Updated March 26, 2021 by Bob Ciura
The Dividend Aristocrats are some of the best dividend stocks an investor will find. These are companies in the S&P 500 Index that have had dividend increases for more than 25 consecutive years.
We believe the Dividend Aristocrats are among the stocks with the highest dividend growth. That’s why we’ve created a downloadable spreadsheet of all 65 Dividend Aristocrats along with key metrics like price / earnings ratios and dividend yields.
You can download the Excel spreadsheet of all 65 Dividend Aristocrats by clicking the link below:
Every year we review all Dividend Aristocrats. The next stock in the series is industrial giant Dover Corp. (DOV). Dover may not be a familiar stock to most investors, but it has earned its place on the list.
Dover isn’t just a dividend aristocrat. It’s also a dividend king, an even smaller group of companies with more than 50 consecutive years of dividend increases. There are only 31 dividend kings.
Dover has now increased its dividend for an astonishing 65 straight years. The company’s dividend is also very safe
At the same time, Dover stock has seen a multi-year rally. As an industrial act, it has benefited from steady economic growth since the end of the Great Recession. The bottom line is that the stock appears overvalued, which may not be the best time to buy Dover stock now.
Dover Corporation is a diversified global industrial manufacturer with annual sales of ~ $ 7 billion and market capitalization of $ 15 billion. Dover is consisting of five reporting Segments: E.developed S.ystems, Refueling solutions, Pump & Process solutions, imaging & identification and cooling,& Food E.Equipment.
A little more than half of sales come from the USA, the rest from international markets. In early May 2018, Dover spun off its Apergy energy business.
Dover continued to perform well last year despite the negative impact the coronavirus pandemic had on the global economy.
Source: Investor Presentation
Dover reported fourth-quarter and all year round Result results on 1/ 28th/ 2021. revenue of $ 1.8 billion was flat compared to public relationsor quarter of the year. Adjusted result– –Per– –The $ 1.55 portion was 0.6% higher than the previous one Year.
In the year under review, sales decreased 6% to USD 6.68 billion. Adjusted result– –Per– –divide decreased 4% to $ 5.67 in 2020, although that was $ 0.24 above our estimates. Organic sales declined 2% for the quarter and 7% for the year, mainly due to the impact of COVID– –19th
By segments, Engineered ProdProducts fell 9% over the course of the year– –about– –Year as The strength in both aerospace and defense was offset by weaker demand for industrial winches and waste disposal. Refueling Solutions fell 9% and Imaging & Identification Sales decreased by 3%. These declines were offset by growth in other segments. Pumps & Process Solutions returned to growth as sales increased 2% and higher Sales of refrigeration and food appliances increased 13%.
Overall, Dover did well in 2020 given the economic damage caused by the coronavirus pandemic. Bookings rose 5% in the fourth quarter, which is a good sign for 2021. Assuming the global economy continues to recover, the company is likely to see another year of growth in 2021. Dover expects an adjusted result– –Per– –Share from $ 6.25 to $ 6.45 for 2021.
Dover’s future growth will come from the continued expansion of the global economy. As a diversified industrial manufacturer, Dover will of course benefit from GDP growth. In addition to organic growth in existing businesses, Dover’s earnings growth will also be driven by margin improvements thanks to recent portfolio moves.
First, Dover launched an aggressive cost-cutting program to increase margins in the operating segments. The ambitious cost-cutting efforts will also free additional resources for growth investments. Dover is active in mergers and acquisitions. Since 2014, Dover has spent billions on a number of acquisitions.
Dover’s future growth prospects will be accelerated by the portfolio restructuring. The company started a new segmentation of its business areas. The aim of this re-segmentation is to increase efficiency and transparency throughout the company.
After all, emerging markets are a long-term growth catalyst for Dover. Overall, we expect Dover to see earnings per share grow approximately 8% annually through 2026.
Competitive advantage and recession performance
No company can increase its dividend for 60 years in a row without lasting competitive advantage. Dover’s competitive advantages include a large intellectual property portfolio, economies of scale, and a strong balance sheet.
Dover is in good financial shape. It has a long-term credit rating of BBB + from Standard & Poor’s and Baa1 from Moody’s. High credit ratings help Dover keep its cost of capital down.
Dover is in a fortunate position as it generates a lot of cash flow. It can invest ~ 60% of cash flow in acquisitions and investments, and return cash to shareholders through dividends and buybacks.
Dover’s competitive advantages allow it to maintain consistent profitability every year, even during recessions. Dover’s earnings per share during the Great Recession are shown below:
- 2007 earnings per share of $ 3.22
- 2008 earnings per share of $ 3.67 (up 14%)
- 2009 earnings per share of $ 2.00, down 45%
- 2010 earnings per share of $ 3.48, up 74%
As a major industrial manufacturer, Dover is a pioneer in the global economy. As can be expected, this is not a highly recession-resistant company.
The deep economic downturn caused Dover’s profits to decline in 2009. However, during the recession, the company only had declining profits for a year. It returned to growth in 2010 and beyond. During this period of uncertainty, dividends continued to rise.
Dividends continued to rise in 2020, again showing that Dover’s business model is recession-resistant.
Valuation and expected return
Based on expected earnings per share of $ 6.35 for 2021, using the company’s earnings forecast, Dover stock trades at a price-to-earnings-ratio of 21.9. Dover has had an average value for money of 16.2 over the past 10 years. Dover stock appears overvalued due to its average valuation multiples.
If Dover stock sees its valuation multiple drop to its 10-year average P / E, it would cut annual shareholder returns by 5.9% per year over the next five years.
Earnings growth and dividends will have a positive impact on future returns. First, we expect the company to grow earnings per share by 8% per year through 2026.
After all, Dover stock has a dividend yield of 1.4%. All in all, a breakdown of our expected future returns is as follows:
- 8.0% expects earnings per share to grow
- 1.4% dividend yield
- -5.9% negative return from drop in valuation
In this forecast, the total return to shareholders could reach 3.5% on an annualized basis through 2026. This is a positive – albeit unspectacular – expected return for this dividend king.
Dover has tackled a number of challenges over the past decade, including the great 2008-2009 recession, the oil and gas downturn in recent years, and the 2020 coronavirus pandemic. Still, it has kept increasing its dividend every year, no matter What. Very few companies have this ability, which makes Dover a rare dividend growth stock.
Dover has a leadership position in its industry and an enduring competitive advantage. Because of these factors, the company is positioned for growth in the years to come, making it very likely that Dover will continue to raise its dividend.
Dover is a high quality company and a dividend growth company, but the stock is simply too overvalued to earn a Buy rating from Sure Dividend at this point. However, if we pulled back, we would be buyers of these high quality industrial stocks.
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