I review the list of dividend increases every week, as part of my monitoring process. This exercise is one of the steps that helps me evaluate existing holdings. It's also one of the touch points that help me potentially identify companies for further research.
This review also helps show the quick ways I go about reviewing a company. That's to decide whether a company should be added to my list for further research or not.
In general, I look for:
1) A long track record of consecutive annual dividend increases. In this case, I am looking for companies that have raised dividends for at least ten years in a row.
2) A history of increasing earnings over the past decade. Rising earnings per share are the fuel behind future dividend increases.
3) Dividend growth rate versus most recent dividend increase. Dividend increases provide a signaling opportunity into the mind of company management teams. More often than not, it provides clues as to what management teams see happening in the business, before they commit to updating the dividend. They do not make this decision lightly, but rather after evaluating the economy, competition, the business environment and their assessment of how the business would likely perform.
4) I look at trends in dividend payout ratios when evaluating individual companies. It is important to also view trends in dividend payout ratios to determine dividend sustainability and sources of dividend increases.
5) Valuation. That's a tricky concept, which takes into consideration current P/E ratios, dividend growth rates, as well as current yields, payout ratios and earnings growth. Ultimately it also ends up as an exercise in trade-offs as well as opportunity costs.
Over the past week there were four companies that increased dividends and also have a ten year track record of consecutive annual dividend increases. The companies include:
Alexandria Real Estate Equities (ARE) is a REIT which invests in life-science properties in the US.
The REIT increased quarterly dividends by 2.40% to $1.30/share. This is a 5% increase over the dividend paid during the same time last year. This is the 14th year of consecutive annual dividend increases for this dividend achiever. The company has managed to grow dividends at an annualized rate of 7% over the past decade. The five year annualized dividend growth rate is at 6%.
Between 2014 and 2023, FFO/share increased from $4.42 to $7.19.
The REIT is expected to earn $9.49/share in FFO this year.
The stock sells for 12.10 times FFO and yields 4.45%.
Oil-Dri Corporation of America (ODC) develops, manufactures, and markets sorbent products in the United States and internationally. It operates in two segments, Retail and Wholesale Products Group, and Business to Business Products Group.
The company increased quarterly dividends by 6.90% to $0.31/share. This declaration marks the 21st consecutive year the Company has increased dividends. Over the past decade, this dividend achiever has managed to increase dividends at an annualized rate of 4.30%.
The company has managed to grow earnings from $1.18/share in 2014 to $4.13/share in 2023.
The stock sells for 19.40 times forward earnings and yields 1.65%.
UnitedHealth Group Incorporated (UNH) operates as a diversified health care company in the United States. The company operates through four segments: UnitedHealthcare, Optum Health, Optum Insight, and Optum Rx.
The company increased quarterly dividends by 11.70% to $2.10/share. This is the 15th consecutive annual dividend increase for this dividend achiever. Annualized dividend growth has been decelerating. The ten year annualized dividend growth is at 21.40%, while the 5 year annualized dividend growth is 16.10%.
Between 2014 and 2023 the company managed to grow earnings from $5.78/share to $24.12/share.
The company is expected to earn $27.71/share in 2024.
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, behavioral health care hospitals, specialty facilities, medical/office buildings, free-standing emergency departments and childcare centers.
The REIT increased its quarterly dividends by 0.70% to $0.73/share. This was the 39th year of consecutive annual dividend increases for this dividend champion. Over the past decade, this REIT has managed to grow dividends at an annualized rate of 1.50%.
FFO/share went up from $2.78/share in 2014 to $3.23/share in 2023.
The stock sells for 11.80 times FFO and yields 7.45%.
Relevant Articles:
- Six Companies Increasing Dividends to Shareholders Last Week
- Five Dividend Growth Stocks Rewarding Shareholders With Raises Last Week
- Fourteen Dividend Growth Stocks Raising Dividends Last Week
