Fifteen Companies Rewarding Shareholders With a Raise

I review the list of dividend increases as part of my monitoring process. This process helps me review how the companies I own are doing. It also helps me identify companies for further research.

For this weekly review, I tend to focus my attention on companies with at least a ten year history of annual dividend increases, which also raised dividends last week. I provide a quick overview of each company that includes the amount of the most recent dividend increase, and compares it to its recent historical record. I also review the streak of annual dividend increases, and review earnings and valuation information.

Over the past week there were fifteen companies that raised dividends, and have a ten year history of annual dividend increases. The companies include:

The Coca-Cola Company (KO) is a beverage company that manufactures, markets, and sells various nonalcoholic beverages worldwide.

Coca-Cola hiked its quarterly dividend by 2.43% to 42 cents/share. This marked the 59th year of consecutive annual dividend increases for this dividend king. Over the past decade, the company has managed to grow dividends at an annualized rate of 6.40%.

The company is expected to earn $2.14/share in 2021.

The stock is not cheap at 23.69 times forward earnings, given the lack of earnings growth and the slowing dividend growth. It does offer a dividend yield of 3.31%, but the payout ratio is high at 78.50%.

Walmart Inc. (WMT) engages in the retail and wholesale operations in various formats worldwide. The company operates in three segments: Walmart U.S., Walmart International, and Sam's Club.

Wal-Mart hiked its quarterly dividend by 1.85% to 55 cents/share. This marked the 48th consecutive year of dividend increases for this dividend aristocrat. It also marked the 8th consecutive year of 2% dividend increases for Wal-Mart Stores. Over the past decade, the company has managed to grow dividends at an annualized rate of 6.20%.

The company is expected to earn $5.60/share in 2021

The stock is selling for 24.59 times forward earnings and yields 1.60%. I don’t think it offers a good value, given the high valuation, and low growth and yield.

The Sherwin-Williams Company (SHW) develops, manufactures, distributes, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers. It operates in three segments: The Americas Group, Consumer Brands Group, and Performance Coatings Group.

The company raised its quarterly dividend by 23.13% to $1.65/share. This increase follows 42 consecutive years of dividend increases for this dividend aristocrat. The company has managed to grow dividends at an annualized rate of 14% over the past decade.

The company is expected to earn 27.07/share in 2021. 

The stock sells for 26.85 times forward earnings and yields 0.91%. It would be nice if there was a dip below $600/share for this boring paint company.

Nestle S.A. (NSRGY) operates as a food and beverage company. The company operates through Zone Europe, Middle East and North Africa; Zone Americas; Zone Asia, Oceania and sub-Saharan Africa; and Nestle Waters segments.

The company raised its annual dividend to 2.75 Swiss Francs per share, which is a 1.85% increase over the previous annual payment. This marked the 26th consecutive annual dividend increase for this international dividend aristocrat. The company has managed to hike dividends at an annualized rate of 3.70%/year over the past decade.

The stock is selling for 22.31 times forward earnings and yields 2.80%.

British American Tobacco p.l.c. (BTI) provides cigarettes and other tobacco products worldwide.

The company raised its quarterly dividend by 2.50% to 53.90 British Pence/share. This comes out to an annualized payment of 2.156 British Pounds. For reference, in 2011 the company paid an annual dividend of 1.191 British Pounds/share.

Genuine Parts Company (GPC) distributes automotive replacement parts, industrial parts and materials, and business products in the United States, Canada, Mexico, Australasia, France, the United Kingdom, Germany, Poland, the Netherlands, and Belgium.

The company raised its quarterly dividend by 3.16% to 81.50 cents/share. This marked the 65th year of consecutive annual dividend increases for this dividend king. During the past decade, GPC has managed to grow dividends at an annualized rate of 6.80%.

The company is expected to earn $5.72/share in 2021.

The stock is selling for 17.66 times forward earnings and yields 3.23%.

Omnicom Group Inc. (OMC) provides advertising, marketing, and corporate communications services.

The company raised its quarterly dividend by 7.69% to 70 cents/share. This would mark the 12th year of consecutive annual dividend increases for this dividend achiever. 

During the past decade, the company has managed to increase distributions at an annualized rate of 13.20%/year. The rate of dividend growth has been dropping in recent years, as the company skipped a dividend increase in 2020. If Omnicom had not raised dividends in 2021, it would have lost its track record of annual dividend growth.

The company is expected to earn $5.59/share in 2021.

The stock sells for 11.94 times forward earnings and yields 4.19%. It is cheap, but traditional advertising industry is facing some headwinds.

Telephone and Data Systems, Inc. (TDS) is a telecommunications company, provides communications services in the United States. It operates through three segments: U.S. Cellular, Wireline, and Cable.

The company raised its quarterly dividend by 2.94% to 17.50 cents/share. This is the 47th year of consecutive annual dividend increases for this dividend champion.

The company has a 10 year growth rate of 4.18% annualized.

The stock is selling for 15 times forward earnings and yields 3.45%.

Extra Space Storage Inc. (EXR) headquartered in Salt Lake City, Utah, is a self-administered and self-managed REIT and a member of the S&P 500.

The REIT hiked its quarterly dividend by 11% to $1/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. Extra Space Storage has a ten year dividend growth rate of 24.60% annualized.

The stock is selling for 23.11 times FFO and yields 3.38%

Humana Inc. (HUM) operates as a health and well-being company in the United States. It operates through Retail, Group and Specialty, and Healthcare Services segments.

The health insurer hiked its quarterly dividend by 12% to 70 cents/share. This marked the 10th year of consecutive annual dividend increases for this newly minted dividend achiever. Humana has managed to grow annual dividends at an annualized rate of 16.30% over the past 5 years.

The stock is selling for 17.55 times forward earnings and yields 0.74%.

Essex Property Trust, Inc. (ESS) is a fully integrated real estate investment trust (REIT) that acquires, develops, redevelops, and manages multifamily residential properties in selected West Coast markets.

This REIT hiked its quarterly dividends by 0.60% to $2.09/share. This marked the 27th consecytive annual dividend increase for this dividend champion. Over the past decade, this REIT has managed to raise dividends at an annualized rate of 7.10%.

The stock sells for 21.09 times FFO and yields 3.16%.

Xcel Energy Inc. (XEL) generates, purchases, transmits, distributes, and sells electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments.

Xcel Energy raised its quarterly dividend by 6.40% to 45.75 cents/share. This marked the 18th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to increase distributions at an annualized rate of 5.50%.

The company is expected to earn $2.98/share in 2021.

The stock is selling for 20.92 times forward earnings and yields 2.94%.

Analog Devices, Inc. (ADI) designs, manufactures, tests, and markets integrated circuits (ICs), software, and subsystems that leverage analog, mixed-signal, and digital signal processing technologies.

The company managed to increase dividends by 11.29% to 69 cents/share. This marked the 19th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to grow dividends at an annualized rate of 11.20%.

Analog Devices is expected to earn $6.02/share in 2021.

The  stock is selling at 26.25 times forward earnings and yields 1.75%.

Public Service Enterprise Group Incorporated (PEG) operates as an energy company primarily in the Northeastern and Mid-Atlantic United States. It operates through two segments, PSE&G and PSEG Power.

The company raised its quarterly dividend by 4.08% to 51 cents/share, marking the tenth year of consecutive annual dividend increases. Over the past decade, this company has managed to grow dividends at an annualized rate of 3.75%.

The company is expected to earn $3.42/share in 2021.

The stock sells for 17.08 times forward earnings and yields 3.49%.

Jack Henry & Associates, Inc. (JKHY) provides technology solutions and payment processing services primarily for financial services organizations in the United States.

The company hiked its quarterly dividend by 6.98% to 46 cents/share. This marked the 31st year of consecutive annual dividend increases for this dividend champion. Over the past decade, it has managed to increase quarterly dividends at an annualized rate of 16.20%.

The company is expected to earn $3.85/share in 2021.

The stock sells for 39.72 times forward earnings and yields 1.20%.

Relevant Articles:

- Fourteen Dividend Growth Stocks Raising Dividends For Shareholders

- Eight Dividend Paying Companies Growing Dividends Like Clockwork

- Busiest Week For Dividend Increases Ever

- Seven Companies Rewarding Shareholders With a Raise

Warren Buffett's Latest Three New Investments

Warren Buffett does not need any introduction. He is a very successful investor who is in charge of Berkshire Hathaway. He has an impressive track record investing in the stock market and in businesses.

Because of his success, his every move is followed very closely. For example, his holding company Berkshire Hathaway is required to file a report with the SEC once per quarter that shows a listing of its portfolio holdings. You can find the most recent report by clicking on this link to the SEC filing.

It looks like Buffett initiated a position in three dividend growth companies. These are Chevron (CVX), Verizon (VZ) and Marsh & McLennan (MMC). I wanted to provide a brief overview of each company, from the perspective of a dividend growth investor below:

Chevron Corporation (CVX) engages in integrated energy, chemicals, and petroleum operations worldwide. The company operates in two segments, Upstream and Downstream. 

Chevron is a dividend aristocrat with a 33 year track record of annual dividend increases. Over the past decade, it has managed to grow dividends at an annualized rate of 6.20%.

The stock is selling for 26.63 times forward earnings and yields 5.58%. I do not believe that the annual dividend of $5.16/share is safe, based on forward earnings of $3.48/share. If oil prices rebound however, it is likely that earnings would grow as well, making Buffett's investment in Chevron smart in hindsight.

Marsh & McLennan Companies, Inc. (MMC) is a professional services company that provides advice and solutions to clients in the areas of risk, strategy, and people worldwide. It operates in two segments, Risk and Insurance Services, and Consulting. 

This dividend achiever has managed to increase dividends for 11 years in a row. Marsh & McLennan has managed to grow dividends at an annualized rate of 8.60%/year over the past decade.

The stock is selling for 21.24 times forward earnings and yields 1.65%. The annual dividend of $1.86/share seems adequately covered from forward earnings of $5.31/share.

Verizon Communications Inc. (VZ) offers communications, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. This dividend achiever has managed to increase dividends for 16 years in a row. Over the past decade, Verizon has managed to grow dividends at an annualized rate of 2.60%.

The stock is selling for 10.69 times forward earnings and yields 4.63%.

