As part of my monitoring process, I review the list of dividend increases every week. I use this process to update my files on companies I own, and see if they are performing according to my expectations. I also use this exercise in order to uncover any hidden dividend gems.
In order to come with the list of dividend increases for this article I followed these steps:
1) I outlined companies that raised dividends last week
2) I focused on the ones with at least a ten year history of annual dividend increases
Subsequently, I reviewed each company using the following criteria, in order to determine if they are worth reviewing further:
1) Comparing the latest dividend increase to the ten year average
2) Reviewing trends in earnings per share, in order to determine the likelihood of future dividend increases
3) Looking at valuation, in order to determine whether a company is worth researching further.
The companies that made it for this weeks review are listed below:
Lincoln Electric Holdings, Inc. (LECO), designs, manufactures, and sells welding, cutting, and brazing products worldwide. It operates through three segments: Americas Welding, International Welding, and The Harris Products Group.
The company raised its quarterly dividend by 4.30% to 49 cents/share. This marked the 25th consecutive annual dividend increase for this dividend champion. During the past decade, the company has managed to boost distributions at an annualized rate of 12.10%/year
The company grew earnings from $2.46/share in 2008 to $4.37/share in 2018.
The company is expected to generate $4.97/share in 2019.
The stock is fairly valued at 18.50 times forward earnings and a dividend yield of 2.10%.
American Electric Power Company, Inc. (AEP) is an electric public utility holding company, which engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States.
The company raised its quarterly dividend by 4.50% to 70 cents/share. This marked the tenth consecutive year of annual dividend increases for this dividend achiever. During the past decade, AEP has managed to boost distributions at an annualized rate of 4.50%.
The company grew earnings from $3.42/share in 2008 to $3.90/share in 2018.
The company is expected to generate $4.16/share in 2019.
The stock is overvalued at 22.70 times forward earnings and a dividend yield of 3%.
Middlesex Water Company (MSEX), owns and operates regulated water utility and wastewater systems. It operates in two segments, Regulated and Non-Regulated.
The company increased its quarterly dividend by 6.70% to 25.625 cents/share. This marked the 47th year of annual dividend increases for this dividend champion. Over the past decade, this dividend champion has raised distributions at an annualized rate of 2.60%.
The company grew earnings from $0.89/share in 2008 to $1.96/share in 2018.
The company is expected to earn $1.97/share in 2019.
The stock is overvalued at 33.10 times forward earnings and offers a dividend yield of 1.60%.
Prosperity Bancshares, Inc. (PB) operates as bank holding company for the Prosperity Bank that provides retail and commercial banking services to small and medium-sized businesses, and consumers.
The bank increased its quarterly dividend by 12.20% to 46 cents/share. This marked the 22nd year of annual dividend increases for this dividend achiever. During the past decade, the company has managed to boost distributions at an annualized rate of 11.20%.
Between 2008 and 2018, Prosperity Bancshares managed to increase earnings from $1.86/share to $4.61/share. The company is expected to earn $4.74/share in 2019.
The stock is fairly valued at 15.40 times forward earnings and offers a dividend yield of 2.50%.
Stepan Company (SCL) produces and sells specialty and intermediate chemicals to other manufacturers for use in various end products in North America, Europe, Latin America, and Asia. The company operates through three segments: Surfactants, Polymers, and Specialty Products.
The Board of Directors of Stepan Company approved 10% increase on its quarterly cash dividend to 27.50 cents/share. The increase marks the 52nd consecutive year in which the quarterly dividend rate for this dividend king has increased. Over the past decade, this dividend king has managed to grow distributions at an annualized rate of 8.10%.
Between 2008 and 2018, earnings per share rose from $1.76 to $4.83. Stepan is expected to generate $4.95/share in 2019.
The stock is close to fully valued at 19.60 times forward earnings and yields 1.10%.
Visa Inc. (V) operates as a payments technology company worldwide. Visa’s board of directors increased its quarterly cash dividend by 20% to 30 cents per share. This marked the 11th consecutive year of annual dividend increases for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 32.60%.
Between 2008 and 2018, earnings grew from 24 cents/share to $4.42/share.
Visa is expected to earn $6.26/share in 2019, followed by $7.26/share in 2020.
The stock is overvalued at 28.40 times forward earnings. Visa yields 0.70%. The stock doesn't yield much, but offers a potential for rapid dividend growth.
