Last week, there were ten dividend growth companies, which rewarded their shareholders with a dividend increase. This list was generated by scanning through the dividend increases for the last week, and then focusing only on these companies which are at least a dividend contender or a dividend achiever. In other words, I focused on companies which have managed to increase dividends every single year for at least a decade. This is an accomplishment that less than 400 companies in the US have managed to achieve.
Today's list includes companies that have just recently marked their tenth anniversary of annual dividend increases. It also includes two dividend champions and one dividend king. Just because a company is featured on this list, that doesn't mean it is a good idea to invest in it. Investors need to develop their own framework for evaluating companies, which is why I share mine in those weekly reviews of dividend increases.
In my case, I review the most recent dividend hike, and compare it to the ten year average. This is helpful in determining the momentum in dividend growth.
I also review the trends in earnings per share, in order to determine if we have sufficient power behind future dividend increases.
Earnings per share are helpful to calculate the dividend payout ratio as well. That indicator is helpful in determining the safety of distributions. It is also helpful in avoiding companies growing distributions without earning more money.
Last but not least, I do a valuation check by focusing on P/E ratio, expected growth in earnings and dividends and the payout. This is as subjective as it can get, but it makes some logical sense to me that higher growth companies will have higher P/E's and lower yields versus slower growing companies.
The ten dividend growth stocks that rewarded shareholders with higher distributions last week include:
American Equity Investment Life Holding Company (AEL) provides life insurance products and services in the United States.
The company approved 7.10% increase to its annual dividend, bringing the total to 30 cents/share. This marks the twenty first consecutive year a cash dividend has been declared and the sixteenth year in a row that the Company has increased its cash dividend. Over the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 14.90%.
Between 2009 and 2018 earnings per share increased from $1.18 to $5.01.
The company is expected to earn $5.48/share in 2019.
The stock is cheap at 5.30 times forward earnings and yields 1%. I would add it to my list for further research.
National Bankshares, Inc. (NKSH) provides retail and commercial banking services to individuals, businesses, non-profits, and local governments.
The company raised its semi-annual dividend to 72 cents/share. This marked the 21st year of annual dividend increases for this dividend achiever. During the past decade, it has managed to hike distributions at an annualized rate of 4.20%.
National Bankshares managed to grow earnings from $1.96/share in 2008 to $2.32/share 2018.
The company is expected to generate $2.57/share in 2019.
The stock is selling at 17.90 times forward earnings and yields 3.10%.
Brown-Forman Corporation (BF.B) manufactures, bottles, imports, exports, markets, and sells various alcoholic beverages worldwide.
The company raised its quarterly dividend by 5% to 17.43 cents/share. This marks the 36th consecutive year of dividend increases at Brown-Forman, and the 74th year of paying quarterly dividends at the company. During the past decade, this dividend champion has managed to hike annual distributions at a rate of 8.10%.
Between 2009 and 2019, the company has managed to hike earnings from $0.77/share to $1.73/share.
The company is expected to generate $1.79/share in 2020.
The stock is overvalued at 37.40 times forward earnings. Brown-Forman yields 1%. The stock may be a good idea on dips below $36/share.
Royal Gold, Inc. (RGLD) acquires and manages precious metal streams, royalties, and related interests. It focuses on acquiring stream and royalty interests or to finance projects that are in production or in development stage in exchange for stream or royalty interests, which primarily consists of gold, silver, copper, nickel, zinc, lead, cobalt, and molybdenum.
Royal Gold increased its quarterly dividend by 5.70% to 28 cents/share. This increase represents the 19th consecutive annual increase to Royal Gold’s dividend since dividend payments began in 2000.
Between 2009 and 2019, the company grew earnings from $1.09/share to $1.43/share.
The company is expected to generate $2.62/share in 2019.
The stock looks overvalued at 44.60 forward earnings and offers a dividend yield of 0.95%.
Farmers & Merchants Bancorp (FMCB) operates as the bank holding company for Farmers & Merchants Bank of Central California that provides a range of banking services to businesses and individuals primarily in the mid Central Valley of California
Farmers & Merchants Bancorp raised its semi-annual dividend to 7.15/share, which is a 2.14% increase over the dividend paid during the same time last year. Farmers & Merchants Bancorp has paid cash dividends and the 55th consecutive year dividends have been increased. As a result of the reliability of our cash dividends over many decades, it remains a member of a select group of only 27 publicly traded companies referred to as Dividend Kings.
