A dividend increase shows a commitment to enhancing total shareholder returns through both strong business performance and returning cash to shareholders.
It is a testament to a diligent capital allocation and management framework, and it reinforces our commitment to deliver value for our shareholders. The increase in the dividend highlights the board of directors confidence in the company’s overall financial condition and its increasing earnings capacity. It usually shows that they are allocating capital with the best interest of shareholders in mind.
During the past week, there were several companies with established track records that rewarded their shareholders with a dividend increase. The companies include:
Graco Inc. (GGG) designs, manufactures, and markets systems and equipment used to move, measure, control, dispense, and spray fluid and powder materials worldwide.
The company increased quarterly dividends by 11.90% to $0.235/share. This marked the 25th year of consecutive annual dividend increases for this dividend aristocrat.
Over the past decade, the company has managed to boost dividends at an annualized rate of 10.40%.
The stock sells for 27 times forward earnings and yields 1.20%. The stock seems a little overpriced.
Merck & Co., Inc. (MRK) operates as a healthcare company worldwide. It operates through two segments, Pharmaceutical and Animal Health.
The company increased quarterly dividends by 5.80% to $0.73/share. This is the 11th year of consecutive annual dividend increases for this dividend achiever.
Over the past decade, the company has managed to boost dividends at an annualized rate of 5.50%.
The stock sells for 14.90 times forward earnings and yields 2.65%. It looks like a good value for further research.
McCormick & Company (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. It operates in two segments, Consumer and Flavor Solutions.
The company increased quarterly dividends by 5.40% to $0.39/share. This marks the 37th consecutive year that the Company has increased its quarterly dividend.
Lawrence E. Kurzius, Chairman & CEO, said "Our proven strategies are designed to drive long-term profitable growth and build value for our shareholders. We are proud to be a Dividend Aristocrat and remain committed to our long history of returning cash to shareholders. I am pleased to announce another dividend increase."
Over the past decade, the company has managed to boost dividends at an annualized rate of 9.30%.
This dividend aristocrat sells for 32.31 times forward earnings and yields 1.81%. I find it a tad overpriced today.
PNM Resources, Inc. (PNM) provides electricity and electric services in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments.
The company increased quarterly dividends by 5.80% to $0.3675/share. This is the 11th year of consecutive annual dividend increases for this dividend achiever.
Over the past decade, the company has managed to boost dividends at an annualized rate of 10.10%.
The stock sells for 18.90 times forward earnings and yields 2.85%. This looks like an interesting value for further research for me.
Raymond James Financial, Inc. (RJF) is a diversified financial services company, which provides private client group, capital markets, asset management, banking, and other services to individuals, corporations, and municipalities in the United States, Canada, and Europe.
The company increased quarterly dividends by 23.50% to $0.42/share. This is the 10th year of consecutive annual dividend increases for this dividend achiever.
Over the past decade, the company has managed to boost dividends at an annualized rate of 11.60%.
The stock sells for 12.34 times forward earnings and yields 1.41%. This looks like an interesting value for further research for me.
Universal Health Realty Income Trust (UHT) is a real estate investment trust, which invests in healthcare and human service related facilities including acute care hospitals, rehabilitation hospitals, sub-acute care facilities, medical/office buildings, free-standing emergency departments and childcare centers.
The company increased quarterly dividends by 0.70% to $0.715/share. This is the 37th year of consecutive annual dividend increases for this dividend champion.
Over the past decade, the company has managed to boost dividends at an annualized rate of 1.40%.
The stock sells for 15 times FFO and yields 5.32%. Given the slow rate of dividend growth, I view it as a hold at best.
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.
The next step is to check each business, in order to determine if it is worth further review. I would look at ten year trends in earnings per share, dividends per share, payout ratios, shares outstanding. I would try to understand what the business does, and make an assessment if the good times would continue, so that I can expect higher earnings, dividends and intrinsic values over time. I would look at the valuation relative to earnings and dividend growth, in order to determine if the business is fairly valued, if it looks promising too.