Realty Income (O): A look at the past five years

Realty Income (O) stock reached an all-time-high of $82.29/share in February 2020, or about five years ago.

Today, the stock is selling at $56.50/share.

This is a stock price decline of 31.30% over the past five years.

Yet, this Real Estate Investment Trust (REIT) grew FFO/share from $3.29 in 2019 to $4.02/share in 2024.

This is an increase in FFO/share of 22.20%.

Note that the last three years have had FFO/share basically stay around $4/share, which possibly also makes some investors "nervous". Though prospects for FFO/share growth may appear promising too.

So why did this happen?

Long-time readers know that future returns are a function of:

1. Dividends

2. Cashflows per share (I also use EPS interchangeably or FFO/share here)

3. Change in valuations

The first two items are the fundamental sources of returns. Those are the sources of return that matter the most in the long run. I define the long run as a period that is at least 10 years.

The last item is the speculative source of return. It matters the least in the long run. It does matter a lot in the short run - that is over a period that is 5 - 10 years or so.

It looks like in the case of Realty Income the business actually increased cashflows over the past five years.

Monthly dividends per share also increased from $0.2325 in January 2020 to $0.2640 in January 2025. Subsequently the REIT hiked monthly dividends to $0.2680/share in February.

The reason is that the valuation multiple decreased over the past five years, acting as a headwind to share price appreciation.

Basically the stock sold at a Price to FFO of 25 in 2019 to a Price to FFO of 13.60 in 2025.

The multiple shrank by almost half in the past 5 years, when the business actually improved and generated more in cashflows per share.

This is a huge headwind in the short-run, entirely driven by the changes in investor appetite and how much they are willing to pay for a dollar in FFO/share

Some of it was driven by change in interest rates, as the 10 year Treasury Yield went from 2% in late 2019 to 4.40% today. But also the changes in investor appetite for REITs.

The reason for the poor performance in the stock was because investors were over excited about the stock five years ago, and were willing to bid it up. Perhaps that was also because interest rates were low.  Investors were willing to pay a premium valuation for this REIT five years ago.

Today however, investors are not willing to pay premium valuation for this REIT.  Interest rates are also higher as well. 

Predicting investor moods is very hard. Some times they are overly exuberant about a company (like they were about Realty Income in 2019). Other times, they are not excited at all about it (like today).

I believe that the mutliple today appears fine. I have no idea if the FFO multiple would shrink or grow in the future.

I do believe Realty Income will continue to grow FFO/share over time, and its investors would continue to receive their monthly and growing dividends over time. The company has been successful in doing just that for about 30 years as a publicly traded company, through various boom/bust cycles.

Sean William Scott - Dividend Investor

I came upon an interesting story about another dividend investor, this time a famous actor. This is Sean William Scott, who starred in such movies as American Pie. The Yahoo Finance article is an interesting read.

Seann William Scott, best known for his role as Stiffler in the Movie American Pie, has built a strong financial foundation beyond Hollywood. 

He has a dividend portfolio worth $12 Million, which generates $31,000 in monthly dividend income.

He has been able to smartly save and invest his income from acting, which is why he also has $18 Million in paid off real estate.

All of this passive income can provide for his needs, even if he is unable to secure new acting gigs.

This is great to hear, because acting is a notoriously volatile profession. It takes a long time to get established, and to get acting gigs. You may make a lot of money on a few projects, but that money does not always last. You may not be able to secure another role that ends up being highly paid. 

Hence, it is important to avoid inflating your lifestyle, and it is very important to save quite a bit from any windfall, and invest it wisely. There are lots of things that could go wrong, from spending, to investments to dealing with sudden influx of wealth when you are not ready and do not have the ability to manage those finances.

It looks like the royalties and dividends exceed his spending. He said he received another $47,400 in royalty payments and $31,685 in interest and dividends. He also earned $140 in residuals last month. Though that spending does seem high. He said his monthly expenses total $49,739, including $15,333 in property taxes, $8,000 in homeowner’s insurance, $7,554 in child care, $1,500 on eating out, $2,000 on utilities, $1,000 on health care, $1,500 on clothes, $1,800 on education, $1,500 on entertainment and gifts, $1,000 on auto expenses and various other bills.

It's unfortunate that his dividend portfolio holdings are not listed. But based on the monthly dividend amounts, it looks as if he generates a dividend yield of about 3%. Assuming this income is invested in a diversified portfolio of companies, it would likely grow at or above the rate of inflation over time. Qualified dividends are also tax-advantaged, meaning that they have lower tax rates than ordinary income too.

It's great to see the example of someone who made large incomes, and also managed to save and invest a large portion of it. It is unfortunate that we get to see these figures publicly, due to a divorce. Divorces can definitely put a serious dent on any otherwise well-crafted financial plan.

To paraphrase the late Charlie Munger, there are three ways that a smart man could go broke:

"ladies, liquor and leverage"

As we know, higher income won't fix bad spending habits. For example, a lot of athletes tend to make millions of dollars over short periods of time, only to have nothing to show for it later. That's because humans are programmed to base their spending on their incomes. If you suddenly get a large income, you start spending as if this income would last forever. Sadly, it doesn't, which leads to all sorts of potential problems. If you haven't this documentary can be quite interesting. 30 for 30 Broke

Did you find this story inspiring or motivational? You may like these stories listed below as well. Or if you are interested in sharing yours or another story, reach out at dividendgrowthinvestor@gmail.com

Relevant Articles:

- How Ronald Read managed to accumulate a dividend portfolio worth $8 million

- How Anne Scheiber Made $22 Million Investing in Dividend Growth Stocks

- How Grace Groner Turned $180 in $7 Million by Investing in Dividend Growth Stocks

- This Is How This Successful Dividend Investor Turned $1,000 Into $2 Million

- The Oracle of Buffalo

- How Earl Crawley Built a $500,000 Dividend Portfolio on Minimum Wage

19 Dividend Growth Stocks Raising Dividends for Shareholders

As a shareholder, there are two ways to make profits from a stock. 

