As part of my monitoring process, I review the list of dividend increases every week. This is helpful as a method to observe recent developments in companies I own. This process is helpful in identifying companies for further research, which may be exhibiting certain characteristics that look promising.
I usually focus on companies with at least a ten year streak of annual dividend increases, in order to focus my attention to companies that can establish and maintain a streak throughout a full economic cycle.
The next steps involve evaluating the rate of increase relative to the historical average, in an effort to determine consistency. Usually, I end up observing a dividend growth rate that is accelerating or decelerating.
I also try to review trends in earnings, and looks at valuation, in order to determine if a company is worth pursuing further.
There were several companies raising dividends last week. The companies include:
1st Source Corporation (SRCE) operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and investment management services, and insurance to individual and business clients
The company raised its dividend by 8% to 27 cents/share. This marked the 32nd consecutive annual dividend increase for this dividend champion. In the past decade, it has managed to boost dividends at an annual rate of 4.10%.
The company grew earnings from $1.25/share in 2008 to $3.16/share in 2018.
The stock is fairly valued at 14.40 times earnings and yields 2.40%. The company may be worth adding to my list for further research.
Air Products and Chemicals, Inc. (APD) provides atmospheric gases, process and specialty gases, equipment, and services worldwide.
The company raised its quarterly dividend by 5.50% to $1.16/share. This marked the 37th consecutive annual dividend increase for this dividend champion. In the past decade, the company has managed to boost distributions at an annual rate of 9.60%.
Between 2009 and 2018, APD managed to boost its earnings from $2.96/share to $6.78/share. The company is expected to generate $8.17/share in 2019.
The stock is close to overvalued, selling at 19.60 times forward earnings. Air Products & Chemicals yields 2.90%. I own shares in the stock and would love to be able to add on dips below $136/share ( prior year earnings times a P/E ratio of 20)
Comcast Corporation (CMCSA) operates as a media and technology company worldwide. It operates through Cable Communications, Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks segments.
Comcast raised its quarterly dividend by 10.50% to 21 cents/share. This marked the 12th year of annual dividend increases for this dividend achiever. The five year dividend growth rate is 14.90%/year
Comcast managed to grow earnings per share from $0.43 in 2008 to $2.55 in 2018.
Comcast seems to have done very well over the past decade. The stock is attractively valued at 13.90 times earnings and spots a dividend yield of 2.40%. I would add the stock to my list for further research.
J.B. Hunt Transport Services, Inc. (JBHT), together with its subsidiaries, provides surface transportation and delivery services in the continental United States, Canada, and Mexico. It operates through four segments: Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS), and Truckload (JBT).
The company raised its quarterly dividend by 8.30% to 26 cents/share. This marked the 16th consecutive annual dividend increase for this dividend achiever. Over the past decade, J.B. Hunt has been able to grow distributions at an annual rate of 9.80%/year.
Earnings per share great between 2008 and 2017 from $1.56 to $6.18. The company is expected to generate $6.26/share in 2019.
The stock is attractively valued at 16.70 times forward earnings, and yields 1%. I will place it on my list for further research.
Kimberly-Clark Corporation (KMB), together with its subsidiaries, manufactures and markets personal care, consumer tissue, and professional products worldwide. It operates through three segments: Personal Care, Consumer Tissue, and K-C Professional.
The company raised its quarterly dividend by 3% to $1.03/share. This marked the 47th consecutive annual dividend increase for this dividend champion. The latest dividend hike is smaller than the ten year average of 6.70%/year.
Kimberly-Clark managed to grow earnings from $4.04/share in 2008 to $6.40/share in 2017. The company is expected to generate $6.65/share in 2018.
The stock is attractively valued at 16.20 times forward earnings and yields 3.80%. Unfortunately, the company is growing dividends at 3% for a second year in a row. The slowdown in dividend growth shows that management expects headwinds in the near term for the business. I will have to reassess whether it makes sense to continue adding to the position.
Rollins, Inc. (ROL), through its subsidiaries, provides pest and termite control services to residential and commercial customers. It offers protection against termite damage, rodents, and insects. The company raised its quarterly dividend by 12.50% to 10.50 cents/share. This marked the 17th consecutive year of annual dividend increases for this dividend achiever. In the past decade, Rollins has been able to grow the dividend at an annual rate of 17.90%.
Rollins managed to grow earnings from 20 cents/share in 2008 to 55 cents/share in 2017. The company is expected to generate 72 cents/share in 2018.
Unfortunately, the stock is overvalued today at 51.80 times forward earnings. The yield is 1.10%. Rollins may be worth a closer look on dips to $14/share, which would be a huge decline from todays levels.
Franklin Electric Co., Inc. (FELE), together with its subsidiaries, designs, manufactures, and distributes water and fuel pumping systems worldwide. It operates in three segments: Water Systems, Fueling Systems, and Distribution. The company raised its quarterly dividend by 20.80% to 14.50 cents/share. This marked the 27th year of annual dividend increases for Franklin Electric. This increase was more than double the size of its ten year average dividend growth of 6%/year.
Between 2008 and 2017, earnings per share increased from $0.95 to $1.65. The company is expected to generate $2.23/share in 2018.
The stock is overvalued at 20.50 times forward earnings. Franklin Electric yields 1.30%.
Relevant Articles:
- How to value dividend stocks
- How to read my weekly dividend increase reports
- Price is what you pay, value is what you get
- Three Characteristics of Successful Dividend Investors