However, its dividend growth is just 3.10% annualized over the course of the past decade.
Between 2008 and 2018, the company grew earnings from $28.69/share to $56.82/share. The stock is fairly valued at 13.80 times forward earnings and offers a dividend yield of 1.80%. I do not understand why the yield is so low, and the dividend growth is so low, when there is some decent earnings growth ( although if we exclude 2018 it looks like earnings growth was slow too).
Group 1 Automotive, Inc (GPI), operates in the automotive retail industry. The company sells new and used cars, light trucks, and vehicle parts, as well as service insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services.
Group One Automotive raised its quarterly dividend by 3.60% to 29 cents/share. This marked the eleventh consecutive year of annual dividend growth for this dividend achiever.
During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 8.30%.
Between 2009 and 2018, the company managed to increase earnings from $1.49/share to $7.83/share.
The company is expected to generate $10.60/share in 2019.
The stock looks attractively valued at 9.60 times forward earnings. Group 1 Automotive yields 1.10%.
This looks like an attractive investment today, despite the low yield. However, this company is more cyclical than I would like to see. The dividend may not be as defensible during the next recession, as sales and earnings dip. The payout ratio is low, which means that the dividend will likely be maintained even if things got as bad as during the financial crisis.
Stock Yards Bancorp, Inc. (SYBT) operates as the holding company for Stock Yards Bank & Trust Company that provides commercial and personal banking services in Louisville, Indianapolis, and Cincinnati. Its deposit products include demand deposits, savings deposits, money market deposits, and time deposits.
The company raised its quarterly dividend to 27 cents/share. This marked the eleventh consecutive year of annual dividend growth for this dividend achiever.
During the past decade, this dividend achiever has managed to grow distributions at an annualized rate of 7.80%.
The company managed to grow earnings from $1.06/share in 2008 to $2.42/share in 2018.
The company is expected to generate $2.84/share in 2019.
The stock is fairly valued at 14.40 times forward earnings and offers a dividend yield of 2.60%.It looks like an interesting candidate for further research on dips.
Muncy Bank Financial, Inc. (MYBF) provides banking products and services to individuals and businesses in Pennsylvania. It accepts savings, money market, and checking accounts.
The company raised its quarterly dividend by 6.10% to 35 cents/share. This marked the 17th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow distributions at an annualized rate of 9%.
I have been unable to find financials for the past two years, and I do not want to do too much extra digging for the purposes of tis review. The yield is 3.70% and the P/E looks to be 11.90, based on 2018 EPS of $3.19. My financial databases did not have all annual EPS datapoints loaded, and the company website didn’t have any information before 2013 ( though I could find information going back to 2009 on that report). A company like that may need extra research, which may be a risk factor or an opportunity.
Spire Inc. (SR), engages in the purchase, retail distribution, and sale of natural gas to residential, commercial, industrial, and other end-users of natural gas in the United States. The company operates through two segments, Gas Utility and Gas Marketing.
Spire raised its quarterly dividend by 5.10% to 62.25 cents/share. This marked the 17th year of annual dividend increases for this dividend achiever. Over the past decade, it has managed to boost distributions at an annualized rate of 4.10%.
Between 2008 and 2018, the company has managed to grow earnings from $3.58 to $4.33/share.
The company is expected to generate $3.75/share in 2019. I believe that dividend growth has been running on fumes over the past decade.
The stock appears overvalued at 20.55 times forward earnings. The stock yields 3.20% today.
Roper Technologies, Inc. (ROP) designs and develops software, and engineered products and solutions worldwide. The company operates in four segments: Application Software; Network Software & Systems; Measurement & Analytical Solutions; and Process Technologies.
Roper Technologies raised its quarterly dividend by 10.80% to 51.25 cents/share. This marked the 27th consecutive annual dividend increase for this dividend champion. Over the past decade, it has managed to hike distributions at an annualized rate of 19%.
Roper grew earnings from $3.01/share in 2008 to $9.05/share in 2018.
The company expects to generate $13/share in 2019.
The stock is overvalued at 27.40 times forward earnings and offers a low dividend yield of 0.60%. Roper may be a good pick to research if it dips below $260/share.
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- Twelve Dividend Growth Stocks In The News
- Nine Dividend Growth Stocks With Growing Yields on Cost
- Eleven Dividend Growth Stocks For Further Research
- Seven Dividend Growth Stocks For Further Research