Seven Dividend Growth Companies Increase Dividends Last Week

I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me review existing holdings for dividend increases and financial updates. It also helps me review potential candidates for further research.

This exercise also helps me review the pulse of dividend markets in the US, and also keeps me in fighting shape. When I review a lot of companies, and their fundamentals, I feed myself more data to potentially uncover more patterns and setup for further review down the road. All knowledge compounds over time, just like compound interest after all.

I like to look at several items, when doing those quick reviews. I like to look at the most recent dividend increase, and then compare it to the 5 or 10 year average of dividend growth. In general, I like consistency, but note if there is any deceleration of growth, which is a potential red flag.

I also like to review growth in earnings per share over the past decade, because rising EPS is the fuel behind future dividend increases. I do not want to see generally flat earnings per share, because this shows me that future dividend growth will be limited. 

Last but not least, I also like to review valuation. It's helpful to look at P/E ratios alongside past growth, in order to get a good gauge as to whether a company is fairly valued or expensive. That's one step that has to be done at the end, only after one has narrowed any list down to promising candidates based on fundamentals. 

Over the past decade, there were 23 companies that raised dividends. Only seven of them have managed to raise dividends for at least a decade. The companeis include:

Farmers & Merchants Bancorp (FMCB) operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals. 

The company raised its semi-annual dividend by 5.70% to $9.30/share. Farmers & Merchants Bancorp is a dividend king which has increased dividends for 59 consecutive years. The company has managed to grow dividend at a rate of 3.60%/year over the past 5 years.

The company grew earnings from $32.64/share in 2014 to $116/61/share in 2023.

The stock sells for 8.40 times earnings and yields 1.90%

First National Corporation (FXNC) operates as the bank holding company for First Bank that provides various commercial banking services to small and medium-sized businesses, individuals, estates, local governmental entities, and non-profit organizations in Virginia.

The company raised quarterly dividends by 3.30% to $0.155/share.This is the 10th consecutive annual dividend increase for this newly minted dividend achiever. The company has managed to grow dividends at an annualized rate of 24.60% over the past five years. 

Between 2014 and 2023, the company's earnings went from $1.32/share to $1.54/share. The company is expected to earn $0.69/share in 2024.

The stock sells for 34 times forward earnings and yields 2.60%.  

Griffon Corporation (GFF) provides consumer and professional, and home and building products in the United States, Europe, Canada, Australia, and internationally. The company operates through two segments: Home and Building Products, and Consumer and Professional Products. 

The company raised quarterly dividends by 20% to $0.18/share. This is the 13th consecutive annual dividend increase for this dividend achiever. The company has managed to grow dividends at an annualized rate of 12.10% over the past five years.

Between 2015 and 2024, the company's earnings went from $0.77/share to $4.41/share. The company is expected to earn $5.55/share in 2025.

The stock sells for 13.30 times forward earnings and yields 1%

Motorola Solutions, Inc. (MSI) provides public safety and enterprise security solutions in the United States, the United Kingdom, Canada, and internationally. The company operates in two segments, Products and Systems Integration, and Software and Services.

The company raised its quarterly dividends by 11% to $1.09/share. This marks the 13th consecutive year of annual dividend increases for this dividend achiever. The company has managed to grow dividends at an annualized rate of 11.10% over the past five years.

Between 2014 and 2023, the company's earnings went from $5.29/share to $10.23/share. The company is expected to earn $13.68/share in 2024.

The stock sells for 35.73 times forward earnings and yields 0.90%.  

NIKE, Inc. (NKE) engages in the design, development, marketing, and sale of athletic footwear, apparel, equipment, accessories, and services worldwide. 

The company raised quarterly dividends by 8.10% to $0.40/share. This marks the 23rd consecutive year of annual dividend increases for this dividend achiever. The company has managed to grow dividends at an annualized rate of 11.20% over the past five years.

Between 2015 and 2024, the company's earnings went from $1.90/share to $3.76/share. The company is expected to earn $2.81/share in 2025.

The stock sells for 27 times forward earnings and yields 2.10%.  

Spire Inc. (SR) engages in the purchase, retail distribution, and sale of natural gas to residential, commercial, industrial, and other end-users of natural gas in the United States. The company operates through three segments: Gas Utility, Gas Marketing, and Midstream.

The company increased quarterly dividends by 4% to $0.785/share. 2025 will be the 22nd consecutive year of increasing the annual dividend for this dividend achiever.  The company has managed to grow dividends at an annualized rate of 5.10% over the past five years.

Between 2014 and 2023, the company's earnings went from $2.35/share to $3.86/share. The company is expected to earn $4.20/share in 2025.

The stock sells for 15.95 times forward earnings and yields 4.70%.  

Tyson Foods, Inc. (TSN) operates as a food company worldwide. It operates through four segments: Beef, Pork, Chicken, and Prepared Foods. 

The company raised quarterly dividends by 2% to $0.50/share. This is the 13th consecutive annual dividend increase for this dividend achiever. The company has managed to grow dividends at an annualized rate of 8.60% over the past five years.

Between 2015 and 2024, Tyson Foods earnings went from $3.01/share to $2.26/share. The company is expected to earn $3.47/share in 2025.

The stock sells for 18.50 times forward earnings and yields 3.10%

The Quality Compounder Boom

As a Dividend Growth Investor, my investable universe is the group of companies that have managed to increase annual dividends for at least 10 years in a row.

Once I have my investable universe of 500 or so companies, I spend some time narrowing the list down by:

1. Requiring growth in earnings per share over the past decade

2. Focusing on companies that have more than a token dividend growth

3. Focusing on companies with competitive advantages and recurring revenue streams

For a while now, I've scoured my lists, and ended up with a few companies for research, that seem like great businesses to own. These companies have every characteristic that would qualify them as a quality business. They have the moats, the competitive advantages, the dominant position in their niche, the growth in earnings per share, the high return on investment, etc etc

Unfortunately, once I get to the valuation part, I end up having to put them on hold and not buy them.

That's because a lot of these companies seem wildly overvalued.

In the short run, the market is a voting machine. 

In the long run, it is a weighing maching

- Warren Buffett

As an investor, your returns are a function of:

1. Dividends

2. Earnings per share growth

3. Changes in valuations

Over the long run, earnings growth and reinvested dividends account for over 99% of total returns. Changes in valuation account for pretty much zero of historical total returns on equities.

In the short-run however, changes in valuation  affect expected returns.

For example, let's revisit the lessons we learned from this post Microsoft During the lost decade

Microsoft delivered poor returns between 1999 and 2012, despite the business growing FCF/share from $1.15 to $3.45. The reason was because the stock was overvaluaed as it was selling at 51 times FCF/share in 1999. By 2012 the valuation went to another extreme, when the stock was selling for 8 times FCF/share.

Investors who bought Microsoft $MSFT stock $58.38/share at the end of 1999 were sitting at an unrealized loss by the end of 2012, when the stock declined by 54% to $26.71/share.

Fast forward to 2024, Microsoft now generates $9.97/share in FCF (Free Cash Flow). However, it sells for 42 times FCF/share. The stock has gone up from $26.71 in 2012 to $426 today.

