Thirteen Dividend Growth Stocks Rewarding Shareholders With A Raise

One of the best books written on Dividend Growth Investing is called " The Single Best Investment: Creating Wealth With Dividend Growth".  The book 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 of the study 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.

As dividend growth investors, we are looking for the companies that grow dividends because their business is thriving. One of my monitoring exercises is to review the list of dividend increases every week, and narrow it down to companies that are at least dividend achievers.

There were thirteen 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	New Dividend	Old Dividend	Increase	Years Dividend Increases	P/E	Dividend Yield	10 year Annualized Dividend Growth
Assured Guaranty Ltd.	AGO	0.25	0.22	13.64%	11	13.37	1.57%	17.20%
Albemarle Corporation	ALB	0.395	0.39	1.28%	28	30.43	0.82%	9.37%
Cogent Communications	CCOI	0.855	0.83	3.01%	10	69.93	5.34%	15.98%
Cohen & Steers	CNS	0.55	0.45	22.22%	13	18.67	2.72%	11.61%
CTO Realty Growth	CTO	1.08	1	8.00%	10	13.73	6.93%	58.49%
Essex Property Trust	ESS	2.2	2.09	5.26%	28	22.68	2.71%	7.23%
Eaton Corporation	ETN	0.81	0.76	6.58%	13	20.45	2.10%	8.38%
LeMaitre Vascular	LMAT	0.125	0.11	13.64%	11	35.74	1.08%	22.05%
Old Republic International	ORI	0.23	0.22	4.55%	41	9.81	3.47%	2.30%
Sempra Energy	SRE	1.145	1.1	4.09%	18	16.7	3.24%	9.03%
Silgan Holdings	SLGN	0.16	0.14	14.29%	18	10.95	1.52%	9.79%
Southwest Gas	SWX	0.62	0.59	5.08%	16	17.42	3.59%	8.36%
Xcel Energy Inc.	XEL	0.4875	0.4575	6.56%	19	21.15	2.90%	5.81%

I should also note that the board of directors of Chubb (CB) stated that they would recommend a 3.75% dividend increase to $0.83/share in the quarterly dividend of this dividend aristocrat. It would be the 29th consecutive year of annual dividend increases. It wasn't actually approved yet, hence why I didn't include it in the table above. I doubt it would not be approved though.

I wanted to reiterate that this list is not a recommendation to buy or sell anything. It is simply a list of dividend increases from the past week, narrowed down to the companies that have managed to grow annual dividends for at least a decade. If I were to review each company however, I would run it through my checklist, one company at a time.

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) Adequate P/E ratio ( I used to require P/E below 20, but not any more)

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:

- 21 Dividend Growth Stocks Offering Positive Feedback to Shareholders

- 15 Companies Showering Shareholders With More Cash

- Nineteen Dividend Growth Stocks For Further Research

- Busiest Week For Dividend Increases Ever