I review the list of dividend increases every week, as part of my monitoring process. I tend to focus my attention on companies that have an established track record of annual dividend increases. This is why I focus on the dividend increases from the last week for companies that have a ten year history of annual dividend growth. Some of these companies are in my dividend growth portfolios, while others are simply ideas for further research. A third group would be in my “too hard” pile, where I will not spend any time researching due to one reason or another.
There were five such companies that increased dividends last week. Each company has at least a ten year streak of annual dividend increases under its belt. I review each dividend increase, and compare it relative to the ten year average for context.
At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More
Next, I also review the trends in earnings during the past decade, in order to determine if there is fuel for future dividend increases down the road.
Five Stocks Rewarding With Dividend Increases
Last but not least, I do a quick check on valuation.
Realty Income Corp (NYSE:O) is a REIT with over 6,500 real estate properties owned under long-term lease agreements with commercial tenants.
Realty Income raised its monthly dividend to 23.35 cents/share. This is a 3.10% increase over the dividend paid during the same time last year. The monthly dividend company has raised dividends several times per year since going public in 1994, and is a member of the dividend aristocrats list. During the past decade, this REIT has managed to grow distributions at an annualizd rate of 4.70%.
I like Realty Income, because it managed to grow dividends even during the 2007 - 2009 Great Recession. Right now, it has managed to collect 84% of April rent and 82% of May rent. This is not high, but I believe provides enough liquidity to continue paying the current rate of dividends.
Realty Income managed to grow FFO from $1.84/share in 2009 to $3.29/share in 2019. It's FFO/share dipped only slightly between 2007 and 2010, from $1.89 to $1.83. Realty Income is expected to generate $3.32/share in FFO for 2020.
WP Carey Inc (NYSE: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 includng office, warehouse, industrial, logistics, retail, hotel, R&D, and self-storage properties.
W.P. Carey raised its quarterly dividend to $1.042/share. This is a mere 0.80% increase over the dividend paid during the same time last year. The rate of dividend increases is slowing down on W.P. Carey, mostly because its AFFO/share is not growing and the FFO payout is increasing. You should not forget that, and be excited alone by the high rate of rent collections. It is still impressive that it collected 96% of April rent and 95% of May's. W.P. Carey is a dividend achiever with a 21 year history of annual dividend increases.
Since 2007, FFO/share has grown by 4.50%/year, from $3.34/share to $5/share. W.P. Carey is expected to generate $4.56/share in FFO in 2020.
The stock is selling for 15.15 times forward FFO and yields 6%.
Check my analysis of W.P. Carey for more information on this dividend achiever.
National Fuel Gas
National Fuel Gas Co. (NYSE:NFG) operates as a diversified energy company. It operates through four segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility.
National Fuel Gas raised its quarterly dividend by 2.40% to 44.50 cents/share. It has a fairly consistent pace of annualized dividend growth, with the ten year average at 2.70%/year annualized.
This dividend champion has increased dividends for 49 years in a row. The company press release stated that it had raised dividends for 50 years, but it's dividend history website only shows 49 years. As a result, National Fuel Gas is not eligible to become a dividend king until 2021. Perhaps the people writing the press release should have checked the company's website first?
National Fuel Gas managed to grow earnings from $2.73/share in 2010 to $3.51/share in 2019. The company is expected to generate $2.85/share in 2020 and $3.17/share in 2021.
The stock sells for 14.50 times forward earnings and yields 4.30%.
Target Corporation (NYSE:TGT) operates as a general merchandise retailer in the United States.
Target increased its quarterly dividend by 3% to 68 cents/share. This marked the 49th consecutive annual dividend increase for this dividend champion. Annualized dividend growth has decreased from 14.70% during the past decade to around 3%/year.
Target managed to grow earnings from $4/share in 2011 to $6.36/share in 2020. The company is expected to generate $5/share in 2021 and $6.80/share in 2022.
The stock is selling for 23.50 times forward earnings and yields 2.35%. Check my analysis of Target for more information about this dividend champion.
W. R. Berkley
W. R. Berkley Corp (NYSE:WRB) is an insurance holding company,which operates as a commercial lines writer in the United States and internationally. It operates through two segments, Insurance and Reinsurance & Monoline Excess.
The company increased its quarterly dividend by 9.10% to 12 cents/share. This marked the 19th consecutive annual dividend increase for this dividend achiever. During the past decade, the company has managed to grow distributions at an annualized rate of 10.40%.
W.R. Berkley managed to grow earnings from $1.92/share in 2010 to $3.52/share in 2019. The company is expected to generate $2.59/share in 2020 and $3.04/share in 2021.
The stock is selling for 23 times forward earnings and yields 0.85%.
Thank you for reading!
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Article by Dividend Growth Investor