Wednesday, October 28, 2020

Eleven Companies Rewarding Shareholders With Regular Dividend Increases

As part of my monitoring process, I review the list of dividend increases every week. This exercise helps me monitor the progress of existing holdings. It also helps me identify companies for further research. I use this process in conjunction with my screening process.

As part of this process, I look at the companies that raised dividends over the past week. I narrow my focus on companies with an established track record of annual dividend increases. I look for companies that have managed to increase for at least a decade.

I then review the company’s most recent dividend increase, and compare it to the ten year average for perspective.

I also look at the growth in earnings, along with estimated earnings for this year. It is helpful to gain an understanding if the company has been able to grow dividends due to growth in the business. If growth is achieved through expanding the payout ratio, I am generally not interested in such a company.

Last but not least, I review valuation. This includes P/E ratios, dividend yields, but also compare that with historical dividend growth and trends in earnings per share. As you can see, I have come to the conclusion that valuation is more art than science.

During the past week, there were several companeis that raised dividends. Each company has at least a ten year track record of annual dividend increases: The companies include:

Home Bancshares, Inc. (HOMB) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities. 

The company increased its quarterly dividend by 7.70% to 14 cents/share. This marked the tenth consecutive annual dividend increase for this newly minted dividend achiever. During the past decade, it has managed to grow distributions at an annualized rate of 25%.

The company raised earnings from $/share in 2009 to $/share in 2019. Home Bancshares is expected to earn $1.18/share in 2020.

The company sells for 15 times forward earnings and yields 3.16%.

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 6.30% to 27.30 cents/share. This marked the 47th consecutive annual dividend increase for this dividend champion. Over the past decade, the company has managed to grow distributions at an annualized rate of 3.20%.

Between 2009 and 2019, the company was able to grow earnings from 72 cents/share to $2.01/share.Middlesex Water is expected to earn $2.12/share in 2020.

The company sells for 32.90 times forward earnings and yieods 1.56%.

Standex International Corporation (SXI), together with subsidiaries, manufactures and sells various products and services for commercial and industrial markets in the United States and internationally. The company operates through five segments: Electronics, Engraving, Scientific, Engineering Technologies, and Specialty Solutions. The company hiked its quarterly dividend by 9.10% to 24 cents/share, marking its tenth consecutive annual dividend increase. During the past decade, it has managed to grow distributions at an annualized rate of 8.60%.

Standex is expected to earn $3.65/share in 2020.

The company sells for 17.80 times forward earnings and yields 1.50%

American Electric Power Company, Inc. (AEP) is an electric public utility holding company that engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. 

American Electric Power raised its quarterly dividend by 5.70% to 74 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to grow its dividends at  an annualized rate of 5.15%.

Between 2009 to 2019, the company’s earnings went from $2.96/share to $3.88/share.

American Electric Power is expected to earn $4.32/share in 2020.

The company sells for 21.30 times forward earnings and yields 3.20%

Hubbell Incorporated (HUBB) designs, manufactures, and sells electrical and electronic products in the United States and internationally. The company operates through two segments, Electrical and Power.

The company increased its quarterly dividend by 7.70% to 98 cents/share. This marked the 13th consecutive annual dividend icnrease for this dividend achiever. Over the past decade Hubbell has managed to grow dividends at an annualized rate of 9.40%/year.

Between 2009 and 2019 the company managed to grow earnings from $3.15/share to $7.31/share. Hubbell is expected to earn $7.22/share in 2020.

The company sells for 21.25 times forward earnings and yields 2.56%

The Gorman-Rupp Company (GRC) designs, manufactures, and sells pumps and pump systems worldwide. 

The company increased its quarterly dividend by 10.70% to 15.50 cents/share. This marked the 48th consecutive annual dividend icnrease for this dividend champion. Over the past decade Gorman-Rupp has managed to grow dividends at an annualized rate of 7.80%/year.

The company grew earnings from 70 cents/share in 2009 to $1.37/share in 2019. Gorman-Rupp is expected to earn $1.10/share in 2020.

The company sells for 31 times forward earnings and yields 1.80%

Avery Dennison Corporation (AVY) produces and sells pressure-sensitive materials worldwide.  The company raised its quarterly dividend by 6.90% to 62 cents/share. This marked the 10th consecutive annual dividend increase for this dividend achiever. Over the past decade, the company has been able to raise dividends by 6.35%/year.

In 2008, the company earned $2.70/share. It managed to grow earnings to $3.57/share by 2019. Avery Dennison is expected to earn $6.06/share in 2020.

The company sells for 23.40 times forward earnings and yields 1.75%

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. 

Stepan raised its quarterly dividend by 10.90% to 30.50 cents/share. This marked the 53rd consecutive year of annual dividend increases for this dividend king. During the past decade, the company has managed to boost dividends at an annualized dividend growth of 8.60%.

Between 2009 and 2019, Stepan managed to grow earnings from $2.92/share to $4.42/share. Stepan is expected to earn $5.21/share in 2020.

The company sells for 22.70 times forward earnings and yields 1.03%

Lincoln Electric Holdings, Inc. (LECO), designs, develops, 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 increased its quarterly dividend by 4.10% to 51 cents/share. This marked the 26th consecutive annual dividend icnrease for this dividend champion. Over the past decade Lincoln Electric has managed to grow dividends at an annualized rate of 13.30%/year.