You can see that the valuation can expand and contract in the short run, which can cause share prices to move much more than fundamentals. Even if fundamentals are pretty growing at a nice step forward, like a ladder. 

I am all for investing in quality companies, that will compound earnings, dividends, intrinsic value over time. However, I am not a fan of overpaying wildly for even the best business in the world.

When I overpay, I am essentially paying for all the growth in the immediate future (e.g. next 5- 10 years).. This leaves me with little in forward expected returns for quite some time.  Only if I could hold for 20 years or so would I be likely to generate a decent amount in returns. Provided of course that those businesses would indeed be around in 20 years, still have strong competitive positions and would thrive in the process as well.

The downside is that when I overpay, I have a lower margin of safety. When a business is priced for perfection, even the smallest dent in the overconfidence can produce negative spiraling effects.

Historically, we've had situations in the US when good businesses were sold at highly inflated valuations. That happened with the Nifty Fifty in 1972 for example. You may enjoy this article refresher on the topic: The Nifty Fifty: Valuing Growth Stocks

Back in the early 1970s, there was a group of companies which are referred to as “The Nifty Fifty” in the US. These were companies which were expected to grow earnings forever, by taking advantage of trends in demographics and the economy of the future decades. The stocks were often described as "one-decision", as they were viewed as extremely stable, even over long periods of time.

The most common characteristic by the constituents were solid earnings growth for which these stocks were assigned extraordinary high price–earnings ratios. 

A P/E of forty times earnings, far above the long-term market average, was common for these one-directional glamor stocks.

By 1973 investors lost interest in the stock market, and by the bottom in 1974 lots of the Nifty-Fifty stocks were down by 70 – 80 – 90% from their highs just a couple of years earlier. Many of the companies did not deliver price increases for a while, with the majority of their returns coming from dividends in the first decade since the top. Some of these Nifty-Fifty companies ended up failing outright, while a few others ended up becoming successful beyond their original investors dreams.

In reality, an investor who bought a portfolio of these companies and held through thick and thin for the next 30 years did well in the end.  The truth however is that few investors probably held on through the carnage long enough to not only realize a profit, but also come out ahead as well.

Another historical situation where we had wildly excessive valuations occured during the dot-com bubble in 1999 - 2000. There were a lot of promising technology companies, which were destined to rule the world. Those companies sold at high valuations, because investors were overpaying for expected growth that way many years into the future. 

Investors in those companies lost money in the first decade. Investors did make money in Oracle and Qualcomm, provided they were willing to sit patiently through gut-wrenching 80% declines, and holding for 15 - 20 years before breaking event.

You may like my review of how Cisco Systems (CSCO) investors from the dot-com bubble did over the past 20 - 25 years here: Cisco Systems (CSCO) : Lessons from the Dot-Com Bubble

You may also enjoy my article on how the investors in the companies in Nasdaq 100 from 2000 did over the next 20 years: Investing in Nasdaq 100 in 2000

Right now we have several companies in the dividend growth investing universe, which have been selling at very high valuations. Those valuations have also been increasing as well.

While the businesses themselves seem to be doing well, and would likely continue to do so, investors today are overpaying for the stability and growth of the future. This could impact near-term returns for them over the next 5 - 10years, mostly because these securities are priced based on growth that is not going to occur until 10 years from. These securities are thus priced for perfection.

Any hiccup along the line, could result in a double whammy of lower valuation ratios and P/E shrinkage.

I will illustrate this example of the risks and possible paths using a favorite company - Costco.

For example, Costco sells for 52.50 times forward earnings today. The stock is at $933/share. The company is expected to earn $17.80/share in 2025. It yields 0.50%.

The company earned $5.41/share in 2015 for reference. The stock sold at around $140/share back then. That was equivalent to almost 26 times earnings.

The company has an amazing business model, and has managed to grow Earnings Per Share consistently in an upwards fashion for years:

If the valuation had stayed at 26 times earnings, Costco stock would be at $460 today. The increase in the valuation from 26 to 52 times earnings resulted in the resulting growth in the share price.

Analysts expect Costco to grow earnings per share to $40/share in 2034. Let's assume for a moment that this happens indeed, due to strong membership growth, recurring earnings streams etc. This means that Costco is selling for 23 times forward earnings for 2034.

If Costco stays at the same P/E ratio of 52 in 2034, the stock would be at $2,100 in 2034. You'd more than double your money, plus you'd get the added benefit of a percent or two of dividend reinvestment over the course of the next decade. I highly doubt the P/E ratio would be at 52 in 2034 however. I believe the major risk in investing today in Costco is not that the business fails, but that the business valuation is revalued to a lower P/E ratio. Not sure what would trigger that revaluation, but I highly doubt this could go on forever.

However, if the stock reverts back to the P/E ratio of 26 from 10 years ago, the price of Costco stock would be $1,040 in 2034. This is roughly a 10% total gain in the share price, over a period of ten years. While dividends would likely grow, and there would be special dividends in place, that could probably account for most of any returns generated over the next decade. 

With the annual dividend at $4.64/share today, a doubling in earnings per share would translate into an annual dividend of roughly $10/share in 2034.

It is very much possible that even if growth materializes, that the P/E ratio shrinks to a level below 26. In that case, investors in Costco who overpay for the stock today, would suffer losses, even if they hold for a decade. Any profits they make would be from the growth in the business in years after 2034. That's really long-term investing. Remember, the goal is to make a profit.

It is also possible however that earnings expectations for Costco today are not enthusiastic enough. If Costco actually earns say $80/share in 2034 ( I pulled this number out of a hat to illustrate a principle I am teaching here). In that case, assuming a P/E of 26 in 2024, that stock would likely sell for $2,080/share. That would mean that anyone buying today would double their money. Plus, you'd get the added bonus of reinvesting dividends, which would likely grow from $4.64/share today to perhaps $20/share by 2034 (at the optimistic future EPS figure of $80 in 2034).

Perhaps, I should not discount the possibility that Costco's P/E ratio would increase from here. I find it very hard to believe that Costco's P/E ratio would increase from an already high 52 times earnings. And then also stay there too.

These are just a couple of thoughts I have about the possible outcomes for Costco. I use them as an example of what my thinking goes.

Perhaps my thinking in terms of decision trees, outcomes, and paths is inspired by this chart from Tim Urban

There are several other companies that seem to be following a similar pattern of looking overvalued today. I believe they have decent businesses, that I would likely be willing to buy into at the right price. You can view this as my (non-exhaustive) Holiday Shopping list.

Cintas Corporation (CTAS) sells for 52.76 times forward earnings and yields 0.70%. The company has a 10 year annualized dividend growth rate of 22%.

Costco (CTAS) sells for 52.50 times forward earnings and yields 0.50%. The company has a 10 year annualized dividend growth rate of 12.60%.

Intuit (INTU) sells for 37 times forward earnings and yields 0.60%. The company has a 10 year annualized dividend growth rate of 16.40%.

Eli Lilly (LLY) sells for 61.60 times forward earnings and yields 0.65%. The company has a 10 year annualized dividend growth rate of 9.90%.

