Welcome to another edition of my weekly review of dividend increases.
I follow this process in order to monitor existing dividend holdings. It is helpful to see if my investments continue growing their dividends, and if my original investment thesis is working.
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
I also find this process helpful, in order to identify companies for further research.
WBA Riased Its Quarterly Dividends By 2.10%
Walgreens Boots Alliance, Inc. (WBA) operates as a pharmacy-led health and wellbeing company. It operates through three segments: Retail Pharmacy USA, Retail Pharmacy International, and Pharmaceutical Wholesale.
The company raised quarterly dividends by 2.10% to 46.75 cents/share. This marked the 45th consecutive year of raising the dividend for this dividend champion. During the past decade, Walgreen’s has managed to grow dividends at an annualized rate of 13.60%.The five year annualized growth rate is at 6.60%, and it seems to be slowing down.
Walgreen’s has managed to grow earnings from $2.12/share in 2010 to $4.31/share in 2019.
The company is expected to earn $5.39/share in 2020. For the past two or three years that I have analyzed the stock, the forward earnings per share have remained at $6. Walgreen’s has been unable to grow profits, and not it looks like forward estimates are coming down.
I believe that the stock is attractively valued today, and I believe that the dividend is well covered at a forward payout ratio of 34.70%. The lack of earnings growth means that future dividend growth would be very slow.
The stock is cheap at 7.45 times forward earnings and offers a high yield of 4.65%. The P/E multiple is low because the business is facing some headwinds and is expected to be unable to grow earnings per share. Without future growth in earnings per share however, future fundamental returns would be limited to the dividend yield you lock in at the time of investment. Obviously if the P/E multiple expands because future state of the business is rosier than we expect today, you would get an additional coiled spring like tailwind to future returns. Check my analysis of Walgreen's for more information about the company.
Duke Energy Corp Raised Its Quarterly Dividend By 2.10%
Duke Energy Corp (NYSE:DUK), operates as an energy company in the United States. It operates through three segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables.
The company raised its quarterly dividend by 2.10% to 96.50 cents/share. Duke Energy Corp has increased dividends for 16 years in a row. This dividend achiever has paid dividends for over 94 years. During the past decade, Duke Energy has managed to grow dividends at an annualized rate of 2.90%.
Duke Energy Corp has managed to grow earnings from $