Last week was one of the busiest for dividend increases since the first quarter. There were 54 companies that announced a dividend increase. If we are in a recession, apparently corporate America has not gotten the memo yet.
I review the list of dividend increases as part of my monitoring process. It helps me monitor existing positions, and identify companies for further research.
I usually focus on the companies that have managed to increase annual dividends for at least ten consecutive years. The companies that have raised dividends over the past week, and also have managed to increase dividends for at least ten years in a row are listed below. There were 20 such companies:
|
Name |
Ticker |
New |
Old |
Increase |
Years Dividend Increases |
5 year dividend growth |
Forward P/E |
Dividend Yield |
|
AbbVie |
ABBV |
1.48 |
1.41 |
4.96% |
50 |
17.93% |
10.65 |
4.01% |
|
American Electric Power |
AEP |
0.83 |
0.78 |
6.41% |
13 |
5.74% |
17.81 |
3.71% |
|
Amphenol |
APH |
0.21 |
0.2 |
5.00% |
11 |
15.68% |
25.74 |
1.10% |
|
Associated Banc-Corp |
ASB |
0.21 |
0.2 |
5.00% |
11 |
11.05% |
10.6 |
3.46% |
|
Black Hills |
BKH |
0.625 |
0.595 |
5.04% |
52 |
6.39% |
16.13 |
3.80% |
|
First Interstate Banc |
FIBK |
0.47 |
0.41 |
14.63% |
13 |
13.26% |
14.53 |
4.17% |
|
Gorman-Rupp |
GRC |
0.175 |
0.17 |
2.94% |
50 |
8.11% |
28.03 |
2.55% |
|
Getty Realty |
GTY |
0.43 |
0.41 |
4.88% |
11 |
9.30% |
13.67 |
5.46% |
|
Hartford Financial |
HIG |
0.425 |
0.385 |
10.39% |
13 |
10.36% |
10.12 |
2.36% |
|
Imperial Oil |
IMO |
0.44 |
0.34 |
29.41% |
28 |
16.38% |
6.6 |
1.87% |
|
Middlesex Water |
MSEX |
0.3125 |
0.29 |
7.76% |
50 |
6.52% |
35.69 |
1.39% |
|
Northeast Indiana Bancorp |
NIDB |
0.32 |
0.3 |
6.67% |
28 |
6.05% |
7.61 |
3.08% |
|
People's |
PPLL |
0.6 |
0.58 |
3.45% |
11 |
9.32% |
7.62 |
3.39% |
|
Rockwell Automation |
ROK |
1.18 |
1.12 |
5.36% |
13 |
8.09% |
27.21 |
1.84% |
|
Standex |
SXI |
0.28 |
0.26 |
7.69% |
12 |
11.06% |
14.56 |
1.15% |
|
Tompkins Financial |
TMP |
0.6 |
0.57 |
5.26% |
36 |
4.35% |
13.6 |
2.89% |
|
UMB Financial |
UMBF |
0.38 |
0.37 |
2.70% |
30 |
6.30% |
9.7 |
1.89% |
|
Visa |
V |
0.45 |
0.375 |
20.00% |
14 |
17.94% |
25.21 |
0.86% |
|
West Pharmaceutical |
WST |
0.19 |
0.18 |
5.56% |
30 |
7.09% |
27.59 |
0.34% |
|
Exxon Mobil |
XOM |
0.91 |
0.88 |
3.41% |
40 |
3.21% |
8.15 |
3.18% |
The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.
This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.
Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.
Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.
