As part of my monitoring process, I review the list of dividend increases every week. I focused my attention on companies with a ten year track record of annual dividend increases. I then also focused on companies that manage to grow dividends by more than a token rate. We generally want companies which can grow earnings over time, which then results in growth in dividends. The next requirement is to purchase those quality companies at attractive price.The following two dividend growth machines have high distribution growth rates, which are supported by strong growth in earnings per share.

Lowe’s Companies, Inc. (LOW) operates as a home improvement company in the United States, Canada, and Mexico. It offers a line of products for maintenance, repair, remodeling, and decorating. The company raised its quarterly dividend by 17.10% to 41 cents/share. This marked the 55th consecutive annual dividend increase for this dividend king.

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Lowe's & Casey's

The company has managed to raise its annual distribution at a rate of 22.90%/year over the past decade. Lowe’s has managed to grow earnings from $1.86/share in 2008 to $3.93/share in 2017. The company is expected to grow earnings to $4.62/share in 2018. Currently, the stock is selling for 17 times forward earnings and yields 2.10%. I view Lowe’s as attractively valued today. I also view Lowe’s as a great company to include in a long-term dividend growth portfolio. I believe that Lowe’s and Home Depot will be one of the few retailers who can effectively compete in their niche. The Lowe’s and Home Depot near all places I have ever lived in, have always been packed with homeowners, working on their never ending stream of house projects. Usually, those projects require immediate attention, which may necessitate multiple visits to one of these stores. The need for upkeep on homes will create a constant demand for visits to Lowe’s and Home Depot stores. Given their vast network of stores, these companies can also effectively compete online, by offering in-store pick-ups for certain items.

Casey's General Stores, Inc. (CASY), together with its subsidiaries, operates convenience stores under the Casey’s General Store name in 14 Midwestern states, primarily in Iowa, Missouri, and Illinois. The company raised its quarterly dividends by 8.30% to 26 cents/share. This marked the 18th consecutive annual dividend increase for this dividend achiever. The company has managed to raise its annual distribution at a rate of 17.10%/year over the past decade. Casey’s has managed to grow earnings from $1.67/share in 2008 to $4.48/share in 2017. The company is expected to grow earnings to $4.66/share in 2018. Currently, the stock is overvalued at 23.70 times forward earnings and yield 1%. I would be interested in the company on dips below $95/share.

I initially made an investment in Casey’s, after being inspired by the books of Peter Lynch on investing in what you know. I had lived next to a Casey’s, and was always surprised how busy the locations were. Upon further inquiry, I liked the business model of serving small communities with low levels of competition. I also liked the strategy of expanding throughout the Midwest by rolling out new store locations. The company could further benefit from online ordering, pizza delivery, new store expansion and increasing store hours to 24/hours.

Full Disclosure: Long CASY and LOW

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Article by Dividend Growth Investor