Buffett's company also made other moves, including the complete exit from the following positions (meaning he sold all the shares that his holding company owned)

- Pfizer (PFE)

- M&T Bank Corp (MTB)

- PNC Financial Services (PNC)

- JPMorgan Chase & Co (JPM)

- Barrick Gold Corp (GOLD)

You can view a complete listing of the changes below:

Source: Dataroma

I am interested in the fact that he is adding to Abbvie (ABBV), Bristol Myers Squibb (BMY) and Merck (MRK), which are attractive values in today's market. 

Abbvie (ABBV) is a dividend aristocrat with a 48 year track record of annual dividend increases. It has managed to grow dividends at an annualized rate of 18.50% during the past five years. Abbvie sells for 12.38 times forward earnings and yields 4.98%. Check my analysis of Abbvie for more information about the company.

Bristol-Myers Squibb (BMY) is a dividend achiever with a 12 year track record of annual dividend increases. Over the past decade, it has managed to grow dividends at an annualized rate of 3.50%, but this rate has been accelerating in recent years. The stock sells for 8.04 times forward earnings and a dividend yield of 3.27%. Check my analysis of Bristol-Myers Squibb for more information about the company.

Merck (MRK) has a ten year history of raising dividends and a ten year dividend growth rate of 4.80%. The stock sells for 11.63 times forward earnings and a dividend yield of 3.47%.

I also like the fact that he is buying more Kroger (KR), which in my opinion is a company that is working on transitioning itself to better compete in this new environment. I believe that it has what it takes to survive and thrive in the future. I also believe it offers a good value today as well.  Kroger sells for 10.21 times forward earnings and yields 2.12%. The company is a dividend aristocrat with a 15 year track record of annual dividend increases, and a 13.30% rate of annualized dividend growth over the past decade. Check my analysis of Kroger for more information about the company. 

I have not analyzed RH in detail before, so I do not have much to say about it. I do understand T-Mobile (TMUS), and think that it is a very competitive telecom company in the US telecom sector. While it has not paid a dividend since going public earlier last decade, it has outmaneuvered its competitors, acquired Sprint, and is positioned very well to benefit from an increasingly concentrated oligopoly.

Relevant Articles:

- How to find companies for my dividend portfolio

- Dividend Stock Analysis of Kroger (KR)

- My Bet with Buffett - Year Three Results

Fourteen Dividend Growth Stocks Raising Dividends For Shareholders

In my monitoring process, I tend to analyze companies I own once every 12 to 18 months. However, I also receive push notifications such as annual reports, quarterly press releases, dividend increase notifications. Since most companies I focus on are major multi-national corporations, if they do something significant, it makes the business news.

I review the list of dividend increases every week, as part of my monitoring process. I focus on the companies with at least a ten year history of annual dividend increases, in order to reduce noise.

This process is helpful in monitoring how existing holdings are doing. It is also helpful in uncovering companies for future research.

Auburn National Bancorporation, Inc. (AUBN) operates as the bank holding company for AuburnBank that provides various banking products and services in East Alabama.

The company raised its quarterly dividend by 2% to 26 cents/share. This marked the 20th year of annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 2.70%.

Between 2010 and 2020, the company managed to grow earnings from $1.47/share to $2.09/share

The company sells for 18.80 times earnings and yields 2.65%

Brookfield Asset Management (BAM) is a leading global alternative asset manager and one of the largest investors in real assets.

The company raised its quarterly dividend by 8.33% tp 13 cents/share.

This is the tenth year of consecutive annual dividend increases for this international dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 9.20%.

The stock yields 1.21%.

CSX Corporation (CSX) provides rail-based freight transportation services.

The railroad hiked its quarterly dividend by 7.69% to 28 cents/share.

This is the 17th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 12.30%.

CSX Corp earned $1.35/share in 2010, and managed to grow profits to $3.60/share by 2020.

The stock is selling for 20.63 times forward earnings and yields 1.24%.

Eversource Energy (ES) a public utility holding company, engages in the energy delivery business. The company operates in four segments: Electric Distribution, Electric Transmission, Natural Gas Distribution, and Water Distribution.

This utility company raised its quarterly dividends by 6.17% to 60.25 cents/share.

This was the 23rd consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 8.30%.

Between 2009 and 2019, the company managed to grow earnings from $1.91/share to $2.81/share.

The company is expected to earn $3.64/share in 2020.

The stock is selling for 23.41 times forward earnings and yields 2.83%.

NextEra Energy, Inc. (NEE) generates, transmits, and distributes electric power in North America.

NextEra increased its quarterly dividend by 10% to 38.50 cents/share.

This marked the 26th year of annual dividend increases for this dividend aristocrat. Over the past decade, the company has managed to increase dividends at an annualized rate of 10.80%.

The company earned $1.15/share in 2011 and is expected to earn $2.52/share in 2021.

The stock is selling for 33 times forward earnings and yields 1.85%.

Nu Skin Enterprises, Inc. (NUS) develops and distributes personal care and wellness products worldwide. NuSkin raised its quarterly dividend by 1.33% to 38 cents/share.

That was the 21st year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 11.60%.

