One of the best books written on Dividend Growth Investing is called " The Single Best Investment: Creating Wealth With Dividend Growth". The books discussed a study in the Journal of Financial and Quantitative analysis, which examined the information content of dividend changes. The goal of the study was to understand what dividend changes tell us about a company.
The authors Denis, Denis, and Sarin sought to find an appropriate explanation for the well documented association between dividend change announcements and stock price changes. They found that changes in dividends proved to be intended or unintended signaling by management regarding cash flows at the company.
While many academics had suggested companies that raise their dividends would decrease their capital expenditures (or at least not increase investments), the authors found that just the opposite is true. Companies that increase their dividends are more likely to increase their reinvestment in the business, and companies that decrease their dividends are more likely to reduce capital expenditures.
The conclusion is inescapable: companies that increase their dividends are companies that are making money—enough to run a thriving business and enough to share with stockholders in the here and now as well.
There were seventeen companies that raised dividends last week, which also have a minimum ten year streak of annual dividend increases under their belt. The companies are listed in the table below:
Company
|
Ticker
|
Share Price
|
Dividend Yield
|
New Dividend
|
Previous Dividend
|
Dividend Increase
|
Years of Dividend Increases
|
10 Year Dividend Growth Rate
|
Forward P/E
|
Analog Devices
|
ADI
|
122.76
|
2.02%
|
0.62
|
0.54
|
14.81%
|
18
|
10.44%
|
21.88
|
Allstate
|
ALL
|
123.66
|
1.75%
|
0.54
|
0.5
|
8.00%
|
10
|
9.37%
|
11.16
|
Cohen & Steers
|
CNS
|
76.96
|
2.03%
|
0.39
|
0.36
|
8.33%
|
11
|
21.82%
|
22.77
|
Foot Locker
|
FL
|
38.84
|
4.12%
|
0.4
|
0.38
|
5.26%
|
10
|
9.49%
|
7.43
|
Genuine Parts Company
|
GPC
|
96.23
|
3.28%
|
0.79
|
0.7625
|
3.61%
|
64
|
6.58%
|
16.31
|
Harley-Davidson
|
HOG
|
35.2
|
4.32%
|
0.38
|
0.375
|
1.33%
|
10
|
14.13%
|
10.38
|
Humana
|
HUM
|
369.46
|
0.68%
|
0.625
|
0.55
|
13.64%
|
10
|
14.34%
|
16.61
|
Coca-Cola
|
KO
|
60.13
|
2.73%
|
0.41
|
0.4
|
2.50%
|
58
|
6.91%
|
24.54
|
Moody's
|
MCO
|
271.71
|
0.82%
|
0.56
|
0.5
|
12.00%
|
11
|
17.46%
|
26.48
|
Magna International
|
MGA
|
51.56
|
3.10%
|
0.4
|
0.36
|
11.11%
|
11
|
41.62%
|
7.78
|
Perrigo Company
|
PRGO
|
59.92
|
1.50%
|
0.225
|
0.21
|
7.14%
|
17
|
13.68%
|
13.74
|
Service Corporation International
|
SCI
|
52.54
|
1.45%
|
0.19
|
0.18
|
5.56%
|
10
|
16.23%
|
23.04
|
Sherwin-Williams
|
SHW
|
573.61
|
0.93%
|
1.34
|
1.13
|
18.58%
|
41
|
12.28%
|
22.23
|
Telephone & Data Systems
|
TDS
|
22.23
|
3.06%
|
0.17
|
0.165
|
3.03%
|
46
|
4.38%
|
28.5
|
Texas Roadhouse
|
TXRH
|
71.52
|
2.01%
|
0.36
|
0.3
|
20.00%
|
10
|
14.87%
|
27.83
|
Wal-Mart Stores
|
WMT
|
118.6
|
1.82%
|
0.54
|
0.53
|
1.89%
|
47
|
7.18%
|
21.33
|
Xcel Energy
|
XEL
|
70.82
|
2.43%
|
0.43
|
0.405
|
6.17%
|
17
|
5.15%
|
24.01
|
This list is not a recommendation to buy or sell any securities. It is just a list of companies for further research. It is also a list to update my existing observations on companies I own or plan to own at the right price. I analyze companies before buying the,
If I were to evaluate the companies on this list, I would leverage my screening criteria, which I first outlined in 2010.
Notably I would look for the following:
1) Ten years of annual dividend increases
2) Earnings per share that are increasing over the past decade
3) Dividend Payout Ratio below 60% ( however I am willing to make exceptions for REITs, MLPs, Utilities and Tobacco companies)
4) Dividend growth rate that exceeds the rate of inflation ( however this also needs to take into account the rate of earnings and dividend growth)
5) A P/E ratio below 20
Since I have some experience evaluating dividend companies, I also modify my criteria based on the environment we are in and the availability of quality companies. If I see a company with a strong business model and certain characteristics that I like, I may require a dividend streak that is lower than a decade. I have also found success in looking beyond screening criteria by purchasing stocks a little above the borders contained in a screen.
It is important to be flexible, without being too lenient.
Relevant Articles:
- How to monitor your dividend investments
- Twelve Dividend Growth Stocks Raising Distributions to Investors Last Week
- Nineteen Dividend Growth Stocks For Further Research
- My Portfolio Monitoring Process In a Nutshell
- How to read my weekly dividend increase reports
