Ten Dividend Growth Stocks Offering Positive Feedback to Shareholders

Dividend growth investing involves the selection of companies based on a set of criteria such as valuation, strong brands, strong competitive advantages and long histories of annual dividend increases. It is not about chasing high yielders today, but more about finding the right stock that would grow distributions over time, and thus provide investors with inflation protection in their income. Only companies with strong business models are able to increase dividends every year for long stretches of time. Dividend investors should take the time to study these success stories as they unfold in front of their eyes and even consider adding some to their dividend portfolios.

Over the past week, the following consistent dividend payers announced plans to hike distribution payouts to shareholders. These companies have a dividend culture which encourages sharing profits with shareholders. The companies raising distributions include:

PPL Corporation (PPL) is a utility holding company, which delivers electricity and natural gas in the United States and the United Kingdom. The company operates through three segments: U.K. Regulated, Kentucky Regulated, and Pennsylvania Regulated.

The company raised its quarterly dividend by 0.60% to 41.25 cents/share. The increase, PPL's 17th in 18 years, raised the annualized dividend from $1.64 per share to $1.65 per share. This dividend achiever has paid a dividend in every quarter since 1946

The company earned $2.47/share in 2008, and managed to grow that to $2.58/share in 2018. The anemic earnings growth explains the anemic dividend increase last week. It also explains the slow rate of dividend increases over the past decade of 3.30%/year.

PPL announced 2019 earnings forecast range of $2.30 to $2.50 per share, with a midpoint of $2.40. PPL Corporation reaffirmed projected growth rate through 2020 and initiated 2021 earnings forecast range of $2.50 to $2.80 per share.

Right now, the stock looks attractively valued at 12.70 times forward earnings. It offers a current yield of 5.40%, and a pretty adequate dividend payout ratio of 68.80%. While I believe that the dividend is safe, the lack of earnings growth means that dividend income will be unable to keep up with inflation over time.

Nu Skin Enterprises, Inc. (NUS) develops and distributes anti-aging personal care products and nutritional supplements under the Nu Skin and Pharmanex category brands worldwide. Nu Skin raised its quarterly dividend by 1.40% to 37 cents/share. This is slower than the ten year average of 13.10%/year. Nu Skin is a dividend achiever with an 18 year track record of annual dividend hikes.
The company earned $2.16/share in 2018, which is an improvement from the $1.02/share it earned in 2008. The 2018 figures are after an impairment and inventory write off charge. Nu Skin initiated 2019 EPS guidance of $3.80 to $4.05.

Right now, the stock is attractively valued at 16.60 times forward earnings and yields 2.30%. I analyzed the company 6 years ago and cited a few reasons why I haven’t invested yet. These still apply for me.

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, Asia, and Australia. The company operates in three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group.
The company raised its quarterly dividend by 31.40% to $1.13/share. This increase follows 40 consecutive years of dividend increases for this dividend champion. Over the past decade, the company has managed to grow dividends at an annual rate of 10.40%/year. Most of the dividend growth over the past decade occurred after 2013; dividends per share increased by a little over 10% between 2008 and 2012.

Full year diluted net income per share decreased 35.9% to $11.67 per share from GAAP 2017 $18.20 per share, revised to reflect a voluntary inventory accounting change

Consolidated full year 2018 adjusted EPS of $18.53 excludes acquisition-related costs of $4.15 per share and other non-operating items of $2.71 per share. In comparison, Sherwin-Williams earned $4.02/share in 2008. The Company anticipates diluted earnings per share for 2019 in the range of $16.77 to $17.77 per share, including acquisition-related costs and other non-operating items of $3.63 per share.

Right now the stock is selling at 24.70 times the top range of forward earnings and yields 1%. Sherwin-Williams may be worth a closer look on dips below $355/share.

Tanger Factory Outlet Centers, Inc. (SKT), is a publicly-traded REIT headquartered in Greensboro, North Carolina that operates and owns, or has an ownership interest in, a portfolio of 44 upscale outlet shopping centers.

