 14 years in a row.
The most recent dividend increase was in December 2016, when the Board of Directors approved a 17.60% increase in the quarterly dividend to 50 cents/share. Pending the company's acquisition of insurer Aetna (AET), the board has stopped the share buybacks and dividend increases. While the company is not going to grow dividends every year, because it will focus on debt repayment, I find its valuation compelling enough to give it preference over Walgreen Boots Alliance (WBA).
The largest competitors for Walgreen include Walgreen Boots Alliance (NYSE:WBA), Wal-Mart (NYSE:WMT) and Rite-Aid (NYSE:RAD).
Over the past decade this dividend growth stock has delivered an annualized total return of 6.90% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.
The most recent dividend increase was in December 2016, when the Board of Directors approved a 17.60% increase in the quarterly dividend to 50 cents/share. Pending the company's acquisition of insurer Aetna (AET), the board has stopped the share buybacks and dividend increases. While the company is not going to grow dividends every year, because it will focus on debt repayment, I find its valuation compelling enough to give it preference over Walgreen Boots Alliance (WBA).
The largest competitors for Walgreen include Walgreen Boots Alliance (NYSE:WBA), Wal-Mart (NYSE:WMT) and Rite-Aid (NYSE:RAD).
Over the past decade this dividend growth stock has delivered an annualized total return of 6.90% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.
Thursday, March 15, 2018
Clorox (CLX) Dividend Stock Analysis
The Clorox Company (CLX) manufactures and markets consumer and professional products worldwide. It operates in four segments - Cleaning, Household, Lifestyle and International. This dividend aristocrat has paid dividends since 1968 and has increased them each year since 1977.
Last month, Clorox hiked its dividend by 14% to 96 cents/share. This was an accelerated declaration of the company's dividend increase, which typically takes place in the month of May.
Over the past decade this dividend growth stock has delivered an annualized total return of 11.70% to its shareholders.
The company has managed to deliver a 5.20% average increase in annual EPS over the past decade. Clorox is expected to earn $6.13 per share in 2018 and $6.51 per share in 2019. In comparison, the company earned $5.35/share in 2017.
Last month, Clorox hiked its dividend by 14% to 96 cents/share. This was an accelerated declaration of the company's dividend increase, which typically takes place in the month of May.
Over the past decade this dividend growth stock has delivered an annualized total return of 11.70% to its shareholders.
The company has managed to deliver a 5.20% average increase in annual EPS over the past decade. Clorox is expected to earn $6.13 per share in 2018 and $6.51 per share in 2019. In comparison, the company earned $5.35/share in 2017.
Monday, March 12, 2018
Four Dividend Growth Stocks Working Hard For Their Shareholders
As part of my monitoring process, I review the list of dividend increases every week. I use this list to check for dividend increases for companies I own, as well as monitor companies I am interested in researching at the right valuation.
I narrowed the list down to focus only on companies that have rewarded their shareholders with a dividend raise for at least ten years in a row. I want to focus my attention on companies that have managed to grow dividends over a full economic cycle. I also review each company, in order to determine whether past dividend growth was sustainable, and it came mostly from earnings growth. I am not interested in companies that grow dividends by mere expansion of the dividend payout ratio, while their earnings per share stagnate.
Last but not least, I look for an attractive entry valuation. Even the best company in the world is not worth buying at an inflated price. As a result, I try to avoid purchasing companies above 20 times earnings.
The companies that raised dividends over the past week, and met the above criteria include:
I narrowed the list down to focus only on companies that have rewarded their shareholders with a dividend raise for at least ten years in a row. I want to focus my attention on companies that have managed to grow dividends over a full economic cycle. I also review each company, in order to determine whether past dividend growth was sustainable, and it came mostly from earnings growth. I am not interested in companies that grow dividends by mere expansion of the dividend payout ratio, while their earnings per share stagnate.
Last but not least, I look for an attractive entry valuation. Even the best company in the world is not worth buying at an inflated price. As a result, I try to avoid purchasing companies above 20 times earnings.
The companies that raised dividends over the past week, and met the above criteria include:
Friday, March 9, 2018
Hormel Foods (HRL) Dividend Stock Analysis
Hormel Foods Corporation (HRL) produces and markets various meat and food products worldwide. The company operates in five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, Specialty Foods, and International & Other.
The company is a dividend king which has managed to increase annual dividends for 52 years in a row. There are only twenty-six dividend kings in the world, which have each managed to boost annual dividends every single year for at least half a century.
Hormel’s last dividend increase was in November 2017 when the Board of Directors approved a 10.30% increase in the quarterly distribution to 18.75 cents/share.
Hormel’s largest competitors include Tyson Foods (TSN), Conagra Foods (CAG), General Mills (GIS), Campbell Soup (CPB) and J.M. Smucker (SJM).
Over the past decade this dividend growth stock has delivered an annualized total return of 14.20% to its shareholders.
The company is a dividend king which has managed to increase annual dividends for 52 years in a row. There are only twenty-six dividend kings in the world, which have each managed to boost annual dividends every single year for at least half a century.
Hormel’s last dividend increase was in November 2017 when the Board of Directors approved a 10.30% increase in the quarterly distribution to 18.75 cents/share.
Hormel’s largest competitors include Tyson Foods (TSN), Conagra Foods (CAG), General Mills (GIS), Campbell Soup (CPB) and J.M. Smucker (SJM).
Over the past decade this dividend growth stock has delivered an annualized total return of 14.20% to its shareholders.
Wednesday, March 7, 2018
TJX Companies (TJX) Dividend Stock Analysis
The TJX Companies, Inc. (TJX) operates as an off-price apparel and home fashions retailer in the United States and internationally. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX Europe. TJX Companies is a dividend achiever, which has raised dividends for 22
years in a row.
