As a dividend growth investor, I look for solid companies to invest my hard earned money in. I look for companies that can grow earnings, and afford to raise dividends regularly. A long dividend streak is the indicator of quality, that places companies on my list for further research. A long dividend streak is not an accident, but the result of a long period of a solid company generating excess cashflows. A byproduct of this solid competitive advantage ultimately results in companies showering their investors with more cash dividends every single year. In my research I look at trends in earnings per share, dividends per share, dividend payout ratios and valuation. I try to evaluate qualitative as well as quantitative factors at play as well.
This is why I review the list of dividend increases every single week. This is a helpful monitoring tool for the companies I own, and for the companies I am interested in owning.
In the past week, there were several companies that raised dividends to shareholders. These companies have at least a ten year streak of annual dividend increases. The companies include:
General Dynamics Corporation (GD) operates as an aerospace and defense company worldwide. It operates in five segments: Aerospace, Combat Systems, Information Technology, Mission Systems, and Marine Systems.
The company raised the quarterly dividend by 9.70% to $1.02/share. This marked the 28th year of consecutive annual dividend increases for this dividend champion. General Dynamics has managed to boost the dividend at an annualized rate of 10.50%/year over the past decade.
Between 2008 and 2018 the company managed to boost its earnings from $6.18/share to $11.18/share. General Dynamics is expected to earn $11.71/share in 2019.
The stock is attractively valued at 14.20 times forward earnings and yields 2.45%.
Horace Mann Educators Corporation (HMN) operates as a multiline insurance company in the United States. The Company operates through four segments: Property and Casualty, Retirement, Life, and Corporate and Other. The company’s quarterly dividend was increased by 1% to 28.75 cents/share. This marked the tenth consecutive year of annual dividend increases for this newly minted dividend achiever. The ten-year dividend growth is 12%/year. The company has been unable to grow earnings per share by much over the past decade, and most of the dividend growth was achieved through expanding the dividend payout ratio.
Between 2008 and 2018 the company’s earnings went from $1.81/share to $0.44/share. The earnings for 2018 are lower due to high catastrophe losses. Horace Mann Educators Corporation is expected to earn $2.32/share in 2019.
The stock seems fairly valued at 16.20 times forward earnings and spots a dividend yield of 3.10%. Given the slow rate of earnings growth over the past decade, the recent slow dividend hike, I am not interested in the stock at this time.
Ross Stores, Inc. (ROST) operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brands in the United States. It primarily offers apparel, accessories, footwear, and home fashions.
The board of directors for Ross Stores hiked its quarterly dividend by 13.30% to 25.50 cents/share. This marked the twenty-fifth consecutive annual dividend increase for this newly minted dividend champion. The recent dividend hike is slower than the ten year average of 25.20%/year.
Between 2009 and 2019, Ross Stores managed to boost its earnings from $0.58/share to $4.26/share. Ross Stores is expected to generate $4.52/share in fiscal year 2020. This is a 6% growth in earnings from 2019’s numbers, which is slow for a growth company with lofty expectations baked into the price. I find it richly valued at 19.70 times forward earnings and a dividend yield of 1.15%. Ross Stores may be worth another look on dips below $85/share.
Northrim BanCorp, Inc. (NRIM) operates as the bank holding company for Northrim Bank that provides commercial banking products and services to businesses and professionals in Alaska. The company operates in two segments, Community Banking and Home Mortgage Lending. The board of directors raised the quarterly dividend by 11.10% to 30 cents/share.
This was the tenth consecutive year of increasing dividend payments for Northrim BanCorp. The company has a ten year dividend growth rate of 4.40%/year.
The bank earned $2.86/share in 2018, which was higher than the peak earnings of $1.81 per share achieved in 2007. The company expects to earn $2.83/share in 2019. The stock seems cheap at 13 times forward earnings and offers a dividend yield of 3.20%.
Taubman Centers, Inc. (TCO) operates as a real estate investment trust. Its engaged in the ownership, leasing, acquisition, disposition, development, expansion, and management of regional shopping centers.
Last week, this REIT hiked its quarterly dividends by 3.10% to 65.75 cents/share. This marked the tenth year of consecutive annual dividend increases for this newly minted dividend achiever. Taubman Centers has a ten year dividend growth rate of 4.70%/year.
Taubman Centers managed to grow FFO/share between 2008 and 2018, from $1.51 to $3.71. This REIT seems fairly valued at 13.80 times FFO and offers a dividend yield of 5.10%.
Relevant Articles:
