I review the list of dividend increases each week. This is part of my process to review existing holdings and identify companies for further review. This is also a good exercise to review fundamental trends in earnings, revenues, dividends, payout ratios etc, and look at valuations. Quite often, the dividend increase announcement comes along with an annual or quarterly earnings release. Other times, it is a reminder to review the latest financial figures.
Regular readers know that I usually focus on the companies with a ten year track record of annual dividend increases for this review. I also like reviewing the tone of the press releases, and try to evaluate how committed management is to prudent capital allocation that allows companies to raise dividends over time. Over the past week there were several companies that announced dividend raises. I have included a brief overview of each, along with management comments about the dividend increase:
Automatic Data Processing, Inc. (ADP) provides cloud-based human capital management solutions worldwide. It operates in two segments, Employer Services and Professional Employer Organization (PEO).
Automatic Data Processing increased its quarterly dividend by 12% to $1.04/share. The increased cash dividend marks the 47th consecutive year in which ADP, a dividend aristocrat, has raised its quarterly dividend. It has increased dividends at an annualized rate of 11.80% over the past decade.
"This 12% increase in our quarterly dividend represents a strong signal of the board's confidence in ADP's prospects for this fiscal year and beyond. Our dividend is a cornerstone to our long-standing commitment to shareholder-friendly actions, and we are pleased to increase it for a 47th consecutive year," said Carlos Rodriguez.
Between 2012 and 2021, ADP managed to grow earnings from $2.82/share to $6.07/share. The company is expected to earn $6.76/share in 2022.
The stock is selling for 34.15 times forward earnings and yields 1.80%.
Atmos Energy Corporation (ATO) engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates in two segments, Distribution, and Pipeline and Storage.
Atmos Energy increased its quarterly dividend by 8.80% to 68 cents/share. This is the 38th consecutive year of annual dividend increases for this dividend aristocrat. It has increased dividends at an annualized rate of 5.70% over the past decade.
Between 2011 and 2020, Atmos managed to grow earnings from $2.27/share to $4.89/share. The company is expected to earn $5.43/share.
The stock is selling for 17.57 times forward earnings and yields 2.85%.
Lancaster Colony Corporation (LANC) manufactures and markets food products for the retail and foodservice markets in the United States. The company operates in two segments, Retail and Foodservice.
Lancaster Colony increased the quarterly dividend by 6.70% to 80 cents/share. This is the 59 straight years of regular cash dividend increases for this dividend king. It has increased dividends at an annualized rate of 8.80% over the past decade.
CEO David A. Ciesinski said, "The increased regular cash dividend reflects the company's continued strong financial position and will be the 234th consecutive quarterly cash dividend paid by the company since September 1963." He noted that the indicated annual payout for the current fiscal year ending June 30, 2022 is $3.15 per share, up from the $2.95 per share paid in fiscal 2021.
Between 2012 and 2021, Lancaster Colony managed to grow earnings from $3.51/share to $5.16/share. The company is expected to earn $5.88/share in 2022.
The stock is selling for 27.80 times forward earnings and yields 1.96%
Roper Technologies, Inc. (ROP) designs and develops software, and engineered products and solutions.
The company raised its quarterly dividend by 10.20% to 62 cents/share. This is the 29th consecutive annual dividend increase for this dividend aristocrat. It has increased dividends at an annualized rate of 18.40% over the past decade.
Between 2011 and 2020, Roper managed to grow earnings from $4.34/share to $8.98/share. The company is expected to earn $14.46/year
The stock is selling for 33.74 times forward earnings and yields 0.51%.
Assurant, Inc. (AIZ) together with its subsidiaries, provides lifestyle and housing solutions that support, protect, and connect consumer purchases in North America, Latin America, Europe, and the Asia Pacific. The company operates through three segments: Global Lifestyle, Global Housing, and Global Preneed.
Assurant raised its quarterly dividend by 3% to 68 cents/share. This marked the 17th year of consecutive annual dividend increase for this dividend achiever. It has increased dividends at an annualized rate of 15% over the past decade.
“Our disciplined capital management, driven by robust cash generation in our market-leading lifestyle and housing businesses, has always been a key differentiator for Assurant,” said Alan Colberg, CEO, Assurant. “That has allowed us flexibility to invest in our growth businesses and return capital to shareholders, including the recent completion of our three-year $1.35 billion capital return objective. Looking ahead, we are increasing the dividend 3 percent, marking the 17th consecutive dividend raise since our initial public offering and reaffirming the strength and ongoing visibility of Assurant’s future cash flow generation.”
Between 2011 to 2020, the company managed to grow earnings from $5.51/share to $6.99/share. The company is expected to earn $9.20/share in 2021.
The stock is selling for 17.41 times forward earnings and yields 1.70%.
Cabot Corporation (CBT) operates as a specialty chemicals and performance materials company. It operates through three segments: Reinforcement Materials, Performance Chemicals, and Purification Solutions.
Cabot increased its quarterly dividend by 5.70% to 37 cents/share. This was the tenth consecutive annual dividend increase for this newly minted dividend achiever. It has increased dividends at an annualized rate of 6.90% over the past decade.
“Our longstanding history of consistently paying dividends for over 50 years is a source of great pride for us, and this decision further affirms our continued commitment to provide value to our shareholders,” said Sean Keohane, President and Chief Executive Officer of Cabot Corporation. “The decision to increase the dividend demonstrates the Board’s confidence in our ability to generate strong cash flow to fund high confidence growth investments and return cash to shareholders through a competitive dividend.”
The company is expected to earn $5.42/share in 2021. For reference, Cabot earned $3.57/share in 2011, but lost $4.21/share in 2020.
The stock is selling for 10.75 times forward earnings and yields 2.54%.
MDU Resources Group, Inc. (MDU) engages in the regulated energy delivery, and construction materials and services businesses in the United States.
MDU resources raised its quarterly dividend by 2.40% to 21.75 cents/share. This is the 31st consecutive year that this dividend champion has increased its common stock dividend. It has increased dividends at an annualized rate of 2.80% over the past decade.
"We remain committed to paying dividends to our shareholders as part of the total value they receive from their investment in MDU Resources," said Dennis W. Johnson, chair of the board. "We also are proud of our long tradition of annually increasing those dividends."
MDU Resources grew earnings from $1.12/share in 2011 to $1.95/share in 2020. The company is expected to earn $2.02/share in 2021.
The stock sells for 14.33 times forward earnings and yields 3%.
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- Six Dividend Growth Stocks Rewarding Shareholders With Raises
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