Four Companies Rewarding Thankful Shareholders With Raises

There were several companies over the past week which announced their intent to raise dividends to shareholders. It is always great to see companies that are able to extend their long streaks of annual dividend increases. I find dividend increases to be a good indicator of how company executives feel about the near-term business environment. It also shows their confidence in the company’s growth prospects. 

Factors that boards of directors consider when setting the dividend include future earnings expectations, payout ratio and dividend yield relative to those at peer companies, as well as returns available on other income-oriented investments.

This is why I find it very helpful to review dividend increases every week for established dividend growth companies. To be included in this list, a company should have managed to reward shareholders with a dividend hike for at least ten years in a row.

I review these press releases as part of my monitoring process. For the purposes of this article, I narrowed the list of dividend increases down to a more manageable level.

I focused on companies that can afford to grow dividends for at least a decade. I figured that a company which has managed to boost dividends during a recession and an expansion, or even longer, is better suited for further research by a long-term dividend growth investor like me.

In my previews, I look at the most recent dividend increase, and compare it to the ten year average. While there are some year-over-year fluctuations in dividend growth, it is helpful to see if dividend growth is decelerating.

In addition, it is helpful to review trends in earnings and dividends, alongside dividend payout ratios. This is another indicator of dividend safety.

Last, but not least, I also try to review the valuation behind every company. I prefer to buy future dividend income at attractive valuations; overpaying for future dividend income is not a good business decision.

Over the shortened Thanksgiving week, we had six companies hiking distributions to their thankful shareholders. 

The companies include:

Hormel Foods Corporation (HRL) develops, processes, and distributes various meat, nuts, and food products to retail, foodservice, deli, and commercial customers in the United States and internationally. The company operates through four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other. 

Hormel Foods increased its quarterly dividends by 5.80% to $0.275/share, marking the 57th consecutive annual dividend increase for this dividend king.

The company has managed to grow annual dividends at an annualized rate of 8.87% over the past five years.

The stock sells for 27.27 times forward earnings and yields 2.23%.

HP Inc. (HPQ) provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally. The company operates through three segments: Personal Systems, Printing, and Corporate Investments. 

HP increased quarterly dividends by 5% to $0.2625/share, marking the 13th consecutive year of annual dividend increases for this dividend achiever.

The company has managed to grow annual dividends at an annualized rate of 13.50% over the past five years.

The stock sells for 9.08 times forward earnings and yields 3.48%.

Hingham Institution for Savings (HIFS) provides various financial products and services to individuals and businesses in the United States.

The company hiked its quarterly dividend to $0.63/share. This is a 3.30% increase from the prior quarterly dividend paid in the third quarter of 2022. It is also a 14.54% increase from the dividend paid during the same time last year.

The bank has consistently increased regular cash dividends for the past 27 years. In addition to that, it has managed to pay a special dividend in December, for the past 28 years. 

The special dividend is $0.63/share for 2022, which is down from the special dividend of $0.75/share paid for 2021. Overall annual dividend income paid in 2023 is set to exceed overall annual dividend income paid in 2022 however (including special dividends).

The company has managed to grow annual dividends at an annualized rate of 12.28% over the past five years.

The stock sells for 14.34 times earnings and yields 0.88%.

The York Water Company (YORW) impounds, purifies, and distributes drinking water. It owns and operates three wastewater collection systems; five wastewater collection and treatment systems; and two reservoirs.

The company increased quarterly dividends by 4% to $0.2027/share. This dividend champion has increased dividends for 26 consecutive years.

The company has managed to grow annual dividends at an annualized rate of 4% over the past five years.

The stock sells for 33.06 times forward earnings and yields 1.78%.

Relevant Articles:

- Twelve Cash Machines Hiking Dividends Last Week

- Nine Companies Rewarding Shareholders With Raises

- 13 Dividend Growth Stocks Rewarding Owners With A Raise

- Twenty Dividend Growth Stocks Raising Dividends Last Week

Twelve Cash Machines Hiking Dividends Last Week

 I review the list of dividend increases every week, as part of my review process. I focus my attention on companies that raised dividends in the current week, and have at least a ten-year track record of annual dividend increases.

Only a company with a strong cash flow generating business can afford to grow dividends for a long period of time. Therefore, a business growing dividends for at least a decade is worth looking at for further research.

There were nine companies that fit the criteria. You can view the five companies in the table below:

Name	Ticker	New	Old	Increase	Streak	P/E	Yield	5 year Dividend Growth
Agilent Technologies	A	0.225	0.21	7.14%	12	28.82	0.62%	11.02%
Brown-Forman	BF.B	0.2055	0.1885	9.02%	39	35.66	1.18%	5.70%
C.H. Robinson	CHRW	0.61	0.55	10.91%	25	12.19	2.51%	3.23%
DTE Energy	DTE	0.9525	0.885	7.63%	14	19.03	3.32%	7.10%
Griffon	GFF	0.1	0.09	11.11%	12	9.94	1.11%	9.46%
KeyCorp	KEY	0.205	0.195	5.13%	12	8.72	4.41%	17.84%
Matthews	MATW	0.23	0.22	4.55%	29	9.87	3.07%	6.89%
MDU Resources	MDU	0.2225	0.2175	2.30%	32	16.92	2.91%	2.53%
Motorola Solutions	MSI	0.88	0.79	11.39%	13	25.77	1.34%	11.61%
Nike	NKE	0.34	0.305	11.48%	21	35.69	1.29%	12.04%
Royal Gold	RGLD	0.375	0.35	7.14%	22	31.52	1.42%	5.46%
WesBanco	WSBC	0.35	0.34	2.94%	13	13.05	3.52%	6.64%

This is a list of companies for further review. Most seem attractive as businesses, but that doesn’t mean that they should be invested in at any price, regardless of valuation.