The company earned $2.46/share in 2008, right before the Global Financial Crisis. While it has had some dips in earnings per share in 2009 and in 2014 – 2016, its earnings per share grew to $4.68/share in 2019. Lincoln Electric is expected to earn $3.58/share in 2020.

The company sells for 29.50 times forward earnings and yields 1.93%

Whirlpool Corporation (WHR) manufactures and markets home appliances and related products. It operates through four segments: North America; Europe, Middle East and Africa; Latin America; and Asia. 

The company raised its quarterly dividend by 4.20% to  $1.25/share. This marked the 10th consecutive annual dividend increase for this newly minted dividend achiever. Over the past decade, the company has been able to raise dividends by 10.70%/year.

Between 2009 and 2019, the company managed to increase earnings from $4.34/share to $18.45/share.

Whirlpool is expected to earn $13.02/share in 2020. The company sells for 15.20 times forward earnings and yields 2.50%

Tompkins Financial Corporation (TMP), a community-based financial services company, provides commercial and consumer banking, leasing, trust and investment management, financial planning and wealth management, and insurance services. The company operates in three segments: Banking, Insurance, and Wealth Management. 

The company increased its quarterly dividend by 3.85% to 54 cents/share. This marked the 34th consecutive annual dividend icnrease for this dividend champion. Over the past decade Tompkins Financial has managed to grow dividends at an annualized rate of 5%/year.

Between 2009 and 2019, Tompkins Financial grew earnings from $2.96/share to $5.37/share. Tompkins Financial is expected to earn $4.49/share in 2020.

The company sells for 13 times forward earnings and yields 3.70%

Relevant Articles:

How to value dividend stocks

Four Dividend Increases From Last Week

Price, Value and Sources of Returns

Dividend Growth Investing Principles


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Wednesday, October 21, 2020

2020 Top Investment Picks – Q3 Update

At the beginning of the year, I put together a list of Top Investment Picks for 2020 from the investment community and track them on this website. This is just meant to be a fun exercise to see how the picks do. As part of the process, I intend do provide quarterly updates on the picks to see how they are doing. This is the update after Q3.


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Friday, October 16, 2020

Three Dividend Growth Stocks In the News

I review the list of dividend increases as part of my monitoring process. This helps me review the story behind companies I already own. It also helps me review companies for potential inclusion into my watchlist.

A long track record of annual dividend increases is an indication of a quality company with a strong business model. Its strength could be due to a favorable environment, competitive position, unique product, patent or trademark, a strong brand, a loyal group of customers or a combination of the above. 

I find it helpful to identify these businesses and place them on my list for further research.

During the past week, there were three companies with long histories of annual dividend increases, which also hiked distributions to shareholders.

The companies include:


Northwest Natural Holding Company (NWN) provides regulated natural gas distribution services to residential, commercial, industrial, and transportation customers in Oregon and Southwest Washington.

The utility raised its quarterly dividend by 0.50% to 48 cents/share. This marked the 65th consecutive annual dividend increase for this dividend king. Over the past decade, it has managed to increase the dividend at an annualized rate of 1.75%. 

Earnings peaked at $2.83/share in 2009, and gradually declined to $2.07/share in 2019. The company is expected to generate $2.27/share in 2020. 

Currently, the stock is fairly valued at 20.70 times forward earnings and yields 4.10%. Given the lack of earnings growth, and the high payout ratio, 

RPM International Inc. (RPM) manufactures and sells specialty chemicals for the industrial, specialty, and consumer markets worldwide. 

The company raised its quarterly dividend by 5.60% to 38 cents/share. This marked the 47th consecutive annual dividend increase for this dividend aristocrat

“One of the primary ways we continuously reward our shareholders is by annually increasing our cash dividend,” stated Frank C. Sullivan, RPM chairman and CEO. “Increasing the dividend, combined with an appreciating stock price, is key to our ability to consistently deliver long-term value and outperform the cumulative total return of the broader market.”

Over the past decade, RPM International has managed to grow dividends at an annualized rate of 5.80%. 

Between 2009 and 2019, RPM International grew earnings from $1.39/share to $2.34/share.

RPM International is expected to generate $3.93/share.

Currently, the stock is selling for 22.20 times forward earnings and yields 1.75%. RPM International is close to being fairly valued today.

McDonald's Corporation (MCD) operates and franchises McDonald's restaurants in the United States and internationally.

The company increased its quarterly dividend by 3.20% to $1.29/share. This marked the 44th year of consecutive annual dividend increases for this dividend aristocrat.

"Today's dividend increase reflects our strong financial position and represents continued confidence in our ability to drive profitable growth and long-term shareholder value while still investing in our people and the business."

During the past decade, McDonald's has managed to increase dividends at an annualized rate of 8.70%. 

Between 2009 and 2019, McDonald’s was able to grow earnings from $4.11/share to $7.88/share,

McDonald’s is expected to generate $5.88/share in 2020.

Right now the stock is selling for 38.24 times forward earnings and yields 2.30%. I find the stock to be pricey at the moment. I would love to be able to buy McDonald's at a lower price from here.

Relevant Articles:



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Monday, October 5, 2020

3 Recent Buys

A quick update on a few recent purchases in my portfolio. I used the recent correction in Nasdaq to add to my positions.


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