Between 2009 and 2019, the company managed to grow earnings from $1.40/share to $3.10/share. Nu Skin Enterprises is expected to earn $3.99/share in 2020.

The stock is selling for 12.24 times forward earnings and yields 3.11%.

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 raised its quarterly dividend by 3.33% to 62 cents/share.

This was the 17th year of annual dividends increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 5.80%.

Between 2009 and 2019, the company managed to increase earnings from $2.02/share to $3.98/share.

NorthWestern is expected to earn $3.51/share in 2021.

The stock is selling for 12.24 times forward earnings and yields 3.11%

Primerica, Inc. (PRI) provides financial products to middle income households in the United States and Canada. The company operates in three segments: Term Life Insurance; Investment and Savings Products; and Corporate and Other Distributed Products.

The company raised its quarterly dividend by 17.50% to 47 cents/share.

This marked the 12th year of annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 55%.

The company is expected to earn $11.05/share in 2021.

The stock is selling for 12.83 times forward earnings and yields 1.33%.

Robert Half International Inc. (RHI) provides staffing and risk consulting services in North America, South America, Europe, Asia, and Australia. The company operates through three segments: Temporary and Consultant Staffing, Permanent Placement Staffing, and Risk Consulting and Internal Audit Services.

The company raised its quarterly dividends by 11.76% to 38 cents/share.

This was the 18th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 10.10%.

Between 2010 and 2020, the company managed to increase earnings from 44 cents/share to $2.70/share. The company is expecting to earn $3.35/share in 2021.

The stock is selling for 22 times forward earnings and yields 2.06%.

Sonoco Products Company (SON) manufactures and sells industrial and consumer packaging products in North and South America, Europe, Australia, and Asia. The company operates through four segments: Consumer Packaging, Display and Packaging, Paper and Industrial Converted Products, and Protective Solutions.

The company raised its quarterly dividend by 4.65% to 45 cents/share.

That was the 39th year of annual dividend increases for this dividend champion. Over the past decade, the company has managed to increase dividends at an annualized rate of 4.50%.

The company earned $2.13/share in 2011 and is expecting to earn $3.54/share in 2021.

The stock is selling for 16.90 times forward earnings and yields 3%.

T. Rowe Price Group, Inc. (TROW) is a publicly owned investment manager.

The company raised its quarterly dividend by 20% to $1.08/share.

This marked the 35th consecutive annual dividend increase for this dividend aristocrat. Over the past decade, the company has managed to increase dividends at an annualized rate of 12.80%.

Between 2010 and 2020, the company has managed to grow earnings from $2.53/share to $9.98/share.

The company is expected to earn $11.98/share in 2021.

The stock is selling for 13.70 times forward earnings and yields 2.65%.

United Parcel Service, Inc. (UPS) provides letter and package delivery, specialized transportation, logistics, and financial services. It operates through three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight.

UPS raised its quarterly dividend by 1% to $1.02/share.

That’s the 12th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to increase dividends at an annualized rate of 7.90%.

The company earned $3.84/share in 2011, and is projected to earn $8.92/share in 2021.

The stock is selling for 18.32 times forward earnings and yields 2.50%.

Cisco Systems, Inc. (CSCO) designs, manufactures, and sells Internet Protocol based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. 

Since initiating a dividend in 2011, Cisco has been rewarding shareholders with a raise annually.  The last dividend increase was in February 2021, when the company raised distributions by 2.77% to 37 cents/share. Cisco has a 5-year annualized dividend growth of 13.30%.

The company managed to grow earnings from $1.33/share in 2010 to $2.64/share in 2020. 

Cisco sells for 14.70 times forward earnings and yields 3.13%

PepsiCo, Inc. (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). 

PepsiCo announced a 5.10 percent increase in its annualized dividend to $4.30 per share.

The company is a dividend aristocrat, which has increased distributions for 49 years in a row. 

Between 2010 and 2020, PepsiCo managed to grow its earnings from $3.91/share to $5.12/share. The company is expected to earn $6.06/share in 2021.

The stock is selling for 22.10 times forward earnings and yields 3.21%.

Relevant Articles:

- Busiest Week For Dividend Increases Ever

- Seven Companies Rewarding Shareholders With a Raise

- How to read my weekly dividend increase reports

- Dividends Offer an Instant Rebate on Your Purchase Price

My Bet with Buffett - Year Three and Year Four Results and Year Five and Year Six

Note: Updated on 3/11/2022 for the results of year 4

Back in 2017, I made a bet with Warren Buffett and my friends Carl over at 1500Days and Ben at Suredividend. Buffett does not know that I made a bet with him however.

This bet was inspired by Buffett's now famous bet with a Hedge Fund manager. The bet was that no hedge fund manager can do better than investing in S&P 500, because of their high fees. Needless to say, Buffett won the bet, and donated the proceeds to charity.

Inspired by Buffett's bet, I did my own bet with Carl. I am afraid that Buffett is unaware of this high stakes bet, but I wanted to proceed with it for educational purposes.

A lot of people do not understand the reason why Buffett won the bet with the hedge fund manager.

The reason the hedge funds failed the bet is because of their huge fees. A typical hedge fund charges a 2% annual fee on assets under management plus 20% of profits earned on the investment. These fees serve as a huge drag on performance.