MSCI Inc (MSCI) sells for 40.70 times forward earnings and yields 1.05%. The company has a 5 year annualized dividend growth rate of 20.60%.

Moody's (MCO) sells for 40 times forward earnings and yields 0.71%. The company has a 10 year annualized dividend growth rate of 11.80%.

WD-40 (WDFC) sells for 53.40 times forward earnings and yields 1.23%. The company has a 10 year annualized dividend growth rate of 10%.

Note, this is just a representative sample. There are quite a few more such quality companies, selling at very high valuations.

Conclusion:

I hope you enjoyed this article. It got a little long, and wordy at the end. If you finished it in one sitting, congratulations and thank you for reading. Note that this is not a prediction that these companies would decline in price. It's merely stating that a lot of these companies are overvalued today and most likely, considering all possible paths, shareholders buying today are less likely to make money on them over the next decade or so.

To summarize possible outcomes:

It is quite possible that these companies continue enjoying inflated valuations from here on. 

It is somewhat possible that fundamentals do much better than expected, which would then mean that valuations today "make sense".

However, it is also possible that these companies continue delivering on the fundamentals side, but their valuations shrink.

The worst case scenario is that one or several of these companies stumbles for a little bit on the fundamentals side (perhaps temporarily so), which then leads to a double whammy of decreased earnings growth and a lower valuation ratio.

In the meantime, the stock market is merely a market for stocks. So I will continue investing every month in the values I could find today. For companies that are overvalued, I would not invest today, but keep them on my watchlist. If I hold an expensive company, I would likely keep owning, for as long as it doesn't hit my sell criteria.

17 Dividend Growth Stocks Rewarding Owners With A Raise

I review the list of dividend increases every week, as part of my portfolio monitoring process. I leverage several of my dividend investing resources for this effort.

I started by reviewing the list of all dividend increases for the week. There were 37 of them. I then narrowed the list down to the companies that have managed to boost dividends for at least ten years in a row. I also focused on companies that had a meaningful combination of yield and dividend growth.

The companies for this week’s review include:

The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.

This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.

Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.

Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.

For a sample dividend stock analysis, check my review of Atmos Energy (ATO).

Relevant Articles:

- Twelve Dividend Growth Stocks Rewarding Shareholders With Raises

- 26 Dividend Growth Stocks Raising Dividends Last Week

 

- Three Dividend Growth Companies Raising Distributions Last Week

- Eight Dividend Growth Companies Rewarding Shareholders With Raises Last Week

The Powerful Concept of Covering Expenses With Dividends

My investment strategy is Dividend Growth Investing. I invest in companies that have a long track record of annual dividend increases. These are well-known companies that can be found on several well-known dividend lists:

- Dividend Achievers - Companies that have increased dividends annually for at least 10 years in a row

- Dividend Aristocrats - S&P 500 Companies that have increased dividends annually for at least 25 years in a row

- Dividend Champions - Companies that have increased dividends annually for at least 25 years in a row

- Dividend Kings - Companies that have increased dividends annually for at least 50 years in a row

Dividends from diversified portfolios tend to grow at or above the rate of inflation over time. This is because companies manage to grow earnings over time. Companies also manage to grow the amount of excess cashflows they generate as well. That's what drives growth in dividends over time - growth in  earnings per share. Ultimately, those businesses also grow intrinsic values. While share prices will fluctuate in the short run, in the long-run those share prices would likely grow at the rate of increase in the underlying fundamentals. 

Dividends are a great source of income in retirement, because they are more stable, and easier to predict than share prices. That makes them a very good source of income in retirement.

For example, I could reasonably expect that a REIT like Realty Income (O) would distribute at least $3.16/share in dividends over the next 12 months. If history is any guide, this company would also raise those dividends as well.

However, I have no idea whether the stock price would be above $80/share or below $40/share.

Investing to me means buying future retirement income. 

For each $1000 I invest today, I expect to generate about $30 in annual dividend income that grows above the rate of inflation. Reinvesting dividends further grows total annual dividend income.

I keep stacking assets and reinvesting dividends until dividend income exceeds annual expenses. That's the dividend crossover point, which is synonumous with financial independence for dividend growth investors. 

The concept of covering expenses with dividends is very powerful.

If I spend $50/month on internet, that's $600/year.

To generate $600/year in dividends, I need to invest $20,000 in a portfolio at a 3% average dividend yield. 

Once I invest $20,000 my internet is essentially paid for.

Also those dividends increase over time, at or above the level of inflation.

The concept of a dividend crossover point is a very neat way to illustrate your path on the way to financial independence. It works for covering overall expenses, and also for working on your way to covering expenses, one at a time.

If your overall expenses are say $3,000/month, it may seem impossible to reach there. Or you may get discouraged about the time it could take to get there. This is where defining smaller dividend crossover points first may make it seem not so impossible. 

You can get motivated by smaller dividend crossover points such as:

     $50/month - I can cover my internet with dividends

     $100/month - Dividends pay my cell phone

     $150/month - I can buy a Starbucks latte every day w/dividends

     $500/month - Dividends can cover car payment

     $1,000/month - Dividends pay my rent

 

Learn more about the Dividend Crossover Point here:

 

This exercise also shows the "cost" of  a typical recurring expense as well (e.g. that daily Staburcks Latte). It also shows the amount of capital it would take in retirement to pay for such expense. It's also a good way to look at the natural progression of dividends too..

Of course, nobody just hands you out $20,000. Getting to a certain income target is a function of:

1. How much you can invest every month

2. Rate of return (Dividend Yield + Dividend Growth)

3. How long you invest for

As I stated above, for each $1000 I invest today, I expect to generate about $30 in annual dividend income that grows above the rate of inflation. Reinvesting dividends further grows total annual dividend income.

I keep stacking assets and reinvesting dividends until dividend income exceeds the target expense I am needing to be covered.

For example, if you can invest $1,000/month, and find companies that yield 3% and grow dividends at a rate of 6%/year, it would take 19 months to get to the point of generating $50 in dividends per month.

If you can only invest $500/month, using the returns criteria listed above, it would take 36 months to get to the point of generating $50 in dividends per month.

You may like the spreadsheet listed in this post, which helps me play around with various scenarios.

All of those scenarios assume dividend reinvestment into more shares. But frankly, instead of thinking of "how much capital I need to retire", I like to think in terms of "how much income I can generate to retire". I use the terms "retire" and "achieve financial independence" interchangeably.

Growing that dividend income is extremely motivating.  You know exactly where you are on your journey at any moment. 

You grow that dividend income stream through several inputs.

1. Capital you invest

2. Reinvesting Dividends

3. Dividends that grow

All of those factors work together, in synchrony, to help you build that income machine.

Brick by Brick

That's you financial future in question. So make sure you have a strong foundation for your financial house to be in order.

To me this means focusing on sound businesses, with competitive advantages, long histories of annual dividend increases, sound business models, and making sure those businesses are making and growing that net income over time. It also means diversifying into as many quality businesses as I can find, making sure I do not overpay, and making sure I am not concentrated in only a few companies and in a few sectors. It also means not chasing yield, but focusing on dividend stability, sustainability and evaluating that the payout ratio is not too high or growing too much.

