Five Dividend Increases From Last Week

As part of my monitoring process, I review the list of dividend increases every week. I usually focus on the dividend increases for companies with a status of a dividend contender. A dividend contender is a company which has managed to grow its dividend for at least ten years in a row.

After I come up with a list of companies, I do a brief review of the most recent dividend increase relative to the ten year average. It is helpful to see whether dividend growth is staying constant or decelerating. This exercise is most helpful when done in conjunction with reviewing the dividend payout ratio, in order to check for dividend safety.

I also find it very helpful to review trends in earnings per share over the past decade, in order to determine if the business is growing or stagnant. The dividend investor has to be careful about noise in the data. This means that the information presented always needs to be put in the context of the type of business we are reviewing, and also through the lens of the big picture.

Last but not least, I also review valuations. Putting all of those pieces together has been invaluable for me in selecting investments for my dividend machine.

The five companies that raised dividends over the past week include:


Target Corporation (TGT) operates as a general merchandise retailer in the United States. The company raised its quarterly dividend by 3.20% to 64 cents/share. This marked the 47th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to grow its dividend at an annual rate of 16.70%/year. The company has managed to grow earnings from $2.86/share in 2008 to $5.32/share in 2017. The company is expected to earn $5.26/share in 2018. Unfortunately, since 2013 Target has been unable to grow its earnings per share. The stock is attractively valued at 14.70 times forward earnings and yields 3.30%. Due to the lack of earnings growth however, I view the stock as a hold.

On a side note, in early 2018 I listed Target as a dividend king incorrectly with a 50 year history of annual dividend increases. Upon reviewing the dividend history for Target on the company’s investor relations website, I agree that it has only managed to boost distributions for 47 years in a row ( which is not a small achievement either). Therefore, I am downgrading it back to dividend champion status. Hopefully in three years it can become a dividend king. The lesson for this paragraph is to trust, but always verify the numbers you see. In addition, you should always do your own research and only invest in what makes sense for you. Blindly following others is frequently a mistake.

W. P. Carey Inc. (WPC) is a leading internally-managed net lease REIT that provides long-term sale-leaseback and build-to-suit financing solutions primarily for companies in the U.S. and Europe. The REIT raised its quarterly distribution to $1.02/share. W.P. Carey has been raising dividends for 20 years. Over the past decade, it managed to boost distributions at a rate of 8%/year. Since 2007, FFO/share has grown by 4.70%/year. The REIT yields 6.10% and sells for 14.70 times FFO. W.P. Carey is a decent idea for the diversified portfolio of someone looking for high current income that is expected to keep pace with inflation over time. Check my analysis of W.P. Carey for more information about the company.

National Fuel Gas Company (NFG) operates as a diversified energy company. The company operates in five segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing. The company raised its quarterly dividend by 2.40% to 42.50 cents/share. This marked the 48th consecutive annual dividend increase for this dividend champion. The ten year dividend growth rate is 3%/year. Earnings per share went from $3.16 in 2008 to $3.30 in 2017. The company is expected to earn $3.26/share in 2018. The stock is fairly valued at 16.20 times forward earnings and yields 3.20%. The slow rate of dividend growth, coupled with the relatively low yield for a utility, shows that investors cannot expect much in terms for expected returns from NFG. The lack of earnings growth over the past decade doesn’t bode well for future dividend growth either. I see the stock as a hold at best.

Caterpillar Inc. (CAT) manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for construction, resource, and energy and transportation industries. The company raised its quarterly dividend by 10.30% to 86 cents/share. This marked the 24th consecutive annual dividend increase for this dividend achiever. Over the past decade, Caterpillar has managed to boost its dividends at an annual rate of 8.90%/year. Earnings per share went from $5.66 in 2008 to $1.26 in 2017. The company is expected to earn $10.84/share in 2018. The stock is attractively valued at 13.80 times forward earnings and a dividend yield of 2.30%. The issue with cyclical companies is that they appear cheapest at the top of the cycle when earnings are highest. At the trough of the economic cycle, when earnings are depressed, these companies tend to appear overvalued.

FedEx Corporation (FDX) provides transportation, e-commerce, and business services worldwide. The company raised its quarterly dividend by 30% to 65 cents/share. This marked the 17th consecutive annual dividend increase for this dividend achiever. Over the past decade, Fedex has been able to raised its dividends at an annual rate of 16.50%/year. Fedex has managed to grow earnings from $3.60/share in 2008 to $11.07/share in 2017. The company is expected to earn $15.05/share in 2018. The stock is fairly valued at 17.60 times forward earnings and a dividend yield of 1%. The interesting lesson for me is that earnings per share went nowhere between 2012 and 2016, which was one of the reasons I never really got excited about the company. Then all of a sudden, the earnings for 2017 and the forward earnings for 2018 shot up.

Relevant Articles:

- How to value dividend stocks
- 38 Dividend Champions To Consider
- Three Dividend Growth Stocks Rewarding Shareholders With a Raise
- Five Dividend Stocks Working Hard For Their Owners