Historically, a diversified stock portfolio has earned a total return of 10%/year. This figure includes dividends and capital gains. If you paid a hedge fund manager to earn than return for you however, you would have to subtract 2% for their recurring fee and 2% for their performance fee. The performance fee is calculated by taking the the 10% return, and multiplying it by 20%. This means that you would lose abut 40% of your returns to hedge fund fees, each year, and that's before taxes. In order for the hedge fund manager to generate a return of 10%/year after fees, they would have to outperform S&P 500 by over 4%/year and earn over 14%/year. 

This is incredibly difficult to achieve in the long run, as few investors have been able to do that. 

Check chart below on the performance of the best investors and the length of their great performance:

In a previous article (Keeping Investment Fees Low Matters), I discussed how these excessive hedge fund fees rob investors of their returns, even if the hedge were to do very well. The problem is that most of these excess returns would go to the hedge fund, rather than the investors who are taking all the risk and coming up with all the capital. Investor Terry Smith had calculated that If you had invested $1,000 in Berkshire Hathaway in 1965, your investment would be worth $4.3 million by 2009. Buffett’s company compounded your capital at 20.46%/year. 

If Warren Buffett had set up Berkshire Hathaway as a hedge fund however, he would have charged you 2% per year and gathered 20% of any annual gains. If you had the same performance numbers, your $1,000 would have only grown to $396,000 by 2009. Only $396,000 would belong to you, the investor. This means that of the $4.3 million that you would have earned without fees, $3.9 million would belong to the hedge fund manager. This of course is the result if your hedge fund manager had a performance that is as great as Warren Buffett’s. Most hedge funds do not generate good returns for investors. They only generate good returns for the hedge fund managers, because of their outrageously high fees.

That brings me back to my bet with Buffett and Carl.

I believe that noone knows in advance what the best performing investment over the next decade would be. You can control what you invest in however, your costs, your behavior.

I am doing this bet to educate investors, who may have a lot of misconceptions about things.

If you choose an investment that is different than another investment, their results will vary over time. If you chose a portfolio of international companies, I would do better or worse than a portfolio of US companies. So if I choose a portfolio of 30 companies, I may end up doing better or worse than a portfolio of 500 companies. We do not know which portfolio would do better in advance. All we can do is keep costs low, keep turnover low and stay invested. 

At the end of the day, you have to pick investments that you will be able to stick to through thick or thin. Whether it is a collection of stocks picked by an index, or a collection of stocks picked by you, you have to be a picker and make a choice. When index investors pick US index fund over International index funds, they refer to it as asset allocation. If I chose to own more US stocks over international stocks, they call it stock picking. You can see that index investors are indeed stocks pickers, whether they admit it or not.

Many index investors view the selection of your own stocks as active, while their selection of an index fund as passive investing. Yet by engaging in an active decision to own US or International stocks, or go the route of slicing and dicing funds by market capitalization and value/growth criteria, they are engaging in stock picking as well. 

The nice thing about owning stocks directly is that you can afford to do nothing, and have a very low turnover and a very low cost. With index funds, you have forced turnover for various reasons, including an indexing committee actively deciding whether to add or remove a security. This may increase direct costs, and opportunity costs as well.

Back at the end of 2017 I decided to test my assumptions and knowledge, and select a group of companies that would do better than S&P 500 during the next decade. I essentially made a bet that the passive list of companies in the Dow Jones Industrials average as of December 2017 would do better than the active list of the companies in the S&P 500. At the end of the day, this portfolio is more passive than the passive index S&P 500.

Before we go any further I just wanted to tell you that Carl is winning this bet so far. He's one of the best investors I know, and he invests in a very different way than I do. His portfolio is up by 73%, while mine is up by 37.98%, vs 48.24% for S&P 500.

Carl is a great stock investor. The problem is that he has allowed to be convinced by others that he is going to be mediocre in the future. As a result, he has been selling stock in companies, and buying index funds with the proceeds. But the stock he has been selling has done much better than the index funds he has been buying. If Carl wins this contest, he may realize that he has squandered millions of dollars in potential returns by selling the best companies in the world, and buying investments that didn't do as well.

My friends at SureDividend had selected The Dividend Aristocrats ETF (NOBL), but it was up by 33.02% since the end of 2017 through the end of 2020.

I calculated these results using the total returns calculator at dividendchannel.com.

For my strategy, I decided to focus on solid blue chips, from a strategy that has been around since 1896. 

Basically, I selected the 30 companies from Dow Jones Industrials Average. 

I decided to equally weight the companies at start, and to "never sell them". I keep all spin-offs, reinvest all dividends, and keep costs low ( you can achieve that using a commission free brokerage and investing through a retirement account such as a Roth IRA)

This portfolio has been inspired by a few pieces of research I have shared before. You may check the research by clicking on the links below:

The main inspiration behind the idea for this passive portfolio of blue chip companies stems from the concept of the coffee can portfolio. 

Stocks that leave the Dow tend to outperform after their exit from the average

My analysis of the Corporate Leaders Trust - A passive portfolio of 35 blue-chip stocks selected in 1935

How investing in the original 500 securities of the S&P 500 index in 1957 actually did better than S&P 500

Wow, that's a lot of words to discuss this idea.