The first way is when you sell your stock for a gain, after it has increased above your purchase price. The downside is that once you sell your stock, you will not be able to participate in any further upside. If you hold patiently however, you will experience a surge in net worth if the business succeeds. 

The second way is when a stock you own distributes a dividend. A company typically distributes a dividend after carefully evaluating its business needs. If a business does not find enough good opportunities to deploy profits at high rates of return, then the rational thing to do is to distribute it to shareholders. Some businesses are able to both grow earnings and dividends. 

There are over 520 businesses in the US, which have managed to increase dividends to shareholders for at least a decade. I try to monitor most of them, in an effort to review existing holdings, and uncover companies for further research. 

My monitoring process involves different steps. I regularly screen the investable universe, using my criteria, before reviewing promising candidates. I also review some major news like filings and dividend increases as well for a narrower view of the universe.

For example, last week, there were 63 US companies that raised dividends. Of those companies, only 19 had managed to grow dividends for at least 10 years in a row. You can view this list below:

As part of my review, I look at the size of the increase and compare it to the five and ten year average. I also review the trends in earnings per share, in order to determine if the track record of dividend growth was from a solid base.

I like reviewing trends in payout ratios, in order to determine dividend safety. This of course is best done in conjunction with reviewing of earnings per share.

Last but not least, I also review valuation, in order to determine if a company is worth reviewing today for a potential acquisition.

When I review companies, I look at ten year trends in:

1) Earnings per share

2) Dividend payout ratio

3) Dividends per share

4) Valuation

Since I have some experience evaluating dividend companies, I also modify my criteria based on the environment we are in and the availability of quality companies. If I see a company with a strong business model and certain characteristics that I like, I may require a dividend streak that is lower than a decade. I have also found success in looking beyond screening criteria by purchasing stocks a little above the borders contained in a screen.

It is important to be flexible, without being too lenient.

How to think about the sources of investment returns

In terms of a somewhat succint summary, it is good to think in terms of trade-offs in the full picture. The expected returns formula I use really summarizes things neatly, and makes you think about how changes in the different variables impact overall results over a given time period.

The expected returns formula is a function of:

1. Dividends

2. Earnings Per Share Growth

3. Changes in valuation

I am using this additional step in the exercise, because quite often I see folks whose whole analysis stems from looking at a price chart and making up their mind from it. This is dangerous in my opinion, because you need to understand the context and reasons of why what happened happened. And from them to determine if it can happen further in the future, or not. All probabilistically speaking of course.

One needs to look at these three items together, rather than in isolation, when it comes to understanding where returns come from.

But in general, the first two items, dividends and earnings per share growth are the fundamental sources of returns. Over long periods of time, of at least 10 - 20 years, these items generate the lions portion of returns. The percentage increases the further out in time you go.

The last time, change in valuation, is part of the speculative returns. This can ebb and flow wildly in the short run, from month to month, year to year and even 5 - 10 years. Changes in valuation can push down returns or really accelerate returns in the short-run, but those are very hard to predict. The longer your timeframe however, the lower the importance of the changes in valuation on returns. Unless of course you really really overpaid at the start - think investing at 100 times earnings in Nikkei in 1989 or buying tech stocks at 100 times earnings in 1999. 

As a long-term investor, I focus on fundamental returns (dividends and earnings). I do try to ensure I am not overpaying for a security. Other than that, valuation is a range that is accepted or not. My goal is to find a good company I can hold for decades first. Valuation is important, but in reality it only affects a portion of my returns.

For example, if I invest in a stock it does matter if I pay 15 or 25 times earnings for it in the first decade of ownership. After all, if growth in earnings per share is the same under each scenario, you are better off buying at 15 times earnings. Buying low also means obtaining a higher starting yield today. In an ideal world, you would buy low, then be able to reinvest dividends at a higher yield, and then ultimately the stock price would be revalued higher. This is how many of the greatest investors have done it.

However, you do not always have the option of either buying low or buying high. In many cases, you may have to "buy high" because you may also miss out on buying at all. There is an opportunity cost associated with waiting for too long for the perfect set-up that never comes.

After all, the real wealth for a long-term investor is not if you bought at 15 or 25 times earnings, but identifying a company that can grow those earnings at a steady clip over time, and pay a growing dividends along the way. It took me a long while to realize this lesson.

I really love this chart from the late Jack Bogle, which illustrated the interplay between the sources of return on S&P 500 between 1946 and 2015. It really puts things in perspective. 

This type of thought process works on individual companies, indices and other assets such as bonds for example.

I have posted several articles in the past, discussing the sources of investment returns, and applying the concepts to real-world situations. You can read and enjoy below:

Altria, Dividends and Total Returns

Sources of Investor Returns: Visa Edition

A Simple Model For Estimating Future Returns

Price, Value and Sources of Returns

Realty Income Over The Past Five Years

Microsoft During the lost decade

The one lesson from the first "Lost Decade" of the 21st Century..

