Tuesday, December 22, 2020

Turbo Charge Your Portfolio With Reinvested Dividends

It is well-documented that a significant portion of the historical equity returns are a result of reinvested dividends. In Triumph of the Optimists: 101 Years of Global Investment Returns (2002), the authors looked at equity returns from capital gains and dividends from 1900 to 2000. They determined that performance in any given year was driven by capital appreciation, but long-term returns were largely the result of reinvested dividends. Looking at 101 years of data in the U.S. and U.K., they found that a market-oriented portfolio with dividends reinvested would have generated nearly 85 times the wealth of the same portfolio relying solely on capital gains.


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Wednesday, December 16, 2020

Fourteen Companies Spreading Holiday Cheers To Shareholders

As part of my review process, I evaluate dividend increases every week. This process helps me to see how my portfolio holdings are doing. It also helps me to uncover and review new candidates for my portfolio.

I look for dependable dividends from companies with a minimum ten-year streak of annual dividend increases, fueled by earnings growth. I look for dependable dividends from companies with dependable earnings, and solid competitive advantages, which I can acquire at attractive valuations.

During the past week, the following companies increased dividends to shareholders. Each company has a ten year streak of annual dividend increases. I review the latest dividend increase relative to the ten year average, and the growth in earnings per share over the past decade. Last but not least, I discuss current valuation. The companies include:

Bristol-Myers Squibb Company (BMY) discovers, develops, licenses, manufactures, and markets biopharmaceutical products worldwide. It offers products in hematology, oncology, cardiovascular, and immunology therapeutic classes.

Bristol Myers Squibb increased its quarterly dividend by 8.90% to 49 cents/share. This marks the twelfth consecutive fiscal year that Bristol Myers Squibb increased its dividend payouts. Over the past decade, this dividend achiever has managed to grow dividends at an annualized rate of 2.80%. I am glad to see it starting to kickstart earnings and dividend growth.

The company is expected to earn $6.38/share in 2020.

The stock is selling for 9.50 times forward earnings and yields 3.23%. Check my analysis of Bristol-Myers Squibb for more information about the company.

Abbott Laboratories (ABT) discovers, develops, manufactures, and sells health care products worldwide.

Abbott raised its quarterly dividend by 25% to 45 cents/share. Abbott has increased its dividend payout for 49 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index. The company has managed to increase dividends at an annualized rate of 7.80% over the past five years.

The company is expected to generate $3.55/share in 2020

Abbott stock is selling for 30.10 times forward earnings and yields 1.68%.

Pfizer Inc. (PFE) develops, manufactures, and sells healthcare products worldwide. 

Pfizer increased its quarterly dividend by 2.60% to 39 cents/share. That marked the tenth year of consecutive annual dividend increases for the company. Over the past decade, Pfizer has managed to increase distributions at an annualized rate of 6.10%.

The company is expected to earn $2.84/share in 2020.

The stock is selling for 14.25 times forward earnings and yields 3.80%.

Mastercard Incorporated (MA), a technology company, provides transaction processing and other payment-related products and services in the United States and internationally. 

Mastercard hiked its quarterly dividend by 10% to 44 cents/share. Mastercard has managed to increase dividends at an annualized rate of 36.20% over the past decade.

The company is expected to earn $6.36/share.

The stock sells at 51.50 times forward earnings and yields 0.54%.

Casey's General Stores, Inc. (CASY) operates convenience stores under the Casey's and Casey's General Store names.

Casey’s General Stores raised its quarterly dividend by 6.30% to 34 cents/share. That’s the 21st consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to increase distributions at an annualized rate of 14.30%.

The company is expected to earn $8.32/share in 2021.

The stock sells for 21.68 times forward earnings and yields 0.78%.

W. P. Carey Inc. (WPC) is an independent equity real estate investment trust. The firm also provides long-term sale-leaseback and build-to-suit financing for companies. It invests in the real estate markets across the globe. The firm primarily invests in commercial properties that are generally triple-net leased to single corporate tenants including office, warehouse, industrial, logistics, retail, hotel, R&D, and self-storage properties.

W.P. Carey raised its quarterly dividend by 0.20% to 1.046/share. This is an 0.80% increase over the dividends from the same time last year. Annualized dividend growth has been slowing down over the past one, three and five years.

The REIT sells for 14.50 times forward FFO and yields 6.10%. Check my analysis of W.P. Carey for more information on this dividend achiever.

SEI Investments Company (SEIC) is a publicly owned asset management holding company.

SEI Investments increased semi-annual dividends by 5.70% to declares $0.37/share. This marked the 30th consecutive annual dividend increase for this dividend champion. Over the past decade, the company managed to increase dividends at an annualized rate of 15.20%.

The company is expected to earn $2.91/share in 2020.

The stock is selling for 19.22 times forward earnings and offers a dividend yield of 1.31%.

Erie Indemnity Company operates as a managing attorney-in-fact for the subscribers at the Erie Insurance Exchange in the United States.