Twelve Dividend Growth Stocks Rewarding Shareholders With Raises

I review dividend increases every week, as part of my monitoring process. This exercise helps me monitor existing holdings, and potentially uncover companies for further research.

Over the past week, there were 34 companies that announced dividend increases. Twelve of those companies have managed to increase dividends for at least 10 years in a row. I usually focus on the companies that have managed to increase annual dividends for at least ten consecutive years. The companies that have raised dividends over the past week, and also have managed to increase dividends for at least ten years in a row are listed below.

The companies include:

This list is not a recommendation to buy or sell stocks. It is simply a list of companies that raised dividends last week. The companies listed have managed to grow dividends for at least ten years in a row.

The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.

This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.

Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.

Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.

Relevant Articles:

- 26 Dividend Growth Stocks Raising Dividends Last Week

- Three Dividend Growth Companies Raising Distributions Last Week

- Eight Dividend Growth Companies Rewarding Shareholders With Raises Last Week

- Five Dividend Growth Companies Raising Dividends Last Week

Living Off Dividends in Retirement vs Selling Stock

As a dividend growth investor, I invest with the end goal in mind.

My goal, from the very beginning of my journey, has been to generate a certain amount of target dividend income per year. Dividend income is more stable, reliable and easier to forecast than share prices. That's because share prices are much more volatile than dividends. Dividends are correlated with company cashflows in the short-run and long-runs, and those cashflows are much less volatile than Mr. Market's opinion of the value of those cashflows. Dividends are the only direct link between a company's financial performance and the investor. 

Share prices on the other hand represent the collective opinion of market participants, who may bid prices above any reasonable estimate of intrinsic value if they are excited about the company OR sell them off below any reasonable estimate of intrinsic value if they are gloomy about the company. Share prices tend to fluctuate much more than company cashflows. This is why even a well known company like Apple can sell at a wide range of valuation multiples, like 15 to 35 times earnings, over the course of an year.

It's much easier to forecast the dividend that a company would pay in a given year, than the share price at which it would sell over the course of a given year. For example, for a company like Apple computer, it is much easier to forecast that it would pay at least $1/share in dividends. But it's impossible to tell if the stock price would go above $230 or below $130.

Those share price fluctuations don't matter as much in the accumulation phase. However, this really matters when you get closer to your estimated retirement date and even more important when one is retired. That's because if you have to sell shares to fund your lifestyle, you are now exposing yourself to short-term price fluctuations. You are essentially betting that your portfolio will generate enough gains in the short term, year in and year out, so that you do not run out of money in retirement. You are also exposed to fluctuations, and sequence of returns risk. This basically means that your retirement outcomes will be greatly influenced if you have to sell stock when prices are low, to their potential detriment. If you are lucky, and share prices only go up however, it would be smooth sailing for you. 

To paraphrase the movie "Dirty Harry", Are you feeling lucky, punk?

If I have a diversified portfolio that generates $60,000 in annual dividend income per year, I can be reasonably certain that I would generate at least that much in the next few years. It's very likely that this portflio would generate dividend income that grows above the rate of inflation actually. That portfolio would likely have to be invested in blue chip dividend growth companies, in the dividend aristocrats, dividend champions, dividend achievers types.

If the investor needs $60,000 in annual dividend income in retirement, they are set for life. Getting there is simple, and is the end result of how much you invest, what returns you generate (dividend yield + dividend growth) and how long you invest for. For each $1,000 that you invest, you are essentially buying income. In general, depending on the yield/growth trade-off you are willing to make, you can generate probably $20 in a higher dividend growth/but lower dividend yield portfolio. Or you can generate say $30 in a medium yield/medium growth portfolio tilt. I wouldn't chase yield at this time, but it is also possible to generate $40 in a higher yield but lower growth portfolio. For the purposes of this exercise, let's assume that you can generate $30 in dividends for each $1,000 you invest.

In the accumulation phase, that dividend income gets reinvested, and those dividends increase. You also keep buying more future income, and you build that portfolio out, brick by brick.

That dividend income keeps growing, slowly at first, and then the snowball really accelerates. The neat thing about that total dividend income is that it is more stable than prices. So that dividend income keeps marching forward, year in, and year out, assuming of course diversified portfolio that is not concentrated in a single sector or two. Or even worse, concentrated in less than 20 companies. So it is important to be diversified, holding a lot of individual dividend growth companies, representative of as many sectors that make sense at the right entry price.Then to hold.

The neat thing about US dividends is that they rarely decrease. At least in the past 80 years or so, dividend income has rarely decreased for diversified US portfolios. The only exception was in 2008, when the US economy was on its knees, during the Global Financial Crisis. Even then, when those dividends fell by 20% top to bottom from 2007 to 2009, share prices fell by 60%.

So you can easily see the projected dividend rise, until it reaches the dividend crossover point. That's the point at which dividends pay your expenses. Since dividends are more stable and predictable than share prices, you know exactly where you are on your journey, during your journey. You also know exactly when you can retire. So if you retire when you reach your dividend crossover point, you are more certain that you would receive your target dividend income from your diversified dividend portfolio. Than if you were to rely on forecasting prices and selling at the right price.

On the other hand, that portfolio could be valued at any range at the marketplace. If could be priced at say $3 Million in a bull market (2% yield) or could be worth say $1.50 Million in a bear market (4% yield).

If you were reliant on share prices, you may be in for a little bit of a surprise. For example, assume you owned a portfolio and planned on selling shares to fund your lifestyle. You plan to sell 3% of your initial portfolio value, and then sell enough stock to pay expenses and increase that by rate of inflation.

That's all fine and dandy, but now you are reliant on short-term share price fluctuations for your retirement.

Of course, most people today are told that the 4% rule is safe. The 4% rule basically states that you determine how much money you have, and then you can sell an amount equal to 4% of the initial portfolio value, and also increase that with inflation. So if you retired with $1 Million in 1999, you plan to spend $40,000 in 2000, and a little more than $40,000 in 2001 (by adding inflation), etc.

If you were unlucky enough to retire at the end of 1999 on something like S&P 500, you would not have done so well (versus Dividend Aristocrats). That's mostly because stocks were very overvalued at the end of 1999, dividend yields on S&P 500 were very low so you were exposed to share price declines/sequence of returns risk. And worst of all, stock prices went nowhere for a decade, coupled with two gutwrenching 50%+ bear markets. 

Someone who retired with $1 Million at the end of 1999 in S&P 500, using the 4% rule, would have $330,000 by the end of 2023. Someone who retired with $1 Million at the end of 1999 in Dividend Aristocrats, using the 4% rule, would have over $5.25 Million by end of 2023.

What happens if share prices decrease and or forget to increase? In the past 15 years, we've only seen a bull market. However during the preceding 10 or 12 years from 2000 - 2012 we saw two large 50% declines, and the share prices largely going nowhere.