Value in Growth Clothes: Growth in Value Clothes

The Best Performing Dividend Aristocrat Over The Past Decade

Microsoft and Altria: A Look at the past decade

Altria and Microsoft - returns over the past decade

Twenty Dividend Growth Stocks Raising Dividends Last Week

 I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me monitor existing holdings, but also potentially identify companies for further research. Plus, it helps me get the pulse of corporate boards. One of my favorite exercises in compiling this report is to look at the press releases, and noting down management verbiage related to the dividend increases. That pulse check is a good sentiment check. After all, dividends have a great deal of signaling power, which neatly summarizes corporate board expectations about near term business conditions. The output of that being the dividend increase amounts. 

TL;DR - dividend increase announcements include a lot of information that could be helpful to me as an investor.

Over the past week, there were 60 dividend increases in the US. I went ahead and isolated the 20 companies that increased dividends last week AND have a ten year track record of annual dividend increases. The list can be observed below:

Reviewing the dividend growth universe for dividend increases is part of my monitoring process. For my review, I narrow my focus to the companies with a ten year streak of annual dividend increases. I do this in order to look at companies with a sufficiently long streak of dividend growth.

The next step involves reviewing trends in earnings and dividends. I want to see earnings per share which are growing. Rising EPS can fuel future dividend growth. I also want to see dividend increases which are of decent size, and not done merely to maintain the streak of annual dividend increases.

A steep deceleration in the dividend growth rate relative to the ten year average tells me that management is not very optimistic on their business. If this is coupled with a high payout ratio and stagnant earnings per share, I can tell that the dividend streak is nearing its end.

Last but not least, I also want a decent valuation behind an investment. If I overpay dearly for an investment today, this means that the expectations for the first few years after I make the investment are already baked in the price. As a result, I want to void overpaying for an investment. Unfortunately, this is easier said than done.

The Trade-Off Between Dividend Yield and Dividend Growth

Life is full of choices. 

A few examples include:

Should I spend money on things today, or save money for the future?

Ultimately, you need to strike the right balance between those two seemingly opposite ends of the spectrum.

This is where trade-offs come handy, because they force a balance, a compromise between these two ends of the spectrum.

In the world of Dividend Growth Investing, the ultimate trade-off is the Dividend Yield versus Dividend Growth Connundrum.

On one hand, buying a company with a high dividend yield today would provide high income today. However, this investment may not grow the dividend to maintain the purchasing power of that income. In addition, that high yielding investment may have a high payout ratio. A higher payout ratio may be a problem in a recession, when earnings decline, thus increasing the risk of a dividend cut. 

On the other hand, buying a company with a high dividend growth today, could provide high income in the future.

This investment would not provide high income today however. Even though the dividend is expected to grow at a high rate of return over time, this does require patience. In addition, there is a possibility that this growth expectation does not materialize, as growth slows down. 

All of this is a gross simplification. There are a lot of data points to consider, and possible exceptions, but I've tried to summarize it to the best way possible. That being said, I view three different types of dividend growth companies, based entirely on this yield/growth trade-off.

I personally try to think through those trade-offs when I review a company. In general, expected returns are a function of:

1. Dividend Yield

2. Growth (EPS or Dividend Growth as they are roughly equal over time)

3. Change in valuation multiples

For example, for a company like Verizon (VZ) today, you get a dividend yield of 6.75%. You have an expected dividend growth rate of about 2%. This nets to an expected return of 8.75%. Let's call it 9% for simplicity.

On the other hand of the spectrum is a company like Visa (V). You get a dividend yield of 0.70%. However, dividends have a high expected rate of growth. If Visa manages to grow dividends by 12%/year, it can generate high yields on cost for patient long-term investors. Along with high expected returns of roughly 12.70%. Let's call it 13% for simplicity.

We can go back 10 or 15 years, and see that an investment in Visa would have been a smarter choice than an investment in Verizon. This of course is used merely to illustrate a point.

At the very end of 2009, Verizon sold at $27.59/share. The company paid an annual dividend of $1.90/share. The starting yield was high at 6.88%. Fast forward to the end of 2024, and the stock sold at $39.99/share and paid an annual dividend of $2.72/share. Therefore, the investor from 2009 would be generating an yield on cost of 9.85%, on top of the modest capital gains they generated.

At the end of 2014, Verizon sold at $46.78/share and had an annual dividend of $2.20/share. The starting yield was 4.70%. Investors who bought it back then would be sitting on a small unrealized capital loss, but generating an yield on cost of 5.81%.

Let's look at Visa.

At the very end of 2009, Visa sold at $21.86/share. This was adjusted for stock splits. The company paid an annual dividend of $0.12/share. The yield was low in 2009 at 0.55%. Fast forward to the end of 2024, and the stock sold at $316.04/share and paid an annual dividend of $2.36/share. The current yield is still low at 0.75%. However, the investor from 2009 would be generating an yield on cost of 10.80%, on top of the exceptional capital gains they generated.

At the end of 2014, Visa sold at $65.55/share and had an annual dividend of $0.48/share. The yield was low at 0.73%. However, investors who bought it back then would be sitting on a high unrealized capital gain, but generating an yield on cost of 3.60%.

The yield on cost for Visa is higher than Verizon over the past 15 years, and the same is true for the unrealized capital gains.

Over the past ten years however, Verizon still has a higher yield on cost than Visa, notably due to the higher starting yield. However, Visa still delivered higher unrealized capital gain.

I would argue that Visa's dividend is better covered than Verizon, due to it's lower payout ratio and higher expected growth in earnings. However, Visa's stock is not cheap today, as it discounts expectations for growth to continue. Visa sells for 30.85 times forward earnings and yields 0.68%. It has a forward payout ratio of 21%.

Verizon's stock is cheaper today, selling at 8.50 times forward earnings and yields 6.80% today. The forward payout ratio is 58%. However that's because the market expects small growth, if any. The high payout ratio also makes this dividend riskier.