This dividend champion raised distributions by 1.40% to 35.50 cents/share. This marked the 26th year of annual dividend increases for Tanger. Over the past decade, Tanger has managed to grow dividends at an annual rate of 6.70%. FFO available to common shareholders was $2.48 per share, or $243.3 million in 2018. This was a nice increase from the 2008 FFO figures of $1.18/share. The REIT offered 2019 FFO guidance of $2.31 - $2.37/share for 2019. The REIT is very cheap at 9.20 times expected FFO and yields 6.50%. Tanger Factory Outlet Centers has a low FFO payout ratio of 60%, and is one of the few REITs out there that are actually buying stock back. The downside risk is that the business seems to be gradually getting worse, as tenants are leaving, occupancy rates are dropping and base rents are not growing much. The slowing rate of dividend growth tells that management is cautious about business conditions. Check my analysis of Tanger for more information about the REIT.

T. Rowe Price Group, Inc. (TROW) is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. The company raised its dividend by 8.60% to 76 cents/share, which marked the 33rd year of annual dividend increases for this dividend champion.

Over the past decade, this dividend champion has managed to grow dividends at an annual rate of 12.90%/year.

T. Rowe Price Group posted diluted earnings per common share of $7.27 for 2018, which was an increase from the 2008 figure of $1.80/share.

I find the stock to be attractively valued today at 13.40 times earnings and offers a sustainable dividend of 3.10%. The dividend payout ratio is at 41.80%.

Equity LifeStyle Properties, Inc. (ELS) is a real estate investment trust. It engages in the management of portfolio of resort communities and lifestyle oriented properties. It operates through the Property Operations and Home Sales and Rentals Operations segments. The REIT boosted its quarterly dividend by 11.40% to 61.25 cents/share. Over the past decade, the company has managed to increase annual dividends at a rate of 21.80%/year.

Funds from Operations rose from $1.60/share in 2008 to $3.91/share in 2018 The REIT is expected to generate $4.07-$4.17/share in FFO in 2019. The stock is overpriced at 26.10 times FFO and yields 2.20%. It may be worth a second look if drops below $81/share.

L3 Technologies, Inc. (LLL) provides aerospace systems, communication, electronic, and sensor systems used on military, homeland security, and commercial platforms in the United States and internationally.

The company raised its quarterly dividend by 6.25% to 85 cents/share. The increase marked the 16th year of annual dividend increases for this dividend achiever. The latest dividend increase was much slower than the ten year average of 12.10%/year.

The company earned $10.05/share in 2018, which was an increase from 2008 earnings of $7.59/share. The growth in earnings per share was driven by share buybacks, as net income went down during the past decade. L3 Technologies is expected to generate $11.42/share in 2019. The stock is fairly valued at 18.90 times forward earnings and a forward yield of 1.65%.

NorthWestern Corporation (NWE) provides electricity and natural gas to residential, commercial, and industrial customers. The company operates through Electric Operations and Natural Gas Operations segments. NorthWestern corporation hiked its quarterly dividend by 4.50% to 57.50 cents/share. The latest increase was slightly slower than the ten year average increase of 5.10%/year. NorthWestern posted results for 2018 of $3.94/share. The company is expected to earn $3.42/share in 2019. In comparison, Northwestern earned $2.02/share in 2008.

The stock is fully valued at 19.20 times forward earnings and offers a decent yield at 3.50%. The dividend payout ratio is at 67.30%, which is good for a utility. It would be great if the utility is available at 15 – 16 times forward earnings.

Omnicom Group Inc. (OMC), together with its subsidiaries, provides advertising, marketing, and corporate communications services. The company raised its quarterly dividend by 8.30% to 65 cents/share. This marked the tenth year of consecutive annual dividend increases for Omnicom. Over the past decade, it has managed to boost dividends at an annual rate of 14.90%. Omnicom earned $5.85/share in 2018, which was an increase over 2008’s earnings per share of $3.13/share.
Right now, the stock looks fairly valued at 12.80 times earnings and yields 3.50%.

Hasbro, Inc. (HAS), together with its subsidiaries, operates as a play and entertainment company. The company raised its quarterly dividend by 7.90% to 68 cents/share. This marked the 16th year of annual dividend increases for this dividend achiever. Over the past decade, it has managed to reward shareholders by raising distributions at a rate of 14%/year.

The company earned $2/share in 2008. In 2018, Hasbro earned a little less than that, due to impairment charges, severance costs and the impact of Toys R US closing its operations. The adjusted earnings for 2018 stood at $3.85/share. Hasbro is expected to earn $4.69/share in 2019. Conservative investors may want to wait for a dip below 20 times adjusted earnings for 2018 before they consider the company.

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