Assume now that you retire at the end of the year with $2,000,000. You plan to sell $60,000 worth of stock per year, and increase that amount annually by the rate of inflation. That's great, but by the end of the year, we are in the midst of a bear market. Share prices fall by 25%. Your $2 Million portfolio is now worth $1.5 Million. If you wanted to do a conservative withdrawal rate, you can only sell $45,000 worth of stock. But your expenses are still $60,000/year. So now you cannot retire, and have to work another year.

But somehow the next year brings a continutation of the bear market. Now your portfolio is worth $1 Million. Now your conservative 3% withdrawal would only give you $30,000. But now you actually need $61,800 per year, because of inflation.

Now you can continue waiting to retire for a few more years, until your portfolio value at a 3% withdrawal rate exceeds your expenses. The scenario is discussed is probably influenced by what I saw during the 2000 - 2012 long bear market. 

If that investor had relied on a prudent diversified dividend growth portfolio for their retirement, they would have generated that $60,000 in annual dividend income in year one, then probably enjoyed some dividend growth that exceeded the 3% inflation and continued with their retirement. For as long as you have built that portfolio on a strong base, that's well diversified, and selected good companies at attractive values to hold for the long run, the price fluctuations can be largely ignored.

These are a few thoughts I have based on my experience following investing matters for the past few years, decades etc. 

26 Dividend Growth Stocks Raising Dividends Last Week

I review the list of dividend increases every single week, as part of my monitoring process. A long history of dividend increases is an indication of a quality company with a competitive advantage in its industry. I use the combination of length of streak of consecutive annual dividend increases and dividend increases as part of my toolkit to monitor the breadth of dividend universe. It helps me be on top of existing holdings and potentially identifying companies for furher research.

This is of course an exercise that is in addition to my regular process of scanning the dividend growth investing universe, and monitoring my list. There are a few extra steps involved, such as reviewing trends earnings, dividends, and trying to understand the company. Even a great company is not worth buying however, if it doesn't sell at the right price.

Over the past week, there were 42 dividend increases in the US. I narrowed down the list by focusing only on the companies that raised dividends last week, but also have a ten year track record of consecutive annual dividend increases. The companies are listed below:

This list is not a recommendation to buy or sell stocks. It is simply a list of companies that raised dividends last week. The companies listed have managed to grow dividends for at least ten years in a row.

The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.

This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.

Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.

Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.

Relevant Articles:

- Three Dividend Growth Companies Raising Distributions Last Week

- Eight Dividend Growth Companies Rewarding Shareholders With Raises Last Week

- Five Dividend Growth Companies Raising Dividends Last Week

- Six Dividend Growth Stocks Increasing Dividends Last Week

Bets and Setups

Success in investing is easy to compute. You either make money overall over a certain period of time, or you don't.

If you do make money investing, that's the end result of the aggregate amount of profits (capital gains + dividends) on the winner side, exceeding the aggregate amount of losses on the loser side.

If we continue to break it down further, we may end up with a few more useful statistics.

It is important to understand that not every investment you make will be a successful one. 

However, if your profits on the winners exceed your profits on the losers, you will come out net positive. 

So it is important to understand how many of your positions will be profitable over time, as well as how much you make when right versus how much you lose when you are wrong.

Peter Lynch has also famously said that if you are right on 4 out of 10 investments, you can still generate a good track record. He also noted that when you invest money in a stock, the most you can lose is the amount you invested. The most you can make is roughly unlimited however.

Let's play with some numbers.

Imagine that you are a buy and hold investor. You are right 40% of the time on average.

You invest $1,000 each in 100 companies over the course of your investment career. 

This means that 60 of those companies would likely lose money for you. But 40 of those companies would make money for you.

Now, if you lose $500 per company when you are wrong, that translates into a lifetime loss of $30,000.

This means that your profitable investments need to generate a profit of $750 each on average, just so you can break even. This means that at this percentage of profitable to losing investments (40% Winning), your average gains ($750) have to be 1.5 times the amount of your average losses ($500), just so you can break even. 

It's a fascinating way to think about things. You can feel free to substitute the percentages for winning investments versus percentages for losing investments, along with the amount of dollars you make per winning investment versus amounts you lose with losing investments.

When you have the data, you can try to play more with the numbers, in order to see if you can improve your overall chances of making money.

For example, if you manage to reduce the impact of losses, your overall lifetime gains will improve. If you also manage to improve your winning percentage, your overall lifetime gains will improve. If you manage to maximize your average impact of gains, your overall lifetime gains will improve.

This of course is a lifetime calculation, but to keep it simple I ignored inflation, taxes etc. Mostly because we are discussing a basic concept, and do not want to dillute things further with more data that won't add much more to the original concept.

In the above example, we determined that each profitable investments need to generate a profit of $750 each on average, just so you can break even. 

However, if you are in the habit of simply selling when your investment doubles, your $1,000 investment turns to $2,000 and is cashed in (on the 40 investments you made). Hence, your overall profit is $1,000 times 40 minus $500 times 60 for a net overall lifetime profit of $10,000.

That's great on paper. But then we get the next logical question. What if you don't simply sell when your initial investment doubles.

I believe that for a long-term strategy, it is imperative that you let your winners run for as long as possible. The distribution of outcomes will vary. Some companies would really succeed, and pull up the average profit. Those tails will drive results.

If you let winners run, versus locking in a quick profit, you improve your chances of making more money. If letting winners run results in an average profit of say $1,250, that improves overall profitability.

In addition, if you manage to cut losses, you may also improve overall profitability. 

It's helpful to think through those scenarios, not because of precision, but because they make ask yourself to understand your strategy better. And hopefully improve from there.

For example, a long-term buy and hold strategy would not have a high percentage of investments that are right. Let's assume it is 40%, though it could be lower too. This is why you need to work to minimize losses when you are wrong, as much as possible. But it is really imperative that you simply hold for as long as possible, and milk this for as long as possible, in order to stand the maximum chance of maximum profit.

This to me is what thinking like a business owner feels like, when it comes to investing.

I went through all of those numbers and scenarios to essentially get to Set-Ups. 

A set-up is a combination of factors, or reason to invest, that lead to you taking an investment.

My setup, aka my entry criteria for dividend stocks looks like something like this:

1. A long track record of annual dividend increases

2. Earnings growth over the past decade

3. Dividend growth over the past decade

4. A payout ratio that stays in a range, and is not too high

5. A valuation that is not too excessive

This is a high level overview. If we really get into the details, you'd see I think more about trade-offs between yield and growth, interest rates and valutions, how cyclical a company's earnings stream is, as well as whether to add to an existing company versus a new one based on portfolio weights. Valuing companies is more art than science. Deciding which company to add to on my spectrum of opportunities is another type of art/science connundrum.

But let's get back to set-ups. 

For example, I have determined that if I can buy a company growing at X and a valuation of Y, I can make money. This means that I make money on average, but not every set up or every signal will result in a profit. I do need to manage to overall profits and losses, in order to make money. 

There is less emphasis on each individual company working out, because that outcome is impossible. The emphasis should be instead on the aggregate of those companies working out. This is a smarter and more sustainable approach, as it shifts your mindset from one that is overly concentrated and swings for the fences type, to a more long-term, slow and steady one.