Ultimately, life is full of trade-offs. The decision of whether to focus more on dividend yield versus dividend growth, or vice versa, is one such trade-off. 

Where you lean on the spectrum of this trade-off would depend on various factors, such as your expectations, risk profile, timeframe, experience, goals and objectives etc.

Hope you enjoyed today's article, and you get to thinking about those trade-offs you are making, when making your next investment. I know I do think about the trade-offs involved, whenever I try to build out my portfolio, brick by brick, to reach out my own goals and objectives.

23 Dividend Growth Companies Raising Dividends Last Week

I review the list of dividend increases every week, as part of my monitoring process. Dividends have signaling power about management's outlook for the business. As such dividend increase announcements could provide useful insights, if you know how to read them. Which goes hand in hand with monitoring.

This exericise helps me review existing holdings and also potentially identify companies for further research.

This exercise also shows how I can quickly evaluate a population of dividend growth stocks, and narrow it down to a more manageable list for further research.

Over the past week, there were 62 companies that raised dividends in the US. Twenty three of these companies that raised dividends also have a 10 year track record of annual dividend increases under their belt. The companies include:

As I mentioned above, this list is just a starting list for research and monitoring. It's not a recommendation. In order to narrow down the list, I would look at each company fundamentally, and then do a review of its valuation before deciding where to go next. I also do try to invest in companies I understand, which also prevents me from investing in companies I do not understand. You may like this old post about my entry criteria.  You may also like my post about valuation here. 

Note that I didn't include Meta's (META) first dividend increase in this review. Note that I did find it a little low - a measly 5% to 52.50 cents/share on the quarterly dividend. I would have expected that a large company in the initial phase would have stronger dividend growth. Or perhaps Meta is stating that whatever it is they are building today may need a ton of cash. Hopefully, those large CAPEX investments are allocated at a high ROI to generate further FCF/share growth. 

I also wanted to note that there were a few non-US companies that raised dividends last week as well. These are well-known and perhaps widely held as well.

Those include:

British American Tobacco (BTI), which announced a 2% hike in the annual dividend to GBP 2.4024/share. This is the 28th consecutive annual dividend increase for this international dividend aristocrat.

Nestle (NSRGY), which announced a 1.67% raise in the annual dividend to 3.05 CHF/share. This is the 29th consecutive annual dividend increase for this international dividend aristocrat. 

I was unsure whether to note it or not, but it seems like Unilever (UL) is starting to increase dividends again. The company just raised quarterly dividends to €0.4528/share, which is 6.09% raise over the dividend paid during the same time last year. It's also a 3% increase over the prior dividend. That's after keeping it unchanged for three and a half years, and losing its dividend aristocrat status in 2022.

How I quickly review companies

I have a simple process for evaluating companies. I focus on several key factors, which tell me whether a company is worth putting on my list for further research or not at all. 

1. In general, I look for companies that have managed to increase dividends for several years in a row. At least 10 consecutive annual dividend increases is a minimum requirement, as it signals a business model that has produced excess cashflows through a typical boom/bust economic cycle.

This narrows down my population a little bit, to a more manageable list of about 500 companies in the US as of the beginning of 2025. There are several hundred more of those companies abroad.

2. Second, I look for growth in earnings per share over the past decade. Rising earnings per share are the fuel behind future dividend growth. In other words, without growth in earnings per share, future dividend growth will end at some point. Note that for certain entities such as REITs for example, one needs to look for more unique metrics such as Funds from Operations (FFO).

In general, I like to see rising earnings per share over the past ten and five years. I realize that EPS will not go up in a straight up line all the time, and some fluctuations may occur. These days, we have one-time items hitting the earnings, which can temporarily sway things in either direction. But for as long as these one-time items are not always occuring each year, we should be good to go. Also note, it is very likely I should be using Free Cash Flow Per Share instead of Earnings Per Share. In general, their long-term growth should be identical relatively speaking. For the purposes of this conversation, I would use those interchangeably.

3. Third, I look for growth in dividends per share over the past decade. I like to look at most recent dividend increase, along with historical growth in dividends per share. This exercise helps me identify relatively quickly whether dividend growth is accelerating or decelerating. I understand that dividend growth will fluctuate from year to year or period to period. However, I do subscribe to the signaling theory, which states that management provides us signals about how the business is doing, by setting dividend growth rates. In other words, if dividend increases starts becoming anemic all of a sudden, this means that most likely business conditions are softening. Perhaps the previously believed wide moat firm may be seeing its moat eroding from changes. If the dividend growth stays at a fairly steady clip, then it's likely business as usual, for as long as earnings are also growing at a steady clip, and the payout ratio is not rising too much and too fast.

A rapid increase in dividends per share may signal confidence in the business. However, it may also be signaling that management is bluffing too in my opinion. I've witnessed very high dividend raises by companies in the past, notably CenturyTel about a decade or so ago and UPS around the time of Covid. These companies fortunes turned south afterwards. On the other hand, for some companeis like Dick's Sporting Goods, a high raise in dividends was a precursor to more good times ahead.

4. Fourth, I look for trends in the dividend payout ratio. In general, I prefer a flat dividend payout ratio that is below 60%. A lower payout ratio provides a good margin of safety than a higher payout ratio. That being said, there are several other factors to consider. For a company in the initial phase of dividend growth, the payout ratio would be going up for a while, as dividend growth exceeds earnings growth, up to a point. For many companies in certain industries, such as tobacco or for REITs, the payout ratio is going to be high, which is why the analysis needs to focus on stability of underlying cashflows/earnings. Dependable and less cyclical cashflows can support that high payout ratio, but it is still a risk of unknowns as cuts can be more likely in higher payout ratio companies than lower payout ratio ones.

