Dividend Momentum from Five Dividend Growth Stocks

Dividend momentum is a strategy that takes full advantage of the theory behind companies in motion, who tend to stay in motion for years and decades down the road.

A body in motion tends to stay in motion unless acted on by an outside force. The following dividend payers kept the dividend momentum coming, by raising distributions to shareholders. What is particularly interesting is the fact that most of them have raised distributions consistently for more than one. This is essentially what successful dividend growth investing is all about – finding a dividend grower in the early stages, that keeps paying increasing amounts of dividends each and every year for years to come.

The companies which raised distributions include:

The Wendy's Company (WEN) operates as a quick-service restaurant company. The company is involved in operating, developing, and franchising a system of quick-service restaurants specializing in hamburger sandwiches.

Wendy’s raised its quarterly dividend by 20% to 12 cents/share. This marked the tenth consecutive year of annual dividend increases for this newly minted dividend achiever. The company has been able to grow dividends at an annualized rate of 2.90% during the past decade. That's due to a dividend cut in 2008.

The company earned 34 cents/share in 2007, and has managed to grow that all the way to 59 cents/share in 2018. The 2018 figures are adjusted for the impact of the new tax law that went into effect at the end of 2017. Wendy's is expected to generate 58 cents/share in 2019. The company has not had a long-term history of consistency in operational performance.

The stock is overvalued at 37.20 times forward earnings and offers a dividend yield of 2.20%. The company has a high payout ratio at 82.70%.

1st Source Corporation (SRCE) operates as the 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 to 29 cents/share, which is the second increase over the past year. The new dividend is 16% higher than the distribution paid during the same time last year. This marked the 33rd consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to boost dividends at an annualized rate of 6.20%.

Between 2008 and 2018, the company has managed to boost earnings from $1.25/share to $3.16/share. It is expected to earn $3.55/share in 2019.

The stock is attractively valued at 13.90 times forward earnings and offers a dividend yield of 2.35%.

Tompkins Financial Corporation (TMP) operates as a community-based financial services company that provides commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. The company operates through three segments: Banking, Insurance, and Wealth Management.

The company raised its quarterly dividend by 4% to 52 cents/share. This marked the 33rd consecutive annual dividend increase for this dividend champion. During the past decade, the company has managed to grow its dividend at an annualized rate of 4.90%.

Between 2008 and 2018, the company has managed to grow earnings from $2.53/share to $5.35/share. The company is expected to earn $5.16/share in 2019. Looking at the earnings chart over the past 20 – 30 years, I see a very nice up trending line.

The stock looks fairly valued at 16 times forward earnings and yields 2.50%.

Eagle Financial Services, Inc. (EFSI) operates as the bank holding company for Bank of Clarke County that provides various retail and commercial banking services in the Shenandoah Valley and Northern Virginia.

The company increased its quarterly dividend by 4% to 26 cents/share. This marked the 34th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to increase dividends at an annualized rate of 3.40%.

Between 2008 and 2018, the company has managed to boost earnings from $1.29 to $2.60/share.
The stock is cheap at 11.60 times earnings and yields 3.40%.

Omega Healthcare Investors (OHI) is a real estate investment trust that invests in the long-term healthcare industry, primarily in skilled nursing and assisted living facilities. Its portfolio of assets is operated by a diverse group of healthcare companies, predominantly in a triple-net lease structure
The REIT announced a 1.50% hike in its quarterly dividend to 67 cents/share.

Omega Healthcare has managed to boost annual dividends for 16 years in a row. The REIT has managed to grow distributions at an annualized rate of 8.30% over the past decade. The rate of dividend growth has slowed down recently - the last dividend increase occurred in 2018. The stock yields 6%, which is a good yield in today’s environment.

Relevant Articles:

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- Record Dividend Payments in the US For A Decade