Dividend growth investing is a simple but effective strategy. It is widely misunderstood too.
As a Dividend Growth Investor, I look for companies with a long history of annual dividend increases.
A long streak of consecutive annual dividend increases is typically an indication of a business with strong competitive advantages, good growth prospects, high returns on invested capital, and strong and recurring cash flows. A long streak of annual dividend increases is typical for companies with wide moats, which have tended to grow earnings per share for decades. As a long-term dividend investor, my goal is to identify such a business early in the game, buy it at an attractive price, and ride the economic trend for as long as possible. In other words, I am after companies that can grow earnings and dividends over time. I buy and hold forever, or in my case, for as long as they do not cut dividends.
Before doing so of course, I always review the company, its fundamentals and check the qualitative aspect of the business as well. Once I initiate a position, I also monitor the company for any major developments. But as part of my risk management process, I keep portfolio weights in check, and I very rarely would sell an existing position. I may not add to it if it stops meeting my entry criteria, which is guaranteeing a low allocation, as I build positions slowly and over time.
One of my favorite monitoring exercises is to check the list of dividend increases every week. That way, I get to see if my existing investments continue raising dividends, and if my thesis is still working. I also get to identify companies for future research through this exercise. In addition, I get to read the press releases and gauge managements sentiment towards the near-term prospects of the business.
My weekly review focuses on companies that have increased distributions for at least ten years in a row. During the past week, the eight companies that raised dividends include:
Altria Group, Inc. (MO) manufactures and sells smokeable and oral tobacco products in the United States.
The company raised quarterly dividends by 4.30% to $0.98/share. This is the 54th consecutive annual dividend increase for this dividend king.
Over the past decade, the company has managed to increase dividends at an annualized rate of 8.10%.
Between 2013 and 2022 the company managed to grow earnings from $2.26/share to $3.19/share.
Altria is expected to earn $5/share in 2023.
The stock sells for 8.74 times forward earnings and yields 9.10%.
Atrion Corporation (ATRI) develops, manufactures, and sells products for fluid delivery, cardiovascular, and ophthalmology applications in the United States, Canada, Europe, and internationally.
The company increased quarterly dividends by 2.30% to $2.20/share. This is the 21st year of consecutive annual dividend increases for this dividend achiever.
Over the past decade, the company has managed to increase dividends at an annualized rate of 14.60%.
The company managed to grow earnings per share from $13.22 in 2013 to $19.59 in 2022.
The company is expected to earn $15.37/share in 2023.
The stock sells for 30.24 times forward earnings and yields 1.89%.
BancFirst Corporation (BANF) operates as the bank holding company for BancFirst that provides a range of commercial banking services to retail customers, and small to medium-sized businesses. The company operates through Metropolitan Banks, Community Banks, Pegasus, Worthington, and Other Financial Services segments.
The company increased quarterly dividends by 7.50% to $0.43/share. This is the 30th year of consecutive annual dividend increases for this dividend champion.
Over the past decade, the company has managed to increase dividends at an annualized rate of 10.40%.
Between 2013 and 2022, the company managed to grow earnings from $1.78/share to $5.89/share.
The company is expected to earn $6.27/share in 2023.
The stock sells for 15.25 times forward earnings and yields 1.67%.
EastGroup Properties, Inc. (NYSE: EGP) is a self-administered equity real estate investment trust focused on the development, acquisition and operation of industrial properties in major Sunbelt markets throughout the United States with an emphasis in the states of Florida, Texas, Arizona, California and North Carolina.
The company increased quarterly dividends by 1.60% to $1.27/share. This is the 12th year of consecutive annual dividend increases for this dividend achiever.
Over the past decade, the company has managed to increase dividends at an annualized rate of 8%.
The REIT increased FFO/share from $3.23 in 2013 to $7 in 2022.
The REIT is expected to generate $7.65/share in FFO in 2023.
The stock sells for 23.25 times FFO and yields 2.81%.
First American Financial Corporation (FAF) provides financial services. It operates through Title Insurance and Services, and Specialty Insurance segments.
The company raised quarterly dividends by 1.90% to $0.53/share. This is the 13th year of consecutive annual dividend increases for this dividend achiever.
Over the past 5 years, the company has managed to increase dividends at an annualized rate of 7.40%.
The company managed to grow earnings per share from $1.74 in 2013 to $2.46 in 2022.
The company is expected to earn $4.40/share in 2023.
The stock sells for 13.62 times forward earnings and yields 3.48%.
MGE Energy, Inc. (MGEE) operates as a public utility holding company primarily in Wisconsin. It operates through Regulated Electric Utility Operations; Regulated Gas Utility Operations; Nonregulated Energy Operations; Transmission Investments; and All Other segments.
The company hiked quarterly dividends by 4.90% to $0.4275/share. MGE Energy has increased its dividend annually for the past 48 years and has paid cash dividends for more than 110 years.
Over the past decade, the company has managed to increase dividends at an annualized rate of 4.40%.
This dividend champion managed to grow earnings per share from $2.16 in 2013 to $3.07 in 2022.
The company is expected to earn $3.42/share in 2023.
The stock sells for 21.73 times forward earnings and yields 2.29%.
Peoples Ltd. (PPLL) operates as the holding company for PS Bank that provides various financial services to individuals, small businesses, and corporate customers in Pennsylvania, the United States.
The company increased quarterly dividends by 3.30% to $0.62/share. The cash dividend represents a 12.81% increase over the cash dividend paid in the third quarter 2022. This is the 11th year of consecutive annual dividend increases for this dividend contender.
The company managed to grow earnings per share from $3.27 in 2013 to $8.97 in 2022.
The stock sells at 7.83 times earnings and has a dividend yield of 3.53%.
United Bancorp, Inc. (UBCP) operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio.
The company increased quarterly dividends by 1.50% to $0.1675/share. This payment is also 6.3% over the regular cash dividend paid in the third quarter of the previous year. That's the tenth consecutive annual dividend increase for this newly minted dividend achiever.
Over the past decade, the company has managed to increase dividends at an annualized rate of 11.20%.
The company managed to grow earnings per share from $0.53 in 2013 to $1.51 in 2022.
The company is expected to earn $1.44/share in 2023.
The stock sells for 8.29 times forward earnings and yields 5.40%
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