I review the list of dividend increases every week, as part of my monitoring process. This exercise helps me to check up on existing holdings and to identify companies for my watch list.
Last week, there were seven dividend growth stocks that raised dividends to shareholders. Each one of those companies has at least a ten year track record of annual dividend increases. Since dividends are paid out of earnings, these dividend achievers couldn’t have compiled such a record without having enjoyed consistent success in their core business, whatever it is. So you’re looking at a group of profitable enterprises with staying power.
I review the increase relative to the dividend record, along with valuation and track record. The companies included:
Exxon Mobil Corporation (XOM) explores for and produces crude oil and natural gas in the United States, Canada/Other Americas, Europe, Africa, Asia, and Australia/Oceania. It operates through Upstream, Downstream, and Chemical segments.
The company raised its quarterly dividend by 6.10% to 87 cents/share. This marked the 37th year of annual dividend increases for this dividend champion. Over the past decade, the company has managed to grow its annual dividend at a rate of 7.60%/year. Exxon Mobil’s earnings went from $3.88/share in 2009 to $4.88/share in 2018. Exxon-Mobil is expected to generate $4.37/share in 2019.
Currently, Exxon Mobil is richly valued at 18.40 times forward earnings and yields 4.30%. The stock has a forward payout ratio of 79.60%. I view the stock as a hold today, but I would not be adding to my position, given the lack of meaningful earnings growth over the past decade. The high payout ratio signifies that future dividend growth will be limited and much slower in the future, unless we get another steep increase in oil prices.
Johnson & Johnson (JNJ), researches and develops, manufactures, and sells various products in the health care field worldwide. It operates in three segments: Consumer, Pharmaceutical, and Medical Devices.
The company raised its quarterly dividend by 5.60% to 95 cents/share. This marked the 57th consecutive annual dividend increase for this dividend king. The company has managed to grow dividends by 7%/year on average over the past decade.
Between 2009 and 2018 the company managed to boost earnings from $4.40/share to $5.61/share. The company is expected to generate $.8.61/share in 2019.
The stock is attractively valued at 16.30 times forward earnings and yields 2.70%.
W.W. Grainger, Inc. (GWW) distributes maintenance, repair, and operating (MRO) products and services in the United States, Canada, Europe, Japan, Mexico, and internationally.
The company raised its quarterly dividend by 5.90% to $1.44/share. This marked the 48th consecutive annual dividend increase for this dividend champion. Over the past decade, it has managed to hike its distributions at a rate of 13.20%/year. Between 2009 and 2018, the company has managed to grow earnings from $5.62/share to $13.73/share. W.W. Grainger is expected to earn $17.97/share in 2019.
The stock seems attractively priced at 16.20 times forward earnings and yields 2%.
Cullen/Frost Bankers, Inc. (CFR) operates as the holding company for Frost Bank that offers commercial and consumer banking services in Texas. It operates in two segments, Banking and Frost Wealth Advisors.
The company raised its quarterly dividend by 6% to 71 cents/share. This marked the 26th consecutive annual dividend increase for this dividend champion. The company has managed to grow dividends by 4.50%/year on average over the past decade.
Between 2009 and 2018 the company managed to boost earnings from $3/share to $6.90/share. The company is expected to earn $7.10/share in 2019.
The stock looks attractively valued at 14.10 times forward earnings and offers a 2.80% dividend yield today.
Ameriprise Financial, Inc. (AMP), provides various financial products and services to individual and institutional clients in the United States and internationally. It operates through five segments: Advice & Wealth Management, Asset Management, Annuities, Protection, and Corporate & Other.
The Board of Directors of Ameriprise Financial raised its quarterly dividend by 7.80% to 97 cents/share. This marked the 14th consecutive annual dividend increase for this dividend achiever. The ten year dividend growth rate is 18.20%/year on average.
Between 2009 and 2018, Ameriprise Financial has been able to grow earnings from $2.95/share to $14.29/share. Ameriprise is expected to generate $15.71/share in 2019.