So how did we do in 2020?

The portfolio has generated 37.98% in returns since inception on December 29, 2017. This is lower than the return on S&P 500 for the same period, which was 48.24%. Dow Jones 30 has returned 31.90%.

This is a fun portfolio to calculate, because of the spin-offs.

In 2020 we had United Technologies (UTX) spin--off Otis Elevator and Carrier Global, before acquiring Raytheon (RTN), and changing its name to Raytheon Technologies (RTX).

We also had Pfizer do a spin-off as well in 2020.

You can view the updated annual performance chart as of 12/31/2021:

Looks like the portfolio returned 70.58% between Dec 29, 2017 and December 31, 2021. This did better than Dow Jones Industrials average, but worse than S&P 500. It also did better than Total International Stock Market.

In 2021, we had IBM spin-off Kyndryl.

All of this activity has increased the number of companies in the portfolio to 36, up from 30.

It looks like the best performing company is Apple, while the worst performing company is Boeing.

The companies that had a P/E above 20 in late 2017 have returned 65.37% on average

The companies that had a P/E below 20 in late 2017 have returned 75.79% on average.

This is the performance in year five - ending in 2022:

It looks like this ghost ship portfolio did better than Dow and S&P 500 since the end of 2017.

These are the results in year six (end of 2023). There was one spin-off from GE, GE Health (GEHC), where the original basis was split 7913/2087.

It looks like the Ghost Ship portfolio did better than Dow and International Stocks, but worse than S&P 500.

It would be interesting to see how this portfolio performs through the end of 2027, which is when this bet is off.

Relevant Articles:

- My Bet With Warren Buffett

- My Bet With Warren Buffett – Year One Results

- My Bet With Warren Buffett - Year Two Results

Eight Dividend Paying Companies Growing Dividends Like Clockwork

As part of my review process, I look at the dividend increases every week. I use the following resources to compile this list, if you are interested to learn more about it.

I tend to narrow my attention down to the companies that have managed to increase dividends for at least ten years in a row. This helps me monitor how my existing investments are doing and also identify some emerging dividend growth success stories early on.

During the past week, there were several companies that managed to raise dividends to shareholders. The companies are listed below:

3M Company (MMM) develops, manufactures, and markets various products worldwide. It operates through four business segments: Safety and Industrial, Transportation and Electronics, Health Care, and Consumer.

The company raised its quarterly dividend by 0.68% to $1.48/share

This marks the 63rd consecutive year 3M has increased its dividend. 3M is a dividend king that has paid dividends to its shareholders without interruption for more than 100 years.

The pace of dividend increases has definitely slowed down in recent years, and is a far cry from the ten year dividend growth rate of 10.84%.

Between 2010 and 2020, 3M managed to boost earnings from $5.63/share to $9.25share. The company is expected to earn $9.61/share in 2021.

The stock seems fairly valued at 18.62 times forward earnings and a dividend yield of 3.30%.

Avista Corporation (AVA) operates as an electric and natural gas utility company. It operates through two segments, Avista Utilities and AEL&P.

The company raised its quarterly dividend by 4.30% to 42.25 cents/share. The dividend increase marks the nineteenth consecutive year of dividend increases for this dividend achiever.

Avista has managed to increase dividends at an annualized rate of 4.94% during the past decade.

Between 2009 and 2019, Avista managed to grow earnings from $1.58/share to $2.97/share. Avista is expected to earn $1.84/share in 2020.

The stock is selling for 20.75 times forward earnings and yields 4.40%.

Activision Blizzard, Inc. (ATVI)  develops and distributes content and services on video game consoles, personal computers (PC), and mobile devices in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company operates through three segments: Activision Publishing, Inc.; Blizzard Entertainment, Inc.; and King Digital Entertainment.

The Board of Directors declared an annual dividend of $0.47 per common share, which represents a 14.63% increase from 2020. This marked the 11th year of consecutive annual dividend increases for this dividend achiever.

Over the past decade, Activision Blizzard has managed to increase dividends at an annualized rate of 10.58%.

The company managed to grow earnings from 33 cents/share in 2010 to $$2.22/share in 2020. The company is expected to earn $3.51/share in 2021.

The stock is valued at 28.95 times forward earnings and yields 0.46%.

CME Group Inc. (CME) operates contract markets for the trading of futures and options on futures contracts worldwide.

The company raised its quarterly dividend by 5.88% to 90 cents/share. This marked the 11th year of consecutive annual dividend increases for this dividend achiever.  Over the past decade, CME Group has managed to grow distributions at an annualized rate of 13.96%. 

CME Group managed to boost earnings from $2.48/share in 2009 to $5.91/share in 2019. The company is expected to earn $6.76/share in 2020.

The company’s stock is selling for 28.31 times forward earnings. CME Group yields 1.88%. This figure does not include the special dividend that is has paid regularly over the past few years – the last payment was for $2.50, which is an extra 1.30% yield.

Quest Diagnostics Incorporated (DGX) provides diagnostic testing, information, and services in the United States and internationally. 

