My monitoring process involves reviewing notable information for companies on my watchlist and companies on my portfolio. A fairly significant chunk is spent reviewing the dividend growth universe for value. I also review the list of dividend increases every week, but focus on the ones that have at least a ten year track record of annual dividend increases.
It is a helpful tool to help me see the pace of dividend growth for companies I may be interested. It is also a helpful exercise to familiarize myself with companies that I may have not looked at before, and potentially place them on my list for further research. I like to review a lot of companies, and watch them operate in real time. This trains me to hopefully identify certain patterns that may be helpful in my stock research and selection process.
That process is also a nice summary of what I look for in a company. I view a long streak of dividend increases as an indication of quality. Only a limited number of companies end up being able to grow dividends for ten years in a row. This is my investable universe. I review the most recent dividend increase, and compare it to the past five and ten years. It is helpful to see a company whose growth is fairly consistent over time. It is also helpful to compare this growth along with the growth in earnings per share, and observing the payout ratio as well. In general, dividend growth investing is about selecting a company that grows earnings and dividends in lockstep, and grows intrinsic value as a result. Last but not least, we are looking to acquire such a company without overpaying for it. Valuation is part art, part science, because the right multiple depends on variable such as growth, dependability of the earnings stream, industry and interest rates.
In general, I look for companies that can continue to thrive, no matter what the underlying economic conditions are. It is amazing that no matter what we went through in 2020, there are so many companies that are resilient enough, so that they can continue growing their dividends. Find a company so good that it can increase its dividend and share buyback during a pandemic.
During the past week, the following companies managed to increase dividends to shareholders:
ManpowerGroup Inc. (MAN) provides workforce solutions and services in the Americas, Southern Europe, Northern Europe, and the Asia Pacific Middle East region.
The company increased its semi-annual dividend by 7.35% to $1.17/share. This marked the tenth consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow distributions at an annualized rate of 11.40%.
Earnings are cyclical and rise and fall with the economy. Earnings peaked at $5.73/share in 2007, fell to a loss of $3.26/share in 2010, before rebounding to $8.56/share in 2018. Manpower Group is expected to earn $3.32/share in 2020.
Right now the stock is selling for 26.20 times forward earnings and yields 2.70%.
Aaron’s, Inc. (AAN) operates as a specialty retailer of consumer electronics, computers, residential and office furniture, household appliances, and accessories in the United States and Canada.
The company increased its quarterly dividend by 12.50% to 4.50 cents/share. This marked the seventeenth consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow distributions at an annualized rate of 11.90%.
The company earned $1.37/share in 2009. Aaron's is expected to earn 5.13/share in 2020.
Right now the stock is selling for 11.70 times forward earnings and yields 0.30%.
Microchip Technology Incorporated (MCHP) develops, manufactures, and sells semiconductor products for various embedded control applications in the Americas, Europe, and Asia.
The company increased its quarterly dividend by 0.14% to 36.85cents/share. This marked the 19th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow distributions at an annualized rate of 0.75%.
Between 2009 and 2019, the company grew earnings from $1.31/share to $2.23/share. Microchip Technology is expected to earn $6.26/share in 2020.
Right now the stock is selling for 20.15 times forward earnings and yields 1.20%.
Snap-on Incorporated (SNA) manufactures and markets tools, equipment, diagnostics, and repair information and systems solutions for professional users worldwide. It operates through Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services segments.
Snap-On raised its quarterly dividend by 13.895 to$1.23/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to grow dividends at an annualized rate of 12.60%.
The company earned $4.07/share in 2009 and managed to grow that earnings stream to $12.41/share in 2019. Snap-On is expected to earn $10.74/share in 2020.
Right now the stock is selling for 15.95 times forward earnings and offers a dividend yield of 2.87%.
Assurant, Inc. (AIZ) provides lifestyle and housing solutions that support, protect, and connect consumer purchases in North America, Latin America, Europe, and the Asia Pacific. The company operates through three segments: Global Lifestyle, Global Housing, and Global Preneed.