The stock is attractively valued at 9.30 times forward earnings and offers an attractive current yield of 2.60%.
Magellan Midstream Partners, L.P. (MMP) engages in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. The partnership operates through Refined Products, Crude Oil, and Marine Storage segments. Magellan increased its quarterly distribution to $1.005/unit, which represents a 10.70% increase over the distribution paid during the same time last year. The partnership has managed to grow distributions by 10.80%/year on average over the past decade. Magellan Midstream Partners has managed to increase its annual distributions for 18 years in a row. The MLP yields 6.50% today. Along with Enterprise Products Partners, it is one of the better run MLPs out there in my opinion.
Parker-Hannifin Corporation (PH) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates in two segments, Diversified Industrial and Aerospace Systems.
The company raised its quarterly dividend by 15.90% to 88 cents/share. This marked the 63th consecutive annual dividend increase for this dividend king. The company has managed to grow dividends by 12.30%/year on average over the past decade.
Between 2009 and 2018 the company managed to boost earnings from $4.40/share to $5.61/share. Parker-Hannifin is expecting to earn between $11.04 and $11.54/share in 2019.
Parker-Hannifin looks attractively valued at 16.60 times forward earnings and yields 1.90%.
Portland General Electric Company (POR), an integrated electric utility company, engages in the generation, wholesale purchase, transmission, distribution, and retail sale of electricity in the state of Oregon. The company operates seven thermal plants; seven hydroelectric plants; and two wind farms. The company raised its quarterly dividend by 6.20% to 38.5 cents/share. This marked the 14th consecutive annual dividend increase for this dividend achiever. The company has managed to grow dividends by 3.90%/year on average over the past decade.
Between 2009 and 2018, the company managed to grow its earnings from $1.31/share in 2009 to $2.37/share in 2018. The utility is expected to earn $2.44/share in 2019.
The stock looks overvalued at 21.40 times forward earnings. Portland General Electric yields 2.95%.
Westamerica Bancorporation (WABC) is the holding company for Westamerica Bank, a regional community bank providing consumer and commercial financing with branches throughout Northern and Central California. The company raised its quarterly dividend by 2.50% to 41 cents/share. This marked the 28th consecutive annual dividend increase for this dividend champion. The company has managed to grow dividends by 1.40%/year on average over the past decade.
Between 2009 and 2018, earnings per share decreased from $4.14 to $2.67. Westamerica is expected to generate $2.98/share in 2019. The bank is overvalued at 21.50 times forward earnings and yields 2.60%. Due to the high valuation, lack of earnings growth, and slow dividend growth over the past decade, I am not interested in the stock at the time.
Xilinx (XLNX) develops highly flexible and adaptive processing platforms that enable rapid innovation across a variety of technologies – from the endpoint to the edge to the cloud. The company raised its quarterly dividend by 2.80% to 37 cents/share. This marked the 17th consecutive annual dividend increase for this dividend achiever. The company has managed to grow dividends by 10.20%/year on average over the past decade.
Between 2009 and 2018, the company managed to grow earnings from $1.31/share to $1.99/share. Xilinx is expected to earn $3.83/share in 2019. The stock is overvalued at 31 times forward earnings. Xilinx yields 1.20%.
Evercore Inc. (EVR), operates as an independent investment banking advisory firm in the United States, Europe, Latin America, and internationally. It operates through two segments, Investment Banking and Investment Management. The company boosted its quarterly dividend by 16% to 58 cents/share. This dividend achiever has managed to grow dividends for 13 years in a row. Over the past decade, it has managed to raise dividends at an annual rate of 14.75%/year. Evercore lost 16 cents/share in 2009, but has managed to turn around operations to a gain of $8.33/share in 2018. Evercore is expected to generate $7.95/share in 2019.
The stock is fairly priced at 12.10 times forward earnings and yields 2.40%.
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