This would likely be the last post for me this week. I will look forward to the Thanksgiving raises from Hormel Foods, McCormick, York Water Company, South Jersey Industries and Hingham Institution for Savings.

Relevant Articles:

- Nine Companies Rewarding Shareholders With Raises

- Twenty Dividend Growth Stocks Raising Dividends Last Week

- 13 Dividend Growth Stocks Rewarding Owners With A Raise

24 Dividend Aristocrats For The Next 24 Years

The S&P Dividend Aristocrats Index includes the S&P 500 companies that have managed to increase annual dividends for at least 25 consecutive years. 

It is an elite list of quality companies that I have on my watchlist. To get there a company would have to get to become a member of S&P 500, AND also raise dividends for 25 years in a row. Only a quality company with a strong business model and the ability to grow business and generate a growing amount of excess cashflow can get a spot on this list. Success is not an accident.

There are only 64 such companies in the US today. You can see the list of these companies here.

As part of my monitoring process, I narrowed the list down to 24 dividend aristocrats for further research. I applied the following criteria:

1) I reviewed the earnings histories for each dividend aristocrat over the past decade. I removed the companies that didn't grow earnings sufficiently over the past decade. I also removed companies where earnings per share has been flatlining over the past few years. Rising earnings per share are the fuel behind future dividend increases. For REITs I looked at FFO/share.

2) I reviewed the valuation for the remaining companies and removed those that have a P/E ratio above 25. This corresponds to an earnings yield of 4%, which is roughly on par with US Treasuries.

3) The next step I took was to remove companies which had very small recent dividend increases.  This included Dover, Emerson Electric, 3M, Realty Income, Stanley Black & Decker. 

4) Next, I focused on companies with a payout ratio below 65%. Dividend safety is of paramount importance. I calculate an adequate margin of safety in dividends through the dividend payout ratio.

5) I focused on companies with 5 year annualized dividend growth exceeding 3%/year. This is roughly in line with historical inflation trends. 

This leaves me with a list of 24 dividend aristocrats for research:

Name	Ticker	Consecutive Annual Dividend Increases	Forward P/E	Dividend Yield	Forward Payout Ratio	5 year Annualized Dividend Growth
AbbVie Inc.	ABBV	50	10.85	3.94%	42.75%	17.93%
Abbott Laboratories	ABT	50	20.01	1.81%	36.22%	11.60%
Archer-Daniels-Midland	ADM	47	12.34	1.70%	20.98%	4.28%
Aflac Incorporated	AFL	40	13.36	2.28%	30.46%	9.72%
A. O. Smith Corporation	AOS	29	19.42	2.00%	38.84%	17.17%
Air Products and Chemicals	APD	40	25.33	2.25%	56.99%	11.49%
Atmos Energy Corporation	ATO	38	18.56	2.67%	49.56%	8.36%
Brown & Brown, Inc.	BRO	29	25.21	0.81%	20.42%	8.63%
Church & Dwight Co., Inc.	CHD	26	25.2	1.41%	35.53%	7.30%
Cincinnati Financial Corporation	CINF	62	25.66	2.51%	64.41%	5.56%
Essex Property Trust, Inc.	ESS	28	14.87	4.09%	60.82%	5.99%
Expeditors International of Washington	EXPD	28	12.51	1.20%	15.01%	7.71%
General Dynamics Corporation	GD	31	19.99	2.07%	41.38%	9.47%
Genuine Parts Company	GPC	66	21.82	2.01%	43.86%	4.57%
W.W. Grainger, Inc.	GWW	51	20.1	1.17%	23.52%	5.76%
Illinois Tool Works Inc.	ITW	48	24.22	2.31%	55.95%	15.07%
Johnson & Johnson	JNJ	60	16.85	2.67%	44.99%	5.87%
Lowe's Companies, Inc.	LOW	60	15.47	2.01%	31.09%	17.32%
The Procter & Gamble Company	PG	66	24.28	2.59%	62.89%	4.94%
Pentair plc	PNR	46	12.81	1.80%	23.06%	3.60%
PPG Industries, Inc.	PPG	51	21.76	1.91%	41.56%	7.70%
Sysco Corporation	SYY	52	20.35	2.32%	47.21%	8.21%
Target Corporation	TGT	55	21.56	2.49%	53.68%	6.38%
T. Rowe Price Group, Inc.	TROW	36	16.85	3.60%	60.66%	14.87%

Note: Data as of 11/11/2022. Data is from sources believed to be reliable.

While the titled of the article states 24 dividend aristocrats for the next 24 years, I would not treat it as a recommendation to buy. I view it as a list of companies for further research. I encourage readers to do their own due diligence before putting money to work.

This is a sample analysis of Air Products & Chemicals (APD) for more information on how I review companies.

Relevant Articles:

- Dividend Aristocrats List for 2022

- Rising Earnings – The Source of Future Dividend Growth

- How to determine if your dividends are safe

- Margin of Safety in Dividends