Quest Diagnostics raised its quarterly dividend by 10.70% to 62 cents/share.  This marked the 10th consecutive annual dividend increase for this newly minted dividend achiever. Over the past decade, the company has managed to raise dividends at an annualized rate of 18.64%.

Between 2010 and 2020, Quest Diagnostics managed to increase earnings from $4.05/share to $8.94/share. The company is expected to earn $10.95/share in 2021.

The stock is selling for 11.12 times forward earnings and yields 2.03%. This looks like an interesting company that is selling at a cheap price, that also grows earnings and dividends. I would put it on my list for further research.

Corning Incorporated (GLW) engages in display technologies, optical communications, environmental technologies, specialty materials, and life sciences businesses worldwide.

The company raised its quarterly dividend by 9.09% to 24 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. Over the past decade it has managed to boost dividends at an annualized rate of 15.97%.

Corning is expecting to earn $1.96/share in 2021, which is only slightly higher than 2011's earnings of  $1.78/share.

The stock is selling for 19.09 times forward earnings and yields 2.56%.

Prudential Financial, Inc. (PRU)  provides insurance, investment management, and other financial products and services. It operates through eight segments: PGIM, Retirement, Group Insurance, Individual Annuities, Individual Life, Assurance IQ, International Businesses, and Closed Block.

The company hiked quarterly dividends by 4.50% to $1.15/share. This marked the 13rd consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has actually managed to grow dividends at an annualized rate of 14.36%.

Prudential Financial is expected to earn $11.71/share in 2021. For comparison, Prudential Financial earned $7.12/share in 2010. The company’s earnings per share are all over the place due the cyclical nature of the insurance industry. 

The stock is selling for 6.85 times forward earnings and yields 5.73%. 

RenaissanceRe Holdings Ltd. (RNR) provides reinsurance and insurance products in the United States and internationally. The company operates through Property, and Casualty and Specialty segments.

The company raised its quarterly dividend by 2.86% yo 36 cents/share. This marked the 26th consecutive annual dividend increase for this dividend champion. During the past decade, RenaissanceRe Holdings has managed to increase distributions at an annualized rate of 3.42%/year.

RenaissanceRe is expected to earn $14.69/share in 2021.

The stock is selling for 10.84 times forward earnings and yields 0.90%.

Relevant Articles:

- Busiest Week For Dividend Increases Ever

- Seven Companies Rewarding Shareholders With a Raise

- How to read my weekly dividend increase reports

- Dividends Offer an Instant Rebate on Your Purchase Price

Dividend Investing Resources I Use

I am frequently asked by readers about resources I use. While I have discussed before the resources I use to monitor my holdings, and I have compiled before information on resources before, those lists are forever changing. As I have done this for over a decade, I continuously add, test and remove tools from my list. However, I also have to keep in mind the fact that this site is read by investors with varying levels of experience. Therefore, I have decided to list a few free resources that may be helpful for any dividend investor out there.

The first resource that I have been using for several years is the list of Dividend Champions, Contenders and Challengers, that used to be maintained by Dave Fish. Dave had painstakingly updated and improved on that monster spreadsheet every month for a decade! Unfortunately, Dave passed away last month. The list is now published by someone else. 

The site also includes links to some international dividend growth stock lists focusing on UK, Canada, Swedish securities.

The second resource I have leveraged is Morningstar. I have found Morningstar to be helpful in providing a quick ten year snapshot of a company’s financials. Under the following link, you can view the ten year financials for Johnson & Johnson.

Morningstar also has some good articles on general investing. They also have some newsletters targeting various strategies, which could be helpful to some readers. They had a guy named Josh Peters, who frequently had interviews on dividend investing, but he has since left to manage a dividend mutual fund.

Another helpful resource that shows historical financial information for US and Canadian companies that goes further than the past ten years is from The Globe and Mail. Here you can find a summary of the historical financials for Johnson & Johnson going as far back as 1978

Of course, this is just the beginning for you. I would go back and review quarterly press releases on the company’s website for more information on large changes in earnings per share from year to year.
Alternatively, you can use the SEC website to find old annual and quarterly financial information going as far back as 1994.  In my research, I have leveraged SEC’s website extensively to obtain information on companies that are no longer publicly traded. Those filings have a lot of detail, management comments and footnotes for the really serious full-time investor out there. I doubt most readers would benefit from reading historical footnotes, but if that is your passion, who am I to be the obstacle to your true happiness. In the case of Johnson & Johnson, you can find annual, quarterly and other SEC filings going as far back as 1994.

I have recently started using the following resources more:

Gurufocus - It shows historical data for companies I am researching, going as far back as decades. For example, I can chart earnings per share data for Johnson & Johnson going as far back as 1991. Just select a metric from the drop down menu, and you can find things like historical revenue, number of shares outstanding etc. The site also shows a good collection of articles on investing.

I have found the following resources invaluable in identifying dividend increases:

Wall Street Journal – The Wall Street Journal offers a breadth of information on a variety of topics. I find their dividend section to be very helpful in monitoring dividend increases. However, this section sometimes is late by a few days in reporting dividend increases. In addition, when companies like PepsiCo announce their intention to do a dividend increases a few months in advance, WSJ reports it when declared many weeks later.