For most companies in the sweet spot, a good range in the payout ratio is probably a good bet. 

That being said, I try to look at trends in earnings per share, dividend growth and payout ratio together, rather than in a vacuum. There are relations between these indicators that need to be looked together to gain a fuller picture of what is going on.

In general I also look at valuation, but this is a fun piece that takes things even further. Also, it's great to look at it after you've looked at stability of cashflows, their growth, payout ratios and the signaling power of the dividend. Or rather, taken all into consideration. Then one needs to take into consideration interest rates, the cyclicality of the business, growth and growth expectations and then determine whether this valuation range is reasonable or not. Valuation is part art, part science.

 In terms of a somewhat succint summary, it is good to think in terms of trade-offs in the full picture. The expected returns formula I use really summarizes things neatly, and makes you think about how changes in the different variables impact overall results over a given time period.

25 Companies Rewarding Shareholders With Raises

I review the list of dividend increases each week as part of my monitoring process. I use this process to review existing holdings and potentially uncover more companies for further research. 

That is just one part of my overall monitoring process however.

While I may report on some of the increases, that doesn't mean these companies are automatic buys. The intelligent dividend growth investor would have to apply a set of logical criteria to focus on the promising companies from a fundamental perspective, and then apply another net to catch them at a hopefully good valuation.

In my case, I apply a set of criteria to decide whether I research a company further or not.

Dividend increases do provide signaling value to me in my research process, because they basically provide an input into managements thoughts about the business prospects. It's great to bump this up against past results and my expectations. Then combine with other data I track.

Basically increases are one of the tools that help me monitor existing holdings, monitor the heart of dividend growth investing universe &potentially uncover companies for further research

I wanted to point all that for context, as my sharing increases always seem to confuse someone who is new to my work.

During the past week, there were 69 companies which raised dividends in the US. I reviewed each increase, and narrowed it down to more established dividend growth companies. I define established dividend growth companies as those that have at least a ten year streak of consecutive annual dividend increases under their belt.

In the old days, when we still had a recession every five years or so, a ten year requirement of annual dividend increases was a test of whether a company is cyclical or not. Today, when recessions are happening once every decade, if not even longer, this is perhaps sounds too conservative. However, we still need to establish a baseline for quality. I would argue that someone who is focusing on long-term investing, spanning decades, is looking for companies that can hopefully compound earnings, dividends and intrinsic value for decades. Rather than look for quick hits that may rise quickly to the sun, only to have their wings burned off just as quickly. 

Anywho, of the 69 companies that raised dividends last week, only 25 have managed to grow dividends for at least a decade. The companies that both raised dividends last week and have a ten year track record of annual dividend increases are listed below:

As I mentioned above, this is just the first step in narrowing down an investment popiulation. While this weekly dividend increase exercise is helpful as part of the monitoring process, it is also a good exercise in applying criteria to narrow down any list of companies to an investable universe.

At a minimum I would look at:

1. Growth in earnings per share over the past decade

2. Consistency of dividend growth over the past raise versus the 5 or 10 year historical record

3. Dividend payout ratio which is not too high, and not trending upwards

4. Good valuation. Which is part art, part science.

Note, the list above already includes only companies that have managed to grow dividends annually for at least a decade. In a regular population screening, that would be a key entry criteria.

Then I would review the company. But in general, a diversified portfolio of companies that pass through these types filters would likely generate good results to the investor who applies them. 

Relevant Articles:

- 34 Companies Rewarding Shareholders With Raises

- 16 Companies Rewarding Shareholders With Raises

- Nine Dividend Growth Stocks Raising Dividends Last Week

- Twenty Dividend Cash Machines Hiking Dividends Last Week

34 Companies Rewarding Shareholders With Raises

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

Last week was a very busy week for dividend increases. There were 70 companies in the US which managed to increase dividends to shareholders. This time of the year is typically a busy time for dividend increases in general.

I typically focus my attention on the companies that have managed to increase dividends for at least a decade, in order to identify companies that are more likely to keep growing those dividends in the future.

There were 34 companies that raised dividends last week, which have also managed to increase anual dividends for at least a decade.

This is a list of companies for further review. Most seem attractive as businesses, but that doesn’t mean that they should be invested in at any price, regardless of valuation.

The next step is to check each business, in order to determine if it is worth further review. I would look at ten year trends in earnings per share, dividends per share, payout ratios, shares outstanding. I would try to understand what the business does, and make an assessment if the good times would continue, so that I can expect higher earnings, dividends and intrinsic values over time. I would look at the valuation relative to earnings and dividend growth, in order to determine if the business is fairly valued, if it looks promising too. 

Relevant Articles:

- 16 Companies Rewarding Shareholders With Raises

- Three Dividend Growth Companies Increasing Dividends Last Week

- Nine Dividend Growth Stocks Raising Dividends Last Week

- Twenty Companies Spreading Holiday Cheers To Shareholders

How Robert McDevitt Built A $250 Million Estate

I love the power of compound interest. 

I also love reading stories of ordinary folks, who invested for the long-run in blue chip, dividend paying companies.

As we all know, building wealth is a matter of:

1. How much you invest

2. Your rate of return

3. How long you invest for

If you invest a small amount at the start, and generate a good enough return over time, you may end up with a very large nest egg at the end of your investment journey. For example, if you invest $10,000 today in a tax-advantaged account such as a Roth IRA or Roth 401 (k), at a 10% annualized return, and hold for 50 years, you'd end up with a little more than $1.17 Million.

