As a shareholder, there are two ways to make profits from a stock.
The first way is when you sell your stock for a gain, after it has increased above your purchase price. The downside is that once you sell your stock, you will not be able to participate in any further upside. If you hold patiently however, you will experience a surge in net worth if the business succeeds.
The second way is when a stock you own distributes a dividend. A company typically distributes a dividend after carefully evaluating its business needs. If a business does not find enough good opportunities to deploy profits at high rates of return, then the rational thing to do is to distribute it to shareholders. Some businesses are able to both grow earnings and dividends.
There are over 450 businesses in the US, which have managed to increase dividends to shareholders for at least a decade. I try to monitor most of them, in an effort to review existing holdings, and uncover companies for further research.
My monitoring process involves different steps. I regularly screen the investable universe, using my criteria, before reviewing promising candidates. I also review some major news like filings and dividend increases as well for a narrower view of the universe.
For example, last week, there were 53 US companies that raised dividends. Of those companies, only 13 had managed to grow dividends for at least 10 years in a row. You can view this list below:
|
Ticker |
Name |
New Quarterly Rate |
Dividend Increase |
Consecutive Years of Annual
Dividend Increases |
5 year Dividend Growth |
10 year Dividend Growth |
Forward P/E |
Dividend Yield |
|
AGM |
Federal Agricultural Mortgage
Corp. |
0.88 |
10% |
10 |
37.97% |
31.95% |
8.83 |
4.08% |
|
ALL |
Allstate Corp. |
0.81 |
50% |
11 |
12.43% |
10.24% |
8.43 |
3.04% |
|
BBY |
Best Buy Corp. |
0.7 |
27.27% |
18 |
18.50% |
14.20% |
13.52 |
2.79% |
|
CNS |
Cohen & Steers Inc. |
0.45 |
15.38% |
12 |
9.30% |
14.58% |
19.81 |
2.80% |
|
DLR |
Digital Realty Trust |
1.16 |
3.57% |
17 |
5.48% |
8.63% |
20.93 |
3.44% |
|
FISI |
Financial Institutions Inc. |
0.27 |
3.85% |
11 |
5.18% |
9.92% |
9.33 |
3.94% |
|
HD |
Home Depot Inc. |
1.65 |
10% |
12 |
20.52% |
19.96% |
20.38 |
2.55% |
|
LMAT |
LeMaitre Vascular Inc. |
0.11 |
15.79% |
11 |
18.89% |
18.60% |
46.16 |
0.86% |
|
MGRC |
McGrath Rentcorp |
0.435 |
3.57% |
29 |
10.44% |
6.21% |
18.61 |
2.24% |
|
ORI |
Old Republic International |
0.22 |
4.76% |
40 |
2.57% |
1.99% |
9.55 |
4.55% |
|
QNBC |
QNB Corp. |
0.35 |
2.94% |
11 |
3.23% |
3.54% |
9.8 |
4.18% |
|
SLGN |
Silgan Holdings Inc. |
0.14 |
16.70% |
18 |
8.45% |
8.62% |
11.12 |
1.49% |
|
STLD |
Steel Dynamics Inc. |
0.26 |
4% |
11 |
13.42% |
12.68% |
9.48 |
2.50% |
As part of my review, I look at the size of the increase and compare it to the five and ten year average. I also review the trends in earnings per share, in order to determine if the track record of dividend growth was from a solid base.
I like reviewing trends in payout ratios, in order to determine dividend safety. This of course is best done in conjunction with reviewing of earnings per share.
Last but not least, I also review valuation, in order to determine if a company is worth reviewing today for a potential acquisition.
You may want to review a sample dividend stock analysis of Home Depot (HD), as an illustration of the reviews I make on dividend growth stocks.
Relevant Articles:
- Fifteen Companies Rewarding Shareholders With a Raise
- Fourteen Dividend Growth Stocks Raising Dividends For Shareholders
- Eight Dividend Paying Companies Growing Dividends Like Clockwork