As part of my portfolio monitoring process, I check the list of dividend increases weekly. I usually narrow the list to companies that have increased their dividends annually for at least a decade.
The next step is to scrutinize each company in sufficient detail to see if dividend increases are built on solid foundations. This review includes looking at the development of earnings per share, dividends per share and payout ratios as a good start. The aim is to determine the likelihood of future dividend increases.
The final review point includes the assessment. In general, I try to avoid corporate overpayment. However, valuation is more art than science (as is investing in general). Because of this, it is important to look at the relative valuations and the growth of opportunities rather than just focusing on absolute numbers.
These steps keep me in shape and help me pre-monitor as many companies as possible in the universe of investable dividend growth. This helps me be prepared when the right opportunity arises at the right price.
In the past week there have been six companies that raised dividends to shareholders. Every company has seen an annual dividend increase of at least ten years. The companies include:
Real estate income (O) increased its monthly dividend to 23.50 cents / share. This corresponds to an increase of 1.73% compared to the dividend paid in the same period of the previous year. Over the past decade, Realty Income has increased its dividend by 4.90% on an annualized basis. This dividend aristocrat has managed to grow dividends since 1994.
Between 2010 and 2020, Realty Income increased its FFO from $ 1.83 / share to $ 3.31 / share. Realty Income expects FFO of $ 3.26 – $ 3.34 / share in 2021.
The stock sells at 18.29 times the FFO and offers a yield of 4.57%. For more information about the company, see my Real Estate Income Analysis.
WD-40 Company (WDFC) develops and sells maintenance and home care and cleaning products in the Americas, Europe, the Middle East, Africa and the Asia-Pacific region. The company increased its quarterly dividend 7.46% to 72 cents / share. This was the 12th year in a row that the dividend on this dividend payout has been increased. Over the past ten years, the company has succeeded in increasing dividends by 10.10% on an annual basis.
Between 2010 and 2020, the company increased earnings from $ 2.15 / share to $ 4.40 / share. WD-40 is expected to earn $ 5.51 / share in 2021.
The stock sells for 53.87 times future earnings and generates a return of 0.97%.
Williams-Sonoma, Inc. (WSM) works as an omni-channel specialist retailer for various products for the home. The company increased its quarterly dividend by 11.32% to 59 cents / share. This was the 16th consecutive annual dividend increase for this dividend payout. Over the past decade, the company has managed to increase its dividend by 13.60% on an annualized basis.
Between 2011 and 2021, the company increased earnings from $ 1.83 / share to $ 8.61 / share. Williams-Sonoma is projected to earn $ 9.22 / share in 2022.
The stock sells for 18.96 times future earnings and offers a current yield of 1.35%
UDR, Inc. (UDR) is a leading multi-family real estate investment trust with a proven track record of delivering superior and dependable returns by successfully managing, buying, selling, developing and redeveloping attractive real estate communities in US target markets. The REIT increased its quarterly dividend by 0.69% to 36.25 cents / share. This was the 10th straight year of annual dividend increases for UDR. Over the past decade, the REIT has managed to increase its dividend by 7% on an annual basis.
Between 2011 and 2020, the FFO / share increased from $ 1.28 to $ 1.85. The REIT is expected to earn $ 1.95 / share in 2021.
The stock sells at 22.26 times the FFO and offers a yield of 3.35%
Horizon Bancorp, Inc. (HBNC) acts as the bank holding company of Horizon Bank, which offers a range of corporate and retail banking. The company increased its quarterly dividend 8.33% to 13 cents / share. This was the tenth consecutive annual dividend increase for this newly minted dividend payout. Over the past decade, the company has increased its dividend by 13.60% on an annualized basis.
Between 2010 and 2020, the company increased earnings from $ 0.54 / share to $ 1.55 / share. WD-40 is expected to earn $ 1.45 / share in 2021.
The stock sells for 13.40 times future earnings and offers a yield of 2.67%.
Independent Bank Corp. (INDB) acts as the bank holding company of the Rockland Trust Company, which provides retail and small to medium-sized businesses primarily in Massachusetts with business products and services. The bank increased its quarterly dividend by 4.34% to 48 cents / share, making it the tenth consecutive annual dividend increase. Over the past ten years, the dividend has increased by 9.70% on an annual basis.
The bank earned $ 2.12 / share in 2011 and is projected to grow earnings to $ 3.95 / share by 2021.
The stock is selling for 22.93 times future earnings and offers a yield of 2.12%.