The important thing to remember is while not every set-up will work, overall the strategy would likely work, for as long as one makes more money on winning investments overall than what they lose on losing investments overall. To tie back to the initial discussion, if you end up making 100 investments over your lifetime, each of $1,000.

Then 60% of those investments lose half of their value, you "lost" $30,000. But if the remaining 40% ended up being all tenbaggers, you made $400,000 on the winners. Overall, you made $270,000 profit.

This of course is all hypothetical, but mostly to illustrate the point to take your signals, and not miss them. Do not be discouraged that all investments won't work out, for as long as some do, you should be ok. It's also important to avoid taking "quick profits", but to let winners win for as long as possible. It's important to minimize losses as well. It's also important to monitor portfolio, and try to learn from mistakes and improve continuously and over time. Continuous learning and improvement is how one can improve their odds of success.

Three Dividend Growth Companies Raising Distributions Last Week

I review the list of dividend increasess every week, as part of my monitoring process. This exercise helps me review existing holdings and potentially identify companies for further research.

I typically focus my attention on companies that have managed to grow dividends for at least a decade. I am interested in identifying good companies to acquire at good prices and hold for decades.

The exercise of reviewing dividend increases is a very good quick overview of the process I use to review companies. I look for rising earnings per share, which are the fuel behind future dividend increases. I look for long streaks of annual dividend increases, because that's usually an indicator of a quality business with high ROIC that gushes cashflows. I also look at growth rates in dividends over time, as a gauge to how things are going. 

Over the past week, there were three companies that increased dividends in the US, which also have a ten year track record of annual dividend increases under their belts. The companies include:

Home Bancorp, Inc. (HBCP) operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas.

The company increased quarterly dividends by 4% to $0.26/share. This is the tenth consecutive annual dividend increase for this dividend achiever. The five year annualized dividend growth rate is 7.09%.

Between 2014 and 2023, the company managed to grow earnings from $1.51/share to $5.01/share.

The company is expected to earn $4.15/share in 2024.

The stock sells for 10.80 times forward earnings and yields 2.23%.

Lincoln Electric Holdings, Inc., (LECO) 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.

Lincold Electric increased quarterly dividends by 5.60% to $0.75/share. This is the 30th consecutive annual dividend increase for this dividend champion. The five year annualized dividend growth rate is 10.40%.

Between 2014 and 2023, the company managed to grow earnings from $3.22/share to $9.51/share.

The company is expected to earn $8.80/share in 2024.

The stock sells for 23.10 times forward earnings and yields 1.48%. I liked this company in general, but the slowdown in dividend growth rates is giving me second thoughts.

Prosperity Bancshares, Inc. (PB) operates as bank holding company for the Prosperity Bank that provides financial products and services to businesses and consumers.

Prosperity Bancshares increased quarterly dividends by 3.60% to $0.58/share. This is the 27th consecutive annual dividend increase for this dividend achiever. The five year annualized dividend growth rate is 8.80%.

Between 2014 and 2023, the company managed to grow earnings from $4.32/share to $4.51/share.

The company is expected to earn $5.03/share in 2024.

The stock sells for 14.50 times forward earnings and yields 3.18%.

Relevant Articles:

- Eight Dividend Growth Companies Rewarding Shareholders With Raises Last Week

- Five Dividend Growth Companies Raising Dividends Last Week

- Six Dividend Growth Stocks Increasing Dividends Last Week

- Six Dividend Growth Stocks Rewarding Shareholders With Raises

Dividends Unlock Value

Cash sitting on company balance sheet that's not utilized earns no/small return. There's a risk it would be pissed away/wasted on low roi m&a, corp jets, exec comp. 

1. Sending that cash to shareholders, who can deploy at 10%/year (historical annuialized return on US Stocks) is better than having that money rot away at much lower, if any returns.

2. Unused cash on balance sheet is valued at a discount by marketplace, due to lack of visibility as to what would happen to it. Would it be pissed away on corp jets/pet projects or just invested without any thought of profitability?

Cash on the balance sheet is not always going to be valued at 100% by the market.

It’s very likely that this cash on the balance sheet is valued at a discount. 

That’s because there is an opportunity cost to that cash. There is also the possibility that this cash is wasted on bad acquisitions, purchases, corporate jets, management perks. If you have too much cash on hand, the possibility to piss it all away in a heartbeat increases exponentially. Plus, there is a time value of money cost, where the present value of a future outlay is lower and lower the longer you have to wait.

For example, if I receive $100 today in my bank account, I will have $105 in 1 year at a 5% interest rate.

But, if I have to wait to receive that $100 in one year, I am now $5 poorer. (because I miss out on generating a return on that money for a whole year)

Hence, by paying a dividend, the company actually unlocks hidden value that’s stuck on the balance sheet.

There's some research out there that shows that  governance has a substantial impact on value through its impact on cash: $1.00 of cash in a poorly governed firm is valued at only $0.42 to $0.88. Good governance approximately doubles this value. Link: Corporate governance and the value of cash holdings

If a company does not have uses for cash, it’s going to sit unused on the balance sheet.

As I mentioned above, there is an opportunity cost attached to unused cash on the balance sheet. It gathers the dust of opportunity cost.

For example, if that cash sits on the Balance Sheet earning a minimal return of say 4%, it’s not going to amount to much. It’ll possibly fail to keep up with inflation over time by much.

However, if that cash is distributed to shareholders, they can put it to good use. Long-term returns in the US  Stock Marekt are at 10%/year. 

Hence, investing that money as a shareholder at 10%/year sure beats having that cash gather dust on the balance sheet and make only 4%/year.

Sending this excess cashflow out to shareholders is helpful, because they can reinvest it at a high ROI elsewhere. If they reinvest it into a portfolio of other investments, these shareholders are further diversifying their investments. After all, many companies end up failing. Hence, the prudent thing to do would be to wring out any excess cashflows from them while they are still operating as a going concern, instead of it being pissed away on M&A or executive perks or low ROI projects, and invest it prudently into a diversified portfolio of American Businesses. 

In general, I am a proponent of the idea where businesses reinvest only the cashflows that can be invested at a high hurdle ROI rate. Anything that cannot be deployed intelligently at such a rate, should be sent out to shareholders. 

This is the framework that no other, but Warren Buffett effectively uses at Berkshire Hathaway. He lets managers manage businesses at they see fit. However, when it comes to capital allocation, he asks that they only reinvest capital back into their business, provided they earn a minimum rate of return on these projects (e.g. 15%). If they cannot deploy capital at this hurdle rate, he asks that they send this excess cashflow to him, so that he can deploy it intelligently elsewhere.

These are just a few high level thoughts I have on the topic. I can expand further in future posts.

Eight Dividend Growth Companies Rewarding Shareholders With Raises Last Week

The US Stock Market is one giant dividend growth machine. What is truly remarkable is that the record of dividend payments by US corporations heavily favors rising dividends over declining dividends, almost irrespective of prevailing business conditions.

You can see how annual dividends on S&P 500, which is used as a barometer for the overall health of the US Stock Market, have gone up and up almost uninterruped over the long run. The only correction happened in 2008, when the whole US Economy was on its knees.