If you pull any or all additional levers listed above (1, 2, or 3), you may end up with an even higher amounts. This means adding more money at the start, or over time, increasing the rate of return (which is hard to do), or increasing the holding period.

For example, if you manage to increase the holding period to 100 years, you end up with much more than $135 Million. Few have the vision to do this today, and set their family up financially for generations to come, because most do not really care about those other than themselves. Many also lack the financial literacy that folks such as the Rockefellers have. But I digress.

Today, I will share the story of Robert McDevitt, who left a little over $250 Million to charity when he died in 2008.

He died at the age of 90 in 2008. He ran a nice-enough but unremarkable funeral home near the center of town. He lived a frugal life, living off his business income, and keeping invested on his stock. Sadly, his spouse died a little before him, and they had no children. 

The bulk of this estate was in IBM stock, which he had inherited from his mother.

Robert McDevitt was an early investor in IBM stock which he inherited from his mother and held for his life. (Source)

At the time of his passing, he was the single largest shareholder of IBM stock, valued at over $250 million. 

McDevitt's mother, Mary Graif McDevitt, was secretary to A. Ward Ford, one of the original board members of the Computing Tabulating Recording Company in the early 1900s. 

A. Ward Ford was responsible for hiring Tom Watson, Sr. as president, who eventually changed the company's name to IBM and ran it until the 1950s. 

Mary McDevitt apparently borrowed $125 to buy the company stock and reinvested back into the company, passing the shares on to her son.

It's truly fascinating how a small initial investment, compounded over 90 years at a high rate of return, with dividends reinvested, turned into such an amazingly large estate. 

It sounds simple, but it's definitely not easy. IBM has gone through several shake-ups over the years, which threatened its business. Yet, the company is still going, and had overcome these obstacles.

IBM is a dividend aristocrat that has been able to pay dividends since 1913, and increased them annually for 29 years.

It's even more amazing that this money went to charitable causes, benefiting others. I love all of this.

The money was put in trust, and these benefactors will receive investment income from the pot of money.

It's fascinating to look at the source of this estate, namely IBM, which has generated a ton of wealth for those patient enough to hold on to the stock.

IBM has been one of the best performers on the stock exchange over the past century and then some.

If you invested $1 in $IBM in August 1911, it would have grown to $40,000 by 2014 on a price basis. 

If you reinvested your dividends, that $1 investment would have grown to $1,434,300 by 2014.

The source of that calculation is this Global Financial Data article. They (GFD) really know their stuff when it comes to historical data on various financial markets.

There is some element of survivorship bias of course. But it does seem that a lot of fortunes we hear about are generated from some cash from a business or regular employment, which have been invested in a single security or two, then held on for decades, while enjoying the fruits of patient long-term compounding. This is how wealth tends to be built. 

All those traders that try to time entries and exits, trying to outsmart everyone else, end up wasting those true long-term opportunities. And end up paying tons in taxes, fees, commissions, and missed opportunity. 

The other factor to discuss is that while the majority of the portfolio seems to have been largely in IBM stock, that doesn't mean there weren't other investments either. It's simply a testament to the power of a few principles such as the Coffee Can Portfolio. This is where you assemble a portfolio of a few solid blue chip companies, and then you let the winners run for as long as possible. As a result, the portfolio ends up really concentrating itself over time into the best performing investments. The failures end up as mere footnotes.

The conclusion for me is basically that long-term investing works for those patient enough to take advantage of it. In my case, it means continuing to invest in a diversified portfolio of quality companies, reinvesting those dividends, keeping taxes/commissions/fees low, and investing for the long-run. This also means being as inactive as possible, and letting winners run for as long as possible, without re-balancing/trying to time entries or exits, or second-guessing and micro-managing my investments.

Relevant Articles:

- Time in the market is your greatest ally in investing

- The Perfect Dividend Portfolio

- The Coffee Can Portfolio

- Use these tools within your control to get rich

Do not let politics influence your investment decisions

I recently stumbled upon an interesting statistic, which showed the performance of US Equities by president since president Kennedy.

This chart basically shows that on average, US Equities do not really care much who is in charge at the White House. While policy could affect some companies and some industries, it doesn't really seem to matter for markets who's at the White House. Even if those do occur, their impact and magnitude of the change are hard to ascertain at the moment. Hence, that change is as good as any guess.

If you had only invested if just the Republicans are in power or if just the Democrats are in power, you would have missed out on a large chunk of total returns over the past 63 years.

I am mostly posting this, as I have often heard folks make drastic portfolio changes based on political affiliations. In general, that is most likely a mistake. And possibly a very expensive one, given the opportunity cost of missed power of compounding. 

I would advise against letting political events influence investment decisions, as that is mostly a knee-jerk short-term timing. I emphasize long-term investment principles over political noise. This aligns with broader investment advice to focus on fundamentals rather than short-term political changes.

The chart in the post references historical data from January 1961 to December 2024, showing that the market generally grows under both Democratic and Republican presidencies, except for a notable decline during George W. Bush's term, which was impacted by significant economic events like the dot-com bubble burst and the Great Financial Crisis. That being said, no indicator is 100% right. But trying to time the market based on a single data point is probably not going to work out over time. The best investment strategy is to ignore that noise, try to avoid your costly biases, and stay invested.

As Dividend Growth Investors, we focus on individual companies and businesses. We care about whether those businesses can continue growing earnings and dividends over time, how safe those dividends are and whether we can buy those shares at a good entry point. It doesn't really matter as much who is in the White House. 