ERIE Indemnity (ERIE) raised its quarterly dividend by 7.30% to $1.035/share.  This marked the 31st year of annual dividend increases for this dividend champion. Over the past decade, the company managed to increase dividends at an annualized rate of 7.20%.

The company is expected to earn $5.67/share in 2020.

The stock sells for 42.27 times forward earnings and yields 1.77%.

Pentair plc (PNR) provides various smart water solutions worldwide. It operates through three segments: Aquatic Systems, Filtration Solutions, and Flow Technologies.

Pentair raised its quarterly dividend by 5.30% to 20 cents/share. 2021 will mark the 45th consecutive year that Pentair has increased its dividend.

The company is expected to earn $2.43/share in 2020.

The stock sells for 21.14 times forward earnings nad yields 1.55%.

CubeSmart (CUBE) is a self-administered and self-managed real estate investment trust. The Company's self-storage properties are designed to offer affordable, easily accessible and secure storage space for residential and commercial customers.

CubeSmart raised its quarterly dividend by 3% to 34 cents/share. This is the 11th consecutive year of dividend increases for this dividend achiever. During the past decade, it has managed to grow dividends at an annualized rate of 29%.

The stock sells for 19.77 times forward FFO and yields 4.13%.

Mid America Apartment Communities (MAA), an S&P 500 company, is a real estate investment trust, or REIT, focused on delivering full-cycle and superior investment performance for shareholders through the ownership, management, acquisition, development and redevelopment of quality apartment communities in the Southeast, Southwest, and Mid-Atlantic regions of the United States.

Mid America Apartment Communities raised its quarterly dividends by 2.50% to $1.025/share. The REIT is a dividend achiever with 10 years of annual dividend increases under its belt. Over the past decade, it has managed to increase dividends at an annualized rate of 4.60%.

The stock sells at 19.28 times forward FFO and yields 3.37%.

Alexandria Real Estate Equities, Inc. (ARE) is a real estate investment trust that invests in office buildings and laboratories leased to tenants in the life science and technology industries.

Alexandria Real Estate Equities raised its quarterly dividends by 2.80% to $1.09/share. This is the second increase this year, bringing the new distribution to be 5.80% higher than the dividend paid during the same time last year. During the past decade, this REIT has managed to increase distributions at an annualized rate of 5.50%.

The stock is selling for 23.60 times forward FFO and yields 2.53%.

Norwood Financial Corp. (NWFL) operates as the bank holding company for Wayne Bank that provides various banking products and services.

Norwood Financial raised its quarterly dividend by 4% to 26 cents/share.  This marks the twenty-ninth consecutive year of dividend increases for the Company. Over the past decade, the company has managed to increase dividends at an annualized rate of 3.90%.

The stock sells for 13.87 times forward earnings and yields 3.85%.

Trinity Industries, Inc. (TRN) provides rail transportation products and services in North America. It operates through three segments: Railcar Leasing and Management Services Group, Rail Products Group, and All Other.

Trinity raised its quarterly dividend by 10.50% to 21 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. During the past decade, the company managed to grow distributions at an annualized rate of 14.90%.

The company is expected to earn 42 cents/share in 2020. 

The stock yields 3.25% and sells for a forward P/E of 62. 

Relevant Articles:

Ten companies delivering value to their shareholders

Nine Cash Machines Hiking Dividends Last Week

Eleven Dividend Growth Stocks That Grew Dividends Last Week

Busiest Week for Dividend Increases Since February


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Wednesday, December 2, 2020

McDonald's Corporation (MCD) Dividend Stock Analysis

Linked here is a detailed quantitative analysis of McDonald's Corporation (MCD). Below are some highlights from the above linked analysis:

Company Description: McDonald's Corporation is the largest fast-food restaurant company in the world, with about 35,000 restaurants in 119 countries.


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Monday, November 30, 2020

Six Companies Rewarding Their Thankful Shareholders With a Raise

There were several companies over the past week which announced their intent to raise dividends to shareholders. It is always great to see companies that are able to extend their long streaks of annual dividend increases. I find dividend increases to be a good indicator of how company executives feel about the near-term business environment. It also shows their confidence in the company’s growth prospects. 

Factors that boards of directors consider when setting the dividend include future earnings expectations, payout ratio and dividend yield relative to those at peer companies, as well as returns available on other income-oriented investments.

This is why I find it very helpful to review dividend increases every week for established dividend growth companies. To be included in this list, a company should have managed to reward shareholders with a dividend hike for at least ten years in a row.

I review these press releases as part of my monitoring process. For the purposes of this article, I narrowed the list of dividend increases down to a more manageable level.

I focused on companies that can afford to grow dividends for at least a decade. I figured that a company which has managed to boost dividends during a recession and an expansion, or even longer, is better suited for further research by a long-term dividend growth investor like me.

In my previews, I look at the most recent dividend increase, and compare it to the ten year average. While there are some year-over-year fluctuations in dividend growth, it is helpful to see if dividend growth is decelerating.