Cass Information Systems, Inc. (CASS) provides payment and information processing services to manufacturing, distribution, and retail enterprises in the United States. It operates through two segments, Information Services and Banking Services.
The company raised its quarterly dividend by 3.80% to 27 cents/share. This marked the 18th consecutive annual dividend increase for this dividend achiever. During the past decade, it has managed to grow distributions by 10.70%/year.
Between 2008 and 2018, the company has managed to boost earnings from $1.27 to $2.03/share.
The stock is overvalued at 26.30 times earnings and offers a dividend yield of 2%. It may be worth a look below $40/share, assuming the dividend growth doesn't pick up from the low rate of change recently.
Hubbell Incorporated (HUBB) designs, manufactures, and sells electrical and electronic products in the United States and internationally. It operates through two segments, Electrical and Power.
Hubbell increased its quarterly dividend by 8.30% to 91 cents/share. This marked the twelfth consecutive annual dividend increase for this dividend achiever. During the past decade, it has managed to grow dividends at an annualized rate of 8.80%.
The company has managed to boost earnings from $3.93/share in 2008 to $6.54/share in 2018. Hubbell is expected to earn $8.05/share in 2019.
The stock is attractively valued at 17.30 times forward earnings and offers a dividend yield of 2.60%.
V.F. Corporation (VFC) engages in the design, production, procurement, marketing, and distribution of branded lifestyle apparel, footwear, and related products for men, women, and children in the Americas, Europe, and the Asia-Pacific. It operates through four segments: Outdoor, Active, Work, and Jeans.
The company raised its quarterly dividend by 11.60% to 48 cents/share. This marked the 47th consecutive annual dividend increase for this dividend champion. During the past decade, V.F. Corp has managed to grow dividends at an annualized rate of 12.50%.
The company earned $1.35/share in 2008, and managed to grow earnings to $3.15/share in 2018.
V.F. Corporation expects to earn $3.39/share in 2019, followed by earnings of $3.89/share in 2020.
The stock is overvalued at 24.80 times forward earnings and offers a dividend yield of 2.30%. It may be worth a second look on dips below $68/share.
The Gorman-Rupp Company (GRC) designs, manufactures, and sells pumps and pump systems worldwide.
Gorman-Rupp declared a quarterly dividend of 14.50 cents/share, which was a 7.40% in the quarterly distributions. This marked the 47th consecutive annual dividend increase for this dividend champion. During the past decade, this dividend champion has managed to grow distributions at an annualized rate of 7.10%.
Between 2008 and 2018, Gorman-Rupp managed to grow earnings from $1.04/share to $1.53/share. The company is expected to earn $1.39/share in 2019.
The stock is overvalued at 26 times forward earnings. Gorman-Rupp yields 1.60%. Given the slow rate of earnings growth and the high valuation, I do not view it as a good idea even if it is available below 20 times forward earnings.
Brown & Brown, Inc. (BRO) markets and sells insurance products and services in the United States, England, Canada, Bermuda, and the Cayman Islands. It operates through four segments: Retail, National Programs, Wholesale Brokerage, and Services.
The company raised its quarterly dividend by 6.30% to 8.50 cents/share. This marked the 26th consecutive annual dividend increase for this dividend champion. Over the past decade, Brown & Brown has managed to grow dividends at an annualized rate of 7.90%.
Brown & Brown managed to grow earnings from 58 cents/share in 2008 to $1.22/share in 2018. The company is expected to generate $1.40/share in 2019.
The stock is overvalued at 25.70 times forward earnings and offers a dividend yield of 0.90%. Brown & Brown may be worth a second look on dips below $28/share.
ONEOK, Inc., (OKE) engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates through Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments.
ONEOK Inc raised its quarterly dividend to 91.50 cents/share, which is a 7% increase over the distributions paid during the same time last year.
ONEOK is a dividend achiever who has rewarded shareholders with a raise for 17 years in a row. During the past decade, ONEOK has managed to boost distributions at an annualized rate of 16.90%.
The stock yields 5.10% today.
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 company operates through Refined Products, Crude Oil, and Marine Storage segments.
Magellan Midstream Partners raised its quarterly distribution to $1.02/share, which is a 4.30% increase over the distribution paid during the same time last year. Over the past decade, it has managed to boost distributions at an annualized rate of 10.80%. Magellan Midstream Partners is a dividend achiever with a 19 year track record of annual dividend increases.
The partnership yields 6.40% today.
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