Even the Oracle of Omaha shares this view too. He has stated on numerous occasions that you do not want to have a political view when investing. That's because this view could bias you, and essentially you may end up shooting yourself in the foot. He has mentioned that he has been able to invest under every presidency he has lived through, without worrying who's in the White House.  Warren Buffett says it doesn't matter who's in the white house

Stay true to your long-term strategy, do not let yourself be driven by narratives and do not interrupt the compound interest effect without thinking.

16 Companies Rewarding Shareholders With Raises

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

Last week was a very busy week for dividend increases. There were 40 companies in the US which managed to increase dividends to shareholders. This time of the year is typically a busy time for dividend increases in general.

I typically focus my attention on the companies that have managed to increase dividends for at least a decade, in order to identify companies that are more likely to keep growing those dividends in the future.

There were 16 companies that raised dividends last week, which have also managed to increase anual dividends for at least a decade.

This is a list of companies for further review. Most seem attractive as businesses, but that doesn’t mean that they should be invested in at any price, regardless of valuation.

The next step is to check each business, in order to determine if it is worth further review. I would look at ten year trends in earnings per share, dividends per share, payout ratios, shares outstanding. I would try to understand what the business does, and make an assessment if the good times would continue, so that I can expect higher earnings, dividends and intrinsic values over time. I would look at the valuation relative to earnings and dividend growth, in order to determine if the business is fairly valued, if it looks promising too. 

Relevant Articles:

- Three Dividend Growth Companies Increasing Dividends Last Week

- Nine Dividend Growth Stocks Raising Dividends Last Week

- Twenty Companies Spreading Holiday Cheers To Shareholders

Dividend Aristocrats List for 2025

The S&P Dividend Aristocrats index tracks companies in the S&P 500 that have increased dividends every year for at least 25 years in a row. The index is equally weighted, and rebalanced every quarter.

To qualify for membership in the S&P 500 Dividend Aristocrats index, a stock must satisfy the following criteria:

1. Be a member of the S&P 500
2. Have increased dividends every year for at least 25 consecutive years
3. Meet minimum float-adjusted market capitalization and liquidity requirements defined in the index inclusion and index exclusion rules below.

The group of companies in the Dividend Aristocrats index tend to generate reliable dividend income, and provide the potential for strong total returns. The list is well diversified across sectors.

There are a record 69 companies in the Dividend Aristocrats index for 2025.

For 2025, there were several changes. The index added:

Erie Indemnity (ERIE)

Eversource Energy (ES)

FactSet Research Systems (FDS)

Since the inception of the index in 1989, the number of holdings has fluctuated from 26 to 68 holdings. This year marks the highest number of dividend aristocrats ever, on record. It is still not even half the number of Dividend Champions however.


The 2025 Dividend Aristocrats are listed below:

Symbol	Name	Sector	Years of Annual Dividend Increases	10 year Dividend   Growth	Dividend Yield
ABBV	AbbVie Inc.	Health Care	52	14.08%	3.69%
ABT	Abbott Laboratories	Health Care	52	9.60%	2.09%
ADM	Archer-Daniels-Midland Co	Consumer Staples	49	7.62%	3.96%
ADP	Automatic Data Processing	Information Technology	49	12.76%	2.10%
AFL	AFLAC Inc	Financials	43	10.45%	2.24%
ALB	Albemarle Corp.	Materials	30	4.19%	1.88%
AMCR	Amcor	Materials	29	#VALUE!	5.42%
AOS	Smith A.O. Corp	Industrials	31	15.79%	1.99%
APD	Air Products & Chemicals Inc	Materials	42	8.86%	2.44%
ATO	Atmos Energy	Utilities	41	8.15%	2.50%
BDX	Becton Dickinson & Co	Health Care	53	5.70%	1.83%
BEN	Franklin Resources Inc	Financials	45	9.96%	6.31%
BF.B	Brown-Forman Corp B	Consumer Staples	40	6.30%	2.39%
BRO	Brown & Brown	Financials	31	10.17%	0.59%
CAH	Cardinal Health Inc	Health Care	28	4.55%	1.71%
CAT	Caterpillar Inc	Industrials	31	7.62%	1.55%
CB	Chubb Ltd	Financials	31	3.29%	1.32%
CHD	Church & Dwight	Consumer Staples	28	6.23%	1.08%
CHRW	C.H. Robinson Worldwide	Industrials	27	5.53%	2.40%
CINF	Cincinnati Financial Corp	Financials	64	6.22%	2.25%
CL	Colgate-Palmolive Co	Consumer Staples	61	3.38%	2.20%
CLX	Clorox Co	Consumer Staples	47	5.26%	3.00%
CTAS	Cintas Corp	Industrials	42	21.21%	0.85%
CVX	Chevron Corp	Energy	37	4.47%	4.50%
DOV	Dover Corp	Industrials	69	2.84%	1.10%
ECL	Ecolab Inc	Materials	33	7.56%	1.11%
ED	Consolidated Edison Inc	Utilities	50	2.80%	3.72%
EMR	Emerson Electric Co	Industrials	68	1.79%	1.70%
ERIE	Erie Indemnity	Financials	35	7.22%	1.32%
ES	Eversource Energy	Utilities	26	6.18%	4.98%
ESS	Essex Property Trust	Real Estate	30	6.76%	3.43%
EXPD	Expeditors International	Industrials	30	8.60%	1.32%
FDS	FactSet Research	Financials	26	10.43%	0.87%
FAST	Fastenal	Industrials	26	12.05%	2.17%
FRT	Federal Realty Invt Trust	Real Estate	57	3.13%	3.93%
GD	General Dynamics	Industrials	33	8.71%	2.16%
GPC	Genuine Parts Co	Consumer Discretionary	68	5.56%	3.43%
GWW	Grainger W.W. Inc	Industrials	53	6.75%	0.78%
HRL	Hormel Foods Corp	Consumer Staples	59	10.94%	3.70%
IBM	Intl Business Machines	Information Technology	29	4.61%	3.04%
ITW	Illinois Tool Works Inc	Industrials	50	12.57%	2.37%
JNJ	Johnson & Johnson	Health Care	62	5.93%	3.43%
KMB	Kimberly-Clark	Consumer Staples	52	4.04%	3.72%
KO	Coca-Cola Co	Consumer Staples	62	4.75%	3.12%
KVUE	Kenvue	Consumer Staples	62	#N/A	#N/A
LIN	Linde plc	Materials	31	7.90%	1.33%
LOW	Lowe's Cos Inc	Consumer Discretionary	62	18.56%	1.86%
MCD	McDonald's Corp	Consumer Discretionary	49	7.53%	2.44%
MDT	Medtronic plc	Health Care	47	9.04%	3.51%
MKC	McCormick & Co	Consumer Staples	38	8.54%	2.36%
NEE	NextEra Energy	Utilities	30	11.01%	2.87%
NDSN	Nordson Corp	Industrials	61	14.01%	1.49%
NUE	Nucor Corp	Materials	52	3.85%	1.89%
O	Realty Income Corp.	Real Estate	32	3.61%	5.93%
PEP	PepsiCo Inc	Consumer Staples	52	7.92%	3.56%
PG	Procter & Gamble	Consumer Staples	68	4.57%	2.40%
PNR	Pentair PLC	Industrials	49	2.22%	0.99%
PPG	PPG Industries Inc	Materials	53	7.34%	2.28%
ROP	Roper Technologies, Inc	Industrials	32	14.13%	0.63%
SHW	Sherwin-Williams Co	Materials	46	14.58%	0.84%
SJM	J.M. Smucker	Consumer Staples	27	5.78%	3.92%
SPGI	S&P Global	Financials	51	11.74%	0.73%
SWK	Stanley Black & Decker	Industrials	57	4.80%	4.09%
SYY	Sysco Corp	Consumer Staples	54	5.70%	2.67%
TGT	Target Corp	Consumer Discretionary	57	8.86%	3.31%
TROW	T Rowe Price Group Inc	Financials	38	10.92%	4.39%
WMT	Wal-Mart	Consumer Staples	51	2.47%	0.92%
WST	West Pharmaceutical Services	Health Care	32	7.05%	0.26%
XOM	Exxon Mobil Corp	Energy	42	3.58%	3.68%
Note: Data as of 12/31/2024