In addition, it is helpful to review trends in earnings and dividends, alongside dividend payout ratios. This is another indicator of dividend safety.

Last, but not least, I also try to review the valuation behind every company. I prefer to buy future dividend income at attractive valuations; overpaying for future dividend income is not a good business decision.

Over the shortened Thanksgiving week, we had six companies hiking distributions to their thankful shareholders. I have had the first five of these companies consistently raising dividends during Thanksgiving week for the past several years that I have been writing these review. The companies include:

Hormel Foods Corporation (HRL) produces and markets various meat and food products in the United States and internationally. The company operates through five segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store, and International & Other.

Hormel Foods increased its quarterly dividend by 5.40% to 24.50 cents/share, marking the 55th consecutive annual dividend increase for this dividend king. Hormel Foods has managed to increase distributions at an annualized rate of 16% over the past decade.

Between 2010 and 2020, Hormel managed to triple its earnings from 73 cents/share to $1.69/share.
Analysts expect Hormel to earn $1.80/share in 2021. It looks like earnings per share have plateaued for three years in a row if analyst projections are correct. 

I believe that the stock price is overvalued at 26 times forward earnings. The stock yields 2.10%. I may consider it if it dips below $36/share. Check my analysis of Hormel for more information about the company.

Becton, Dickinson and Company (BDX) develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide.

The company’s dividend eked out a small 5.10% increase to 83 cents/share. Becton Dickinson has raised its dividend for the 49th consecutive year. If BD hikes dividends in 2021, this dividend champion will be upgraded to the elite dividend king status. Over the past decade, Becton Dickinson has managed to boost dividends at an annualized rate of 8.90%.

The company earned $5.49/share in 2010 and analysts expect Becton Dickinson to earn $12.53/share in 2021. 

The stock seems fairly valued at 18.15 times forward earnings and a dividend yield of 1.45%. The rate of dividend growth has slowed down, and if you want to review earnings per share, you would have to dig a little deeper into things such as purchase accounting adjustments and other items that the company deems as one-time events.

McCormick & Company, Incorporated (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. The company operates in two segments, Consumer and Flavor Solutions.

McCormick managed to hike its quarterly dividend by 9.70% to 68 cents/share. This marks the 35th consecutive year that this dividend champion has increased its quarterly dividend. McCormick has managed to boost dividends at annualized rate of 9% over the past decade.

The company earned $2.75/share in 2010, and managed to grow this to $5.24/share in 2019.
Analysts expect that McCormick will earn $5.71/share in 2019.

Unfortunately, this great company is overvalued at 32.50 times forward earnings and yields 1.45%. Check my analysis of McCormick for more information about the company.

Hingham Institution for Savings (HIFS) provides various financial products and services to individuals and small businesses in the United States.

The company increased its quarterly dividend to 47 cents/share, which is a 4.40% increase over the dividend paid during the same time last year. This dividend champion has consistently increased regular quarterly cash dividends over the last twenty-five years. The bank also announced a special dividend in the amount of 70 cents/share. During the past decade, it has managed to increase dividends at an annualized rate of 6.10%.

The company managed to grow earnings from $4.81/share in 2010 to $17.83/share in 2019.
The stock is fairly valued at 10.80 times earnings and offers a dividend yield of 0.85%.

The York Water Company (YORW) impounds, purifies, and distributes drinking water. It also owns and operates three wastewater collection systems and two wastewater treatment systems.

The company raised its quarterly dividend by 4% to 18.74 cents/share. This is the twenty-third consecutive year that this dividend achiever has increased its dividend. During the past decade, York Water has managed to grow its distribution at an annualized rate of 3.20%.

York Water has stated that it has managed to pay dividends every year since 1816, but I have been unable to find any history on distribution payments that goes beyond 1912. If anyone from the company’s IR department is reading, I would love to see the data behind this claim.

The company earned $0.71/share in 2010 and managed to grow earnings to $1.11/share in 2019.

Analysts expect the company to earn $1.25/share in 2020.

The stock is overvalued at 37.22 times forward earnings and sells at a dividend yield of 1.60%. 

South Jersey Industries, Inc. (SJI) provides energy-related products and services. The company engages in the purchase, transmission, and sale of natural gas.

The company hiked its quarterly dividend by 2.50% to 30.25 cents/share. With this announcement, SJI has increased its dividend for 22 consecutive years. During the past decade, this dividend achiever has managed to boost distributions at an annualized rate of 6.90%.

Analysts expect that South Jersey Industries will generate $1.56/share in 2019.

The stock is fairly valued at 15.80 times forward earnings and offers a dividend yield of 4.90%. Sadly, the dividend payout ratio is at 78%, which means that the pace of future dividend growth will be slow at best.

Relevant Articles:

Dividend Achievers Offer Income Growth and Capital Appreciation Potential
Ten Companies Rewarding Investors With Dividend Hikes Last Week
Nine Dividend Growth Stocks With Growing Yields on Cost
Eleven Dividend Growth Stocks For Further Research


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