I review the list of dividend increases every week, as part of my monitoring process. This exercise helps in monitoring existing positions and potentially identifying companies for further research.
This exercise also provides a good overview of the types of reviews I make to determine if I should place a company on my list for further reviews.
In general, I require a long track record of annual dividend increases first. A long track record of annual dividend increases does not happen by accident. It is an indication of quality, competitive advantage and the ability to generate excess cashflows, in order to be able to shower shareholders with more cash for over a decade.
I also require growth in earnings per share over the past decade. Rising earnings per share provide the fuel behind future dividend growth. All of this can potentially drive growth in intrinsic value as well.
I also review trends in dividends per share and the dividend payout ratio as well. In terms of dividend growth, I check to see for consistency. I also review the latest dividend increase in comparison to the 5 and 10 year history.
I also want to see dividend increases that are fueled by earnings per share growth, rather than an expansion of the dividend payout ratio. In general, the lower the payout ratio the better. In addition, I want to see a dividend payout ratio that is in a range.
Last but not least, I review current valuation. This means looking at P/E ratio, along with historical dividend growth, while also taking into account how cyclical the business is.
This sounds like a lot of work. But after doing this for a while, it becomes second nature.
Over the past week, there were five dividend growth companies which raised dividends to shareholders. The companies include:
Bar Harbor Bankshares (BHB) operates as the holding company for Bar Harbor Bank & Trust that provides banking and nonbanking products and services primarily to consumers and businesses.
The company raised quarterly dividends by 7.10% to $0.30/share. This is the 21st consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to grow dividends at an annualized rate of 7.07%.
The company managed to grow earnings from $1.65/share in 2014 to $2.96/share in 2023. It is expected to earn $2.75/share in 2024.
The stock sells for 9.27 times forward earnings and yields 4.71%.
Donegal Group Inc.(DGICA) (DGICB), an insurance holding company, provides property and casualty insurance to businesses and individuals. It operates through three segments: Investment Function, Personal Lines of Insurance, and Commercial Lines of Insurance.
The company increased the dividend on it's A shares by 1.50% to $0.1725/share. It increased the dividend on it's B shares by 1.60% to $0.155/share.
This dividend achiever has increased dividends to shareholders for 22 consecutive years. It has a 10 year annualized dividend growth rate of 2.90%.
Earnings per share have gone from $0.55/share in 2014 to $0.13/share in 2023.
The A shares yield 4.80% today, while the B shares yield 4.90%.
Johnson & Johnson (JNJ) researches, develops, manufactures, and sells various products in the healthcare field worldwide.
Johnson & Johnson increased the quarterly dividend by 4.20% to $1.24/share. This is the 62nd year of consecutive annual dividend increases for this dividend king. Over the past decade, the company has managed to grow dividends at an annualized rate of 6.10%.
Between 2014 and 2023, the company managed to grow earnings from $5.80/share to $13.88/share.
The company is expected to earn $10.65/share in 2024.
The stock sells for 13.89 times forward earnings and yields 3.35%.
Sonoco Products Company (SON) designs, develops, manufactures, and sells various engineered and sustainable packaging products in North and South America, Europe, Australia, and Asia.
The company increased quarterly dividends by 1.96% to $0.52/share. This is the 41st consecutive year this dividend champion has increased its annualized dividend.
The company has managed to raise dividends at an annualized rate of 5.10% over the past decade.
Sonoco is expected to earn $5.18/share in 2024. The company managed to grow earnings from $2.21/share in 2014 to $4.83/share in 2023.
The stock sells for 11 times forward earnings and yields 3.65%.
Star Group, L.P. (SGU) provides home heating oil and propane products and services to residential and commercial customers in the United States.
The company increased quarterly distributions by 6.20% to $0.1725/unit. This is the 12th year of consecutive annual distribution increases for this dividend achiever. Over the past decade, this entity has managed increase distributions at an annualized rate of 7%.
The stock sells for 12.83 times earnings and yields 6.70%.
The Travelers Companies, Inc. (TRV) provides a range of commercial and personal property, and casualty insurance products and services to businesses, government units, associations, and individuals in the United States and internationally. The company operates through three segments: Business Insurance, Bond & Specialty Insurance, and Personal Insurance.
The company increased its quarterly dividend by 5% to $1.05/share. Over the past decade, Travelers has managed to grow dividends at an annualized rate of 7.20%. This is the 20th consecutive annual dividend increase for this dividend achiever.
Between 2014 and 2023, the company grew earnings from $10.82/share to $12.93/share.
The company is expected to earn $18.30/share in 2024.
The stock sells for 11.70 times forward earnings and yields 1.96%.
Winmark Corporation (WINA) is a resale company operates as a franchisor for small business in the United States and Canada.
The company raised quarterly dividends by 12.50% to $0.90/share. This is the 14th consecutive annual dividend increase for this dividend achiever.
The company managed to grow dividends at an annualized rate of 31.95% over the past decade.
Between 2014 and 2023, the company managed to grow earnings from $3.96/share to $11.55/share.
The company is expected to earn $10.95/share in 2024.
The stock sells for 35 times forward earnings and yields 0.93%.
Value Line, Inc. (VALU) produces and sells investment periodicals and related publications.
The company announced it's tenth consecutive increase in its dividend, as it raised quarterly dividends by 7.10% to $0.30/share.
Between 2014 and 2023 the company grew earnings from $0.69/share to $1.91/share.
The stock sells for 19.30 times earnings and yields 3.21%.
Relevant Articles:
- Five Dividend Growth Companies Raising Dividends Last Week