The company raised its quarterly dividend by 476% to 66 cents/share. This marked the 17th year of annual dividend increases for this dividend achiever. During the past decade, it has managed to grow dividends at an annulized rate of 15.20%.
Between 2009 and 2019, Assurant managed to grow earnings from $3.63/share to $5.84/share. The company is expected to earn $8.97/share in 2020.
Right now the stock is selling for 14.90 times forward earnings and yields 2%.
Automatic Data Processing, Inc. (ADP) provides cloud-based human capital management solutions worldwide. It operates through two segments, Employer Services and Professional Employer Organization (PEO).
The company raised quarterly dividends by 2.20% to 93 cents/share. This marked the 45th consecutive annual dividend increase for this dividend champion. Over the past decade ADP has managed to grow dividends at an annualized rate of 10.60%.
Between 2009 and 2019, the company managed to increase earnings from $2.63/share to $5.70/share. The company is expected to generate $5.63/share in 2020.
Right now, the stock is selling for 30.50 times forward earnings and yields 2.20%.
Service Corporation International (SCI) provides deathcare products and services in the United States and Canada. The company operates through Funeral and Cemetery segments.
The company raised quarterly dividends by 10.53%to 21 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. Over the past decade SCI has managed to grow dividends at an annualized rate of 16.23%.
The company managed to grow earnings from $0.49/share in 2009 to $1.99/share by 2019. Service Corporation International is expected to earn $2.60/share in 2020.
Right now the stock is selling for 19.20 times forward earnings and yields 1.70%.
Southside Bancshares, Inc. (SBSI) operates as the bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations.
The company raised its quarterly dividend by 3.23% to 32 cents/share. This marked the 26th consecutive year of annual dividend increases for this dividend champion. During the past decade, it has managed to grow dividends at an annulized rate of 12.50%.
Between 2009 and 2019, Southside Bancshares managed to grow earnings from $2.05/share to $2.20/share. The company is expected to earn $2.23/share in 2020.
Right now the stock is selling for 13.30 times forward earnings and yields 4.30%.
Atmos Energy Corporation (ATO) engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through Distribution, and Pipeline and Storage segments.
Atmos increased its quarterly dividend by 8.70% to 62.50 cents/share. This was a higher rate of increase than the ten year average of 4.95%/year over the past decade. This was the 37th year of annual dividend increases for this dividend champion.
Between 2009 and 2019, Atmos managed to grow earnings from $2.07/share to $4.35/share. The company is expected to earn $5.02/share in 2020.
Right now the stock is selling for 20.35 times forward earnings and yields 2.45%.
Lancaster Colony Corporation (LANC) manufactures and markets specialty food products for the retail and foodservice markets in the United States. The company operates in two segments, Retail and Foodservice.
The company raised its quarterly dividends by 7.15% to 75 cents/share. This marked the 58th consecutive annual dividend increase for this dividend king. Over the past decade, the company has managed to grow distributions at an annualized rate of 8.65%.
Lancaster Colony managed to boost earnings from $3.17/share in 2009 to $4.97/share in 2019. The company is expected to generate $5.61/share in 2020. The stock is selling at 31.20 times forward earnings and yields 1.70%.
MDU Resources Group, Inc. (MDU) engages in regulated energy delivery, and construction materials and services businesses in the United States. The company's Electric segment generates, transmits, and distributes electricity for residential, commercial, industrial, and municipal customers in Montana, North Dakota, South Dakota, and Wyoming
MDU Resources hiked its quarterly dividend by 2.40% to 21.25 cents/share. This marked the 29th consecutive year of annual dividend increases for this dividend champion. During the past decade, the company has managed to boost distributions at an annuazlied rate of 2.7%.
MDU resources has failed to grow earnings per share since 2007, when EPS was at $2.36. The company is expected to earn $1.83/share in 2020.
Right now the stock is selling at 13.60 times forward earnings and yields 3.40%.