US Dividends grow over time, because companies grow earnings over time. You cannot fake the cash that's needed to pay those dividends. Thus, only companies that can make actual profits tend to pay and grow those dividends. Speculative companies typically cannot afford to pay dividends.

I typically focus my attention on companies that have managed to grow dividends for at least a decade. Those are the best companies in the US, with strong competitive advantages, which drown their shareholders with rising torrents of cash each year. Such companies can be found on the lists of dividend champions, dividend aristocrats, dividend kings and dividend achievers.

As part of my reviews, I review the list of dividend increases each week. I use this review as part of my monitoring process. This exercise helps me monitor existing holdings and potentially identify companies for further research.

Last week, there were eight companies that both managed to raise dividends to shareholders, and also have a ten year track record of annual dividend increases under their belt. The companies include:

Avient Corporation (AVNT) operates as a formulator of material solutions in the United States, Canada, Mexico, Europe, South America, and Asia. It operates in two segments, Color, Additives and Inks; and Specialty Engineered Materials.

The company raised quarterly dividends by 4.90% to $0.27/share. This is the 13th consecutive annual dividend increase for this dividend achiever.  In the past 5 years, annualized dividend growth has been at 7.20%.

Between 2014 and 2023, the company's earnings went from $0.86/share in 2014 to $0.83/share in 2024.

Avient is expected to earn $2.64/share in 2024.

The stock sells for 18.35 times forward earnings and yields 2.22%.

A. O. Smith Corporation (AOS) manufactures and markets residential and commercial gas and electric water heaters, boilers, heat pumps, tanks, and water treatment products in North America, China, Europe, and India.

The company raised quarterly dividends by 6.25% to $0.34/share. This is the 31st consecutive annual dividend increase for this dividend aristocrat. The company has managed to grow dividends at an annualized rate of 18.20%. The five year annualized rate of dividend growth is 9.90%, and decelerating.

The company has managed to grow dividends at an annualized rate of 16.20% over the past decade.

Between 2014 and 2023 the company grew earnings from $1.15/share to $3.71/share.

The company is expected to earn $3.96/share in 2024.

The stock sells for 20.40 times forward earnings and yields 1.70%. 

Agree Realty Corporation  (ADC) is a fully integrated real estate investment trust (“REIT”) primarily focused on the ownership, acquisition, development and management of retail properties net leased to industry leading tenants. 

The REIT increased monthly dividends by 1.20% to $0.253/share. The monthly dividend reflects an annualized dividend amount of $3.036 per common share, representing a 2.4% increase over the annualized dividend amount of $2.964 per common share from the fourth quarter of 2023. This is the 12th consecutive annual dividend increase for this dividend achiever.

The company has managed to grow dividends at an annualized rate of 5.90% over the past decade.

Agree Realty Corporation grew FFO from $2.18/share in 2014 to $3.58/share in 2023.

The REIT is expected to generate FFO of $4.09/share  in 2024.

The REIT sells for 18 times forward FFO and yields 4.13%.

Canadian Natural Resources Limited (CNQ) acquires, explores for, develops, produces, markets, and sells crude oil, natural gas, and natural gas liquids (NGLs).

The company raised quarterly dividends by 7.10% to $0.5625/share. This will make 2025 the 25th consecutive year of dividend increases by Canadian Natural, with a CAGR of 21% over that time.

The company has managed to grow dividends at an annualized rate of 16.84%.

Between 2014 and 2023, the company grew earnings from $1.80/share to $3.77/share.

Canadian Natural Resources is expected to earn $3.57/share in 2024.

The stock sells for 14.50 times forward earnings and yields 4.35%.

Calvin B. Taylor Bankshares, Inc. (TYCB) operates as the holding company for Calvin B. Taylor Banking Company that provides commercial banking products and services.

The company raised quarterly dividends by 2.90% to $0.36/share. This dividend champion has managed to grow distributions for 35 years in a row. Over the past decade, the company has managed to grow dividends at an annualized rate of 3.60%.

Earnings per share went from $1.39 in 2013 to $4.89 in 2023.

The stock sells for 12.60 times earnings and yields 2.91%.

Northwest Natural Holding Company (NWN) provides regulated natural gas distribution services to residential, commercial, and industrial customers in the United States.

The company raised quarterly dividends by 0.50% to $0.49/share. This is the 69th year of consecutive annual dividend increases for this dividend king. Over the past decade, the company managed to grow dividends at an annualized rate of 0.60%.

Between 2014 and 2023 the company managed to grow earnings from $2.16/share to $2.59/share.

The company is expected to earn $2.31/share in 2024.

The stock sells for 17.25 times forward earnings and yields 4.92%.

THOR Industries, Inc. (THO) designs, manufactures, and sells recreational vehicles (RVs), and related parts and accessories in the United States, Germany, Canada, rest of Europe, and internationally. 

The company raised quarterly dividends by 4.20% to $0.50/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 7.63%.

Between 2015 and 2024, the company grew earnings from $3.75/share to $4.98/share.

The company is expected to earn $5/share in 2025.

The stock sells for 22 times forward earnings and yields 1.82%.

Terreno Realty Corporation (TRNO) acquires, owns and operates industrial real estate in six major coastal U.S. markets: Los Angeles, Northern New Jersey/New York City, San Francisco Bay Area, Seattle, Miami, and Washington, D.C.

The company raised its quarterly dividends by 8.90% to $0.49/share. This is the 13th consecutive annual dividend increase for this dividend achiever. Over the past decade, this company has managed to grow dividends at an annualized rate of 12.70%.

Between 2014 and 2023, the REIT managed to grow FFO/share from $0.86 to $2.23.

Terreno is expected to generate FFO of $2.42/share in 2024.

The stock sells for 26.20 times forward FFO and yields 3.10%.

Warren Buffett and Strategy Diversification

Many investors discuss Buffett on diversification, and conclude that he ran a "concentrated portfolio"

This is missing the nuance that he was diversified in terms of strategies he followed, especially in his early years. The best investors in the world tend to build their investment records by following a multi-strategy approach. Buffett is no exception, as this post will demonstrate.

Buffett was a very successful fund manager. He was able to compound money at close to 30%/year before fees for 14 years in his partnership.

What built his wealth was the fact that Buffett obtained 25% of any profits over 6% that the partnership generated.

Many investors are not fully aware that when he ran the Buffett Partnership, Warren Buffett essentially followed three different strategies

He focused on:

1. Generally undervalued securities ("Generals") - These were generally undervalued securities, where Buffett waited for valuation to correct upwards.

2. Work-Outs - stock affected by corporate events like mergers & acquisitions, spin-offs, reorganizations &liquidations. Buffett did mention that this strategy would produce relatively stable earnings from year to year, .

3. Control Situations These were events where the partnership would initiate a large enough position in a company and try to influence corporate policy. 

A famous control situation is Berkshire Hathaway (BRK.A), which started out as an undervalued position.

