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 seven companies that raised dividends include:
Altria Group, Inc. (MO) manufactures and sells smokeable and oral tobacco products in the United States.
Altria raised quarterly dividends by 4.10% to $1.02/share. This is the 55th consecutive annual dividend increase for this dividend king. Over the past decade, the company managed to raise dividends at an annualized rate of 7.75%.
Between 2014 and 2023 the company grew earnings from $2.56/share to $4.57/share.
The company is expected to earn $5.10/share in 2024.
The stock sells for 10.30 times forward earnings and yields 7.80%
Avnet, Inc. (AVT) distributes electronic component technology. The company operates through two segments, Electronic Components and Farnell.
Avnet raised quarterly dividends by 6% to $0.33/share. This is the 12th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to grow dividends at an annualized rate of 14.85%.
The company increased earnings from $4.18/share in 2015 to $5.51/share in 2024. Avnet is expected to earn $4.49/share in 2025.
The stock sells for 12.30 times forward earningds and yields 2.40%.
EastGroup Properties, Inc. (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.
Eastgroup Properties raised quarterly dividends by 10.20% to $1.40/share. This was the 13th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has managed to grow dividends at an annualized rate of 8.90%.
Between 2014 and 2023, this REIT has managed to grow FFO from $3.47/share to $7.79/share.
The REIT has a forward FFO of $8.32/share.
This REIT sells for 22.60 time forward FFO and yields 3%.
MGE Energy, Inc. (MGEE) operates as a public utility holding company primarily in the United States. It operates through Regulated Electric Utility Operations; Regulated Gas Utility Operations; Nonregulated Energy Operations; Transmission Investments; and All Other segments.
MGE Energy raised quarterly dividends by 5.30% to $0.45/share. MGE Energy has increased its dividend annually for the past 49 years and has paid cash dividends for more than 110 years. Over the past decade, the companythis dividend champion has managed to grow dividends at an annualized rate of 4.55%.
The company managed to grow earnigns from $2.32/share in 2014 to $3.25/share in 2023.
The company is expected to earn $3.69/share in 2024.
The stock sells for 23.64 times forward earnings and yields 2.05%.
Northrim BanCorp, Inc. (NRIM) operates as the bank holding company for Northrim Bank that provides commercial banking products and services to businesses and professional individuals. It operates through two segments, Community Banking and Home Mortgage Lending.
The company ekes out a 1.60% raise in its quarterly dividend to $0.62/share. This is the 16th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to grow dividends at an annualized rate of 14.10%.
The bank managed to grow earnings from $2.57/share in 2014 to $4.53/share in 2023. It is expected to earn $5.83/share in 2024.
The company sells for 11.60 times forward earnings and yields 3.60%.
Stock Yards Bancorp, Inc. (SYBT) operates as a holding company for Stock Yards Bank & Trust Company that provides various financial services for individuals, corporations, and others in the United States. It operates in two segments, Commercial Banking, and WM&T.
Stock Yards Bancorp raised quarterly dividends by 3% to $0.31/share. This is the 15th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to grow dividends at an annualized rate of 8.10%.
Between 2014 and 2023, the company managed to grow earnings per share from $1.59 to $3.69.
The company is expected to earn $3.69/share in 2024.
The stock sells for 16.30 times forward earnings and yields 2.05%.
United Bancorp, Inc. (UBCP) operates as the bank holding company for Unified Bank that provides commercial and retail banking services in Ohio.
The company raised quarterly dividends by 1.40% to $0.1775/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 dividends at an annualized rate of 8.65%.
The company grew earnings per share from $0.54 in 2014 to $1.57 in 2023.
The stock sells for 8.15 times earnings and yields 5.90%.
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