Note: Data as of 12/31/2024

The index has generated strong total returns over time past decade. 

It tends to shine during bear markets, such as 2000 - 2003, 2007 - 2009 and 2022. I wanted to note that in 2008, the Dividend Aristocrats index declined by 21.88%. The S&P 500 however declined by 37%.


The dividend aristocrats index tends to shine during bear markets and low return environments. However, it also pulls its weight when we are in a bull market too. It is the best of both worlds really.

These are the returns since the launch of the Dividend Aristocrats Index in 1989:

You can see the performance of the Dividend Aristocrats Index versus S&P 500 since 1989. The S&P 500 dominated during the 1990's. However, the Dividend Aristocrats index did very well during the next decade. During the past decade, the Dividend Aristocrats Index has basically matched S&P 500 until early 2020. Over the past two years, it has trailed S&P 500 significantly. 

I first stumbled upon the Dividend Aristocrats index in late 2007, and instantly understood why dividend growth investing is such a powerful wealth generating tool. If someone had invested in the Dividend Aristocrats index after reading my review of the list at the beginning of 2008, they would have more than tripled their money. 

As I gained more experience however, I have gravitated more towards the Dividend Champions list, which was created by Dave Fish. The Dividend Champions list is more complete, as it doesn’t exclude companies due to low liquidity, or due to market capitalization below a certain threshold. In addition, I find that historically, the list of Dividend Champions has followed a more consistent approach than the list of Dividend Aristocrats. Sadly, Dave passed away last year. Luckily, another person has agreed to update it for the time being. You can view the 2024 Dividend Champions List here.

When I review the list of historical changes in the Dividend Aristocrats index, I see some inconsistencies in the way portfolio components are added or removed.

For example, the Dividend Aristocrats index removed Altria in 2007, after it spun-off Kraft Foods and as a result its dividend decreased. It could be argued that the dividend income for the investor was not decreased, because they kept getting a dividend from Altria as well as dividends from Kraft Foods.

The S&P committee seems to have rectified this issue, and have kept both Abbott and Abbvie after legacy Abbott Laboratories split in two companies in early 2013.

Ironically, Dave Fish had Altria listed as a Dividend Champion. However, he didn’t have Abbott nor Abbvie listed as a dividend champion ( they are listed as Dividend Aristocrats however).


This is why you need to perform your own checks as an investor.

In addition, I wanted to let you know that I would not purchase all companies from either lists blindly. I run my entry criteria screen to come up with a list of companies for further research. Before investing in any individual stock, I research it enough to gain some understanding of the business and its trends in fundamentals.

Relevant Articles:

- Dividend Champions, Contenders & Challengers: The most complete list of US dividend growth stocks available
- Dividend Aristocrats List for 2017
- Dividend Aristocrats for Dividend Growth and Total Returns
- Where are the original Dividend Aristocrats now?
- Historical changes of the S&P Dividend Aristocrats
- Why do I like the Dividend Aristocrats?
- Dividend Aristocrats List for 2016