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.
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% |
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)
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: