As part of my monitoring process, I review the list of dividend increases every week. This exercise helps me to monitor events related to companies I own, in order to keep up with them better. It also helps me identify companies for further research.
I usually focus my attention on the companies that have managed to increase dividends for at least a decade. That’s because my goal is to find companies for long-term investment, which I can hopefully hold for decades. I am not interested in buying a stock that I then have to sell a few years down the road. I am interested in companies that can deliver performance for long periods of time.
There were two companies that raised dividends last week, which also have managed to boost dividends for at least a decade:
The Kroger Co. (KR) operates as a retailer in the United States.
Kroger raised its quarterly dividend by 16.70% to 21 cents/share. This marks the 15th consecutive year of annual dividend increases. The company continues to expect, subject to board approval, an increasing dividend over time. Over the past decade, Kroger has managed to increase dividends at an annualized rate of 13.30%.
I love hearing from the company executives, when they announce a dividend increase:
"In recognition of our strong performance during the last year, we are proud to increase the quarterly dividend at a higher rate than our historical average," said Rodney McMullen, Kroger's Chairman and CEO. "This increase reflects the Board of Directors' confidence in the strength of our free cash flow and our ability to deliver consistently strong and attractive total shareholder returns."
"Kroger remains committed to investing in the business to drive long-term sustainable net earnings growth, maintaining its current investment grade debt rating, and returning excess free cash flow to shareholders via share repurchase and a growing dividend over time. The company actively balances the use of its adjusted free cash flow to achieve these goals."
The company managed to grow earnings from 51 cents/share in 2011 to $3.27/share in 2020. Kroger is expected to earn $3.04/share in 2021.
The stock is selling for 12.86 times forward earnings and yields 2.15%. I find Kroger to be an interesting company for review. Check my analysis of Kroger for more information about this dividend achiever.
John Wiley & Sons, Inc. (JW.A) operates as a research and learning company worldwide.
John Willey & Sons raised its quarterly dividends by 0.70% to 34.50 cents/share. It was Wiley’s 28th consecutive annual increase. Over the past decade, this dividend champion has managed to raise dividends at an annualized rate of 8.60%. However, the 5 year rate is down to 3%.
The company is expected to earn $2.91/share in 2021. For reference, the company earned $2.80/share in 2011, which is not much of a growth.
The stock is selling for 19.73 times forward earnings and yields 2.41%. Given the lack of earnings growth over the past decade, I view it as a hold at best today.
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