As part of my monitoring process, I review the list of dividend increases every week. This exercise helps me monitor the progress of existing holdings. It also helps me identify companies for further research. I use this process in conjunction with my screening process.
As part of this process, I look at the companies that raised dividends over the past week. I narrow my focus on companies with an established track record of annual dividend increases. I look for companies that have managed to increase for at least a decade.
I then review the company’s most recent dividend increase, and compare it to the ten year average for perspective.
I also look at the growth in earnings, along with estimated earnings for this year. It is helpful to gain an understanding if the company has been able to grow dividends due to growth in the business. If growth is achieved through expanding the payout ratio, I am generally not interested in such a company.
Last but not least, I review valuation. This includes P/E ratios, dividend yields, but also compare that with historical dividend growth and trends in earnings per share. As you can see, I have come to the conclusion that valuation is more art than science.
During the past week, there were several companies that raised dividends. Each company has at least a ten year track record of annual dividend increases: The companies include:
Brown & Brown, Inc. (BRO) markets and sells insurance products and services in the United States, Canada, Ireland, the United Kingdom, and internationally. It operates through four segments: Retail, National Programs, Wholesale Brokerage, and Services.
The company increased quarterly dividends by 13% to $0.13/share. This is the 30th consecutive annual dividend increase for this dividend aristocrat. Over the past decade, the company has managed to grow distributions at an annualized rate of 7.70%.
Between 2013 and 2022, the company managed to grow earnings from $0.75/share to $2.38/share.
The company is expected to earn $2.65/share.
The stock sells for 25.34 times forward earnings and yields 0.68%.
Lincoln Electric Holdings, Inc. (LECO), through its subsidiaries, designs, develops, manufactures, and sells welding, cutting, and brazing products worldwide. The company operates through three segments: Americas Welding, International Welding, and The Harris Products Group
The company increased quarterly dividends by 10.90% to $0.71/share. This is the 29th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to grow distributions at an annualized rate of 12.70%.
“Our dividend increase reflects strong execution of our Higher Standard 2025 Strategy, record cash flow generation, and confidence in our ability to continue to generate superior long-term value for our shareholders,” said Christopher L. Mapes, Chairman, President and Chief Executive Officer.
Between 2013 and 2022, the company managed to grow earnings from $3.58/share to $8.14/share.
The company is expected to earn $9.02/share in 2023.
The stock sells for 19 times forward earnings and yields 1.49%.
Middlesex Water Company (MSEX) owns and operates regulated water utility and wastewater systems. It operates in two segments, Regulated and Non-Regulated.
The company increased quarterly dividends by 4% to $0.325/share. This marks the 51st consecutive year of dividend increases for this dividend king. Over the past decade, the company has managed to grow distributions at an annualized rate of 4.80%.
Between 2013 and 2022, the company managed to grow earnings from $1.04/share to $2.40/share.
The company is expected to generate $2.32/share in 2023.
The stock sells for 26.75 times forward earnings and yields 2.09%.
Pinnacle West Capital Corporation (PNW), through its subsidiary, Arizona Public Service Company, provides retail and wholesale electric services primarily in the state of Arizona.
The company increased quarterly dividends by 1.70% to $0.88/share. This is the 12th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to grow distributions at an annualized rate of 4.90%.
Between 2013 and 2022, the company managed to grow earnings from $3.69/share to $4.27/share.
The company is expected to generate $4.22/share in 2023.
The stock sells for 17.61 times forward earnings and yields 4.74%.
Prosperity Bancshares, Inc. (PB) operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers.
The company increased quarterly dividends by 2% to $0.56/share. This is the 26th year of consecutive annual dividend increases for this dividend champion. Over the past decade, the company has managed to grow distributions at an annualized rate of 10%.
Between 2013 and 2022, the company managed to grow earnings from $3.66/share to $5.73/share.
The company is expected to generate $4.90/share in 2023.
The stock sells for 10.35 times forward earnings and yields 4.34%.
1st Source Corporation (SRCE) operates as the bank holding company for 1st Source Bank that provides commercial and consumer banking services, trust and wealth advisory services, and insurance products to individual and business clients.
The company increased quarterly dividends by 6.30% to $0.34/share. This is the 36th consecutive year of annual dividend increases for this dividend champion. Over the past decade, the company has managed to grow distributions at an annualized rate of 7.70%.
Between 2013 and 2022, the company managed to grow earnings from $2.03/share to $4.84/share.
The company is expected to generate $4.84/share in 2023.
The stock sells for 9.05 times forward earnings and yields 3.10%.
Stepan Company (SCL) produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products worldwide. It operates through three segments: Surfactants, Polymers, and Specialty Products.
The company eked out a small 2.70% raise to $0.375/share. This marks the 56th consecutive year of dividend increases for this dividend king. Over the past decade, the company has managed to grow distributions at an annualized rate of 9%.
Between 2013 and 2022, the company managed to grow earnings from $3.22/share to $6.46/share.
The company is expected to generate $2.26/share in 2023.
The stock sells for 33.52 times forward earnings and yields 1.98%.
As usual, this list is not a recommendation. It just includes a group of companies that have raised dividends last week. These are the types of companies I review, before deciding if I want to put on my list for review or not.
Relevant Articles:
- Seven Dividend Growth Stocks Raising Distributions Last Week
- Five Dividend Growth Companies Raising Dividends Last Week
