I review the list of dividend increases as part of my monitoring process. This helps me review the story behind companies I already own. It also helps me review companies for potential inclusion into my watchlist.
A long track record of annual dividend increases is an indication of a quality company with a strong business model. Its strength could be due to a favorable environment, competitive position, unique product, patent or trademark, a strong brand, a loyal group of customers or a combination of the above.
I find it helpful to identify these businesses and place them on my list for further research.
During the past week, there were three companies with long histories of annual dividend increases, which also hiked distributions to shareholders.
The companies include:
Northwest Natural Holding Company (NWN) provides regulated natural gas distribution services to residential, commercial, industrial, and transportation customers in Oregon and Southwest Washington.
The utility raised its quarterly dividend by 0.50% to 48 cents/share. This marked the 65th consecutive annual dividend increase for this dividend king. Over the past decade, it has managed to increase the dividend at an annualized rate of 1.75%.
Earnings peaked at $2.83/share in 2009, and gradually declined to $2.07/share in 2019. The company is expected to generate $2.27/share in 2020.
Currently, the stock is fairly valued at 20.70 times forward earnings and yields 4.10%. Given the lack of earnings growth, and the high payout ratio,
RPM International Inc. (RPM) manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide.
The company raised its quarterly dividend by 5.60% to 38 cents/share. This marked the 47th consecutive annual dividend increase for this dividend aristocrat.
“One of the primary ways we continuously reward our shareholders is by annually increasing our cash dividend,” stated Frank C. Sullivan, RPM chairman and CEO. “Increasing the dividend, combined with an appreciating stock price, is key to our ability to consistently deliver long-term value and outperform the cumulative total return of the broader market.”
Over the past decade, RPM International has managed to grow dividends at an annualized rate of 5.80%.
Between 2009 and 2019, RPM International grew earnings from $1.39/share to $2.34/share.
RPM International is expected to generate $3.93/share.
Currently, the stock is selling for 22.20 times forward earnings and yields 1.75%. RPM International is close to being fairly valued today.
McDonald's Corporation (MCD) operates and franchises McDonald's restaurants in the United States and internationally.
The company increased its quarterly dividend by 3.20% to $1.29/share. This marked the 44th year of consecutive annual dividend increases for this dividend aristocrat.
"Today's dividend increase reflects our strong financial position and represents continued confidence in our ability to drive profitable growth and long-term shareholder value while still investing in our people and the business."
During the past decade, McDonald's has managed to increase dividends at an annualized rate of 8.70%.
Between 2009 and 2019, McDonald’s was able to grow earnings from $4.11/share to $7.88/share,
McDonald’s is expected to generate $5.88/share in 2020.
Right now the stock is selling for 38.24 times forward earnings and yields 2.30%. I find the stock to be pricey at the moment. I would love to be able to buy McDonald's at a lower price from here.
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