Seeking Alpha – Seeking Alpha is quickly becoming a one stop shop for the needs of dividend investors. You have articles, comment sections and news on important topics occurring in real-time. They also have a feed of dividend news as they happen. You can learn pretty much all notable dividend news such as dividend declarations and dividend increases by scrolling through that feed. The problem is that they just decided to charge $200/year to access the site.

Street Insider - This is another source that is paid. However it offers a real-time view of dividend announcements such as dividend increases and dividend cuts. 

I used to frequent Yahoo Finance religiously over the past twenty years. The site is helpful to me, because I can create portfolios that include various metrics such as P/E ratio, dividend yields, prices etc. This makes it super easy to navigate the list of dividend champions, and screen for quality companies using my entry criteria.

In addition, I use Yahoo Finance to obtain historical quotes and dividends. I always check the data however, in case there are issues with the data.

Unfortunately, Yahoo! Finance has been unveiling new features which in my opinion have made the site less usable.

If you like to socialize and interact with other dividend investors, there are several online communities that would get the job done.

Dividend Growth Forum
Seeking Alpha comments under articles on dividend investing
Drip Investing
Motley Fool
Morningstar Income & Dividend Investing


I also want to warn you that this is not an all inclusive list of resources for dividend growth investors. I read blogs and follow people on Twitter, who frequently mention items in real-time that may not be available in other resources above. In addition, I also use the services of my broker, which shows me expected dividend increases for companies I own.

Going through all of these resources takes time and effort. This is where the value proposition of this site comes up - I read that all for you, and then synthesize the information by adding some actionable steps.

Relevant Articles:

- How to monitor your dividend investments

- Dividend Investing Resources

- How I Manage to Monitor So Many Companies

- Dividend Aristocrats List for 2018

Long Term Investing Is a Marathon, Not a Sprint

A little over two years ago I launched a project, where I am trying to show readers how I would go about building a dividend portfolio from scratch. I invest about $1,000/month in ten dividend growth stocks, which I believe to be attractively valued. I reinvest dividends, and stick to the plan, in order to reach a stated goal and objective. This is the type of investing I have been working on for the past 10 - 15 years, and which I have discussed on this blog.

The goal of this dividend portfolio is to generate $1,000 in monthly dividend income. I want a stable dividend income, from a diversified portfolio of blue chip companies, which grows at or above the rate of inflation without any new capital added in.

The portfolio following this strategy is on track to earn $1,100 in annual dividend income or $91.64 in monthly dividend income.

Most of us invest or have invested with the stated goal of reaching the coveted dividend crossover point. Given the limits I outlined above, I believe that reaching $1,000/month was a decent goal. 

Based on my calculations, which are dependent on factors outside my control, I can expect to reach those objectives within ten to fifteen years from the launch date. Based on my experience and observations, the journey to the coveted dividend crossover point for many investors could easily take at least 10 - 15 years. This is all dependent on people's savings rates, ability to keep investment costs and taxes low, and the availability of quality companies at affordable valuations. 

I keep reminding myself that every investing journey is more of a Marathon than a Sprint. I tell this to myself as a reminder, after feeling good about some company I bought. This reminder is helpful from becoming too overconfident in my abilities, when the shares have appreciated or the dividend keeps growing and humming along.

I also remind myself that whenever I end up kicking myself for investing earlier in the month, when prices were lower later or vice versa ( not investing early in the month when prices are higher later). My research has uncovered that it doesn’t matter if you are buying at the high of the month, the low of the month or the close of the month, as long as you are investing every month. I believe that Time in the market beats timing the market.

Sometimes I get the urge to do some short-term move like buying a higher yielding security, which would increase current income, but would result in lower dividend growth going forward. The immediate gratification is great, and would immediately flow through my results. The problem is that the long-term dividend growth of the portfolio will suffer. I do not want to be in a position where I have reached my goal, but the dividend income is not growing organically.

Going for the quick short-term wins may feel good, but would lead to a performance that suffers in the long run. Just like everything else in life, the good things in life take time to achieve. Delayed gratification works wonders in the end, but at the heat of the moment it is always challenging to go through the motions, constantly improving and grinding through in the initial stages. In the initial stages, it sounds like there is not progress to be made. In reality, the initial grind sows the seeds of future success.

For my portfolio, this means not overpaying for securities, focusing on defensive earnings streams, and well covered dividends. I want earnings that grow over time, in order to generate higher dividends over time. It means having adequate diversification, but focusing more of a bottoms up approach on defensiveness, rather than focusing on diversification for the sake of diversification. It also means focusing on quality, and using a streak of annual dividend increases as a factor in initial determination of quality. It also means having adequate risk controls in place, in order to focus on prudent allocation of new capital, strategic reinvestment of dividend income and knowing when to continue building a position versus letting a position go. It means focusing on a process, investing regularly and consistently, keeping costs low, and avoiding turnover like the plague.

At the end of the day the true results from this strategy won’t be felt until several years down the road. If the foundation is built right however, it would withstand anything thrown at it. It might even become stronger and more resilient as a result of any adversity.

That's really the important part, because we want income to keep growing, even when all dividends are spent and no new capital is added to the portfolio.

Relevant Articles:

- Time in the market is more important than timing the market

- Should I buy more high yielding stocks in order to retire early?
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