The most recent dividend increase was in March 2018, when the Board of Directors approved a 25% increase in the quarterly dividend to 39 cents/share.
The company’s largest competitors include Ross Stores (ROST), Kohl’s (KSS) and Target (TGT).
Over the past decade this dividend growth stock has delivered an annualized total return of 19.20% to its shareholders. Future returns will be dependent on growth in earnings and starting dividend yields obtained by shareholders.
years in a row.
The most recent dividend increase was in March 2018, when the Board of Directors approved a 25% increase in the quarterly dividend to 39 cents/share.
The company’s largest competitors include Ross Stores (ROST), Kohl’s (KSS) and Target (TGT).
Over the past decade this dividend growth stock has delivered an annualized total return of 19.20% to its shareholders. Future returns will be dependent on growth in earnings and starting dividend yields obtained by shareholders.
Monday, March 5, 2018
Altria Delivers High Dividends and Strong Dividend Growth
Altria Group, Inc. (MO) manufactures and sells cigarettes, smokeless products, and wine in the United States. The company is well known in dividend growth investor circles, and is a common holding for many of us. Altria delivers dependable dividend growth and high total returns, and has been doing that for decades.
Altria raised its quarterly dividend by 6.70% to 70 cents/share just last week. This was the second dividend increase over the past year, after Altria hiked its distributions by 8.20% to 66 cents/share back in August 2017. Altria is a dividend champion, which has rewarded shareholders with a raise for the past 48 years in a row.
The company’s press release really summed it up very well:
Today’s dividend increase reflects Altria’s intention to return a large amount of cash to shareholders in the form of dividends and is consistent with Altria’s dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share. Altria has increased its dividend 52 times in the past 49 years.
The company is hiking the dividends, because its tax rate is going lower. As a result, its earnings per share are increasing faster than expected, which leaves more room for further dividend increases to be shared with long-term shareholders like us.
For some strange reason, Altria was booted from the dividend aristocrats index in 2007, which is why I prefer to focus on the dividend champions list, maintained by David Fish.
The company has managed to almost double dividends per share between 2009 and 2017.
Altria raised its quarterly dividend by 6.70% to 70 cents/share just last week. This was the second dividend increase over the past year, after Altria hiked its distributions by 8.20% to 66 cents/share back in August 2017. Altria is a dividend champion, which has rewarded shareholders with a raise for the past 48 years in a row.
The company’s press release really summed it up very well:
Today’s dividend increase reflects Altria’s intention to return a large amount of cash to shareholders in the form of dividends and is consistent with Altria’s dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share. Altria has increased its dividend 52 times in the past 49 years.
The company is hiking the dividends, because its tax rate is going lower. As a result, its earnings per share are increasing faster than expected, which leaves more room for further dividend increases to be shared with long-term shareholders like us.
For some strange reason, Altria was booted from the dividend aristocrats index in 2007, which is why I prefer to focus on the dividend champions list, maintained by David Fish.
The company has managed to almost double dividends per share between 2009 and 2017.
Friday, March 2, 2018
Disney (DIS) Dividend Stock Analysis
The Walt Disney Company (NYSE:DIS) operates as an entertainment company worldwide. The company operates in five segments: Media Networks, Parks and Resorts, Studio Entertainment, Consumer Products, and Interactive. The company is not a typical dividend growth stock, although it has paid dividends since 1957, and has never cut them. Disney is a dividend angel which often raises dividends several years in a row, after which it keeps them unchanged. This is followed by another round of dividend raises again.
The most recent dividend increase was in December 2017, when the Board of Directors approved a 7.70% increase in the semi-annual dividend to 84 cents/share. The largest competitors for Disney include Time Warner (NYSE:TWX), Viacom (NYSE:VIA) and Twenty-First Century Fox (NASDAQ:FOXA).
Over the past decade the stock has delivered an annualized total return of 14.20% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.
The most recent dividend increase was in December 2017, when the Board of Directors approved a 7.70% increase in the semi-annual dividend to 84 cents/share. The largest competitors for Disney include Time Warner (NYSE:TWX), Viacom (NYSE:VIA) and Twenty-First Century Fox (NASDAQ:FOXA).
Over the past decade the stock has delivered an annualized total return of 14.20% to its shareholders. Future returns will be dependent on growth in earnings and dividend yields obtained by shareholders.
Thursday, March 1, 2018
Two Wide Moat Dividend Stocks to Consider on Dips
I like to invest in quality companies, with an established track record of dividend increases. I want to acquire these quality companies at an attractive entry price, and then see earnings per share, dividends per share and intrinsic values grow over time.
The beauty of quality companies is that you need to get one decision right – that is the ability to identify their business model, and then buy those companies in the first place without overpaying for them.
I do not want to worry about buying at a low price, and then selling at a high price. I want to make one decision, and then let these quality companies do the heavy lifting for me. My favorite holding period is forever. While some may fail, I know that by building a diversified portfolio of dividend growth stocks, I will do just fine over time.
Speaking of quality companies, there are two I have my eye on, whenever they start to look attractively valued. The companies include:
The beauty of quality companies is that you need to get one decision right – that is the ability to identify their business model, and then buy those companies in the first place without overpaying for them.
I do not want to worry about buying at a low price, and then selling at a high price. I want to make one decision, and then let these quality companies do the heavy lifting for me. My favorite holding period is forever. While some may fail, I know that by building a diversified portfolio of dividend growth stocks, I will do just fine over time.
Speaking of quality companies, there are two I have my eye on, whenever they start to look attractively valued. The companies include:
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