Enjoy a more detailed overview from the 1957 Buffett Partnership Letters below:

You can read the Buffett Partnership Letters from 1957 - 1970 there:

Buffett Partnership Letters

The best investors in the world tend to build their investment records by following a multi-strategy approach.  That provides diversification in returns. We saw how this has been the case with Warren Buffett in his early years. He has also followed a similar strategy in his later years with Berkshire Hathaway as well. 

The same has been the case with other great investors such as Peter Lynch and Ben Graham for example. We will be discussing those investors (and more) in future posts. Please stay tuned!

Five Dividend Growth Companies Raising Dividends Last Week

I review the list of dividend increases every week, as part of my monitoring process. It's helpful as one of the things I use to review how existing holdings are doing. It's also helpful to potentially add new companies on my radar for further research.

I typically focus my attention on companies that have managed to increase dividends annually for at least a decade. This is a good way to gauge quality, and put a company on my list for further review from there.

Over the past week, there were five companies that managed to increase dividends and also have a ten year track record of annual dividend increases:

American Financial Group, Inc. (AFG) is an insurance holding company that provides specialty property and casualty insurance products in the United States.

The company increased quarterly dividends by 12.70% to $0.80/share. This is the 19th 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 12.40%.

Between 2014 and 2023, the company grew earnings from $1.43/share to $1.77/share.

The company is expected to earn $11.01/share in 2024.

The stock sells for 12.20 times forward earnings and yields 2.30%.

Arrow Financial Corporation (AROW) is a bank holding company, which provides commercial and consumer banking, and financial products and services.

The company raised quarterly dividends by 3.70% to $0.28/share. This is the 31st year of consecutive annual dividend increases for this dividend champion. Over the past decade, the company has managed to grow dividends at an annualized rate of 3.40%.

Between 2014 and 2023, the company grew earnings from $1.43/share to $1.77/share.

Arrow Financial is expected to earn $2.05/share in 2024. 

The stock sells for 13.50 times forward earnings and yields 4%.

Bank OZK (OZK) provides various retail and commercial banking services for individuals and businesses in the United States. 

Bank OZK raised quarterly dividends by 2.50% to $0.41/share. That's a 10.80% raise over the dividend paid during the same time last year. This is the 28th year of consecutive annual dividend increases for this dividend aristocrat. Over the past decade, the company has managed to raise dividends at an annualized rate of 14.70%.

Between 2014 and 2023, the company grew earnings from $1.53/share to $5.89/share.

The company is expected to earn $6.02/share in 2024.

The stock sells for 7 times forward earnings and yields 3.88%. 

Lockheed Martin Corporation (LMT) a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of technology systems, products, and services worldwide. The company operates through Aeronautics, Missiles and Fire Control, Rotary and Mission Systems, and Space segments. 

The company raised quarterly dividends by 4.80% to $3.30/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 9.80%.

Between 2014 and 2023, the company grew earnings from $11.41/share to $27.65/share.

The company is expected to earn $26.54/share in 2024.

The stock sells for 22.85 times forward earnings and yields 2.18%.

RPM International Inc. (RPM) manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. 

RPM increased its quarterly dividends by 10.90% to $0.51/share. This is the 51st consecutive annual dividend increase for this dividend king. Over the past decade, the company has managed to raise dividends at an annualized rate of 6.50%.

Between 2015 and 2024, the company managed to grow earnings from $1.81/share to $4.58/share.

The business is expected to earn $5.52/share in 2025.

The stock sells for 23 times forward earnings and yields 1.60%.

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Six Dividend Growth Stocks Increasing Dividends Last Week

I review the list of dividend increases each week, as part of my monitoring process. This exercise helps me monitor existing holdings and potentially identify companies for further research.

Dividend increases offer a good gauge for management's opinion on near terms business conditions and their affect on company cashflows. As a result, dividend increases can provide a good overview of management's assessment of the business environment. Changes in the pace in dividend increases could provide valuable insight about the business, in conjunction with other factors at play, that could potentially provide investors with a slight edge.

I identified six companies that increased dividends last week. All of these companies have managed to increase dividends for at least a decade. My short review of each company is listed below:

Accenture plc (ACN) is a professional services company, provides strategy and consulting, industry X, song, and technology and operation services worldwide. 

Accenture raised quarterly dividends by 14.70% to $1.48/share. This is the 19th consecutive annual dividend increase for this dividend achiever. The company managed to grow dividends at an annualized rate of 10.30% over the past decade.

The company's earnings increased from $4.87/share in 2015 to $11.57/share in 2024.

The company is expected to earn $12.81/share in 2025. 

The stock sells for 27.30 times forward earnings and yields 1.70%. 

City Holding Company (CHCO) operates as a holding company for City National Bank of West Virginia that provides various banking, trust, and investment management, and other financial solutions in the United States.

The company raised quarterly dividends by 10.50% to $0.79/share. This is the 12th consecutive annual dividend increase for this dividend achiever. The company managed to grow dividends at an annualized rate of 6.20% over the past decade.

The company managed to grow earnings from $3.40/share in 2014 to $7.62/share in 2023.

The company is expected to earn $7.75/share in 2024. 

The stock sells for 15.10 times forward earnings and yields 2.70%. 

Farmers & Merchants Bancorp, Inc. (FMAO) operates as the bank holding company for The Farmers & Merchants State Bank that provides commercial banking services to individuals and small businesses in Northwest Ohio and Northeast Indiana.

Farmers & Merchants Bancorp raised quarterly dividends by 0.60% to $0.2213/share. This is the 30th consecutive annual increase in the Company’s regular dividend payment. The company managed to grow dividends at an annualized rate of 7.70% over the past decade.

The company's earnings increased from $1.04/share in 2014 to $1.67/share in 2023.

The company is expected to earn $1.59/share. 

The stock sells for 17.40 times forward earnings and yields 3.20%. 

Fortis Inc. (FTS) operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries.

Fortis raised quarterly dividends by 4.20% to $0.615/share. ( That's Canadian Dollars). This marks the 51st consecutive annual dividend increase for this dividend king.

The company's earnings increased from $1.41/share in 2014 to $3.10/share in 2023.

The company is expected to earn $3.23/share in 2024. 

The stock sells for 19 times forward earnings and yields 4%. 

Honeywell International Inc. (HON) engages in the aerospace technologies, building automation, energy and sustainable solutions, and industrial automation businesses in the United States, Europe, and internationally.

Honeywell increased quarterly dividends by 4.60% to $1.13/share. This is the 14th 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 9.50%.

The company managed to grow earnings from $5.40/share in 2014 to $8.53/share in 2023.

The company is expected to earn $10.10/share in 2024. 

The stock sells for 20.60 times forward earnings and yields 2.20%. 

McDonald's Corporation (MCD) operates and franchises restaurants under the McDonald’s brand in the United States and internationally.

McDonald's increased quarterly dividends by 6% to $1.77/share. McDonald's has a strong history of returning capital to its shareholders and has raised its dividend for 48 consecutive years since paying its first dividend in 1976. The company managed to grow dividends at an annualized rate of 7.20% over the past decade.

The company is expected to earn $11.82/share in 2024. 

The stock sells for 20.60 times forward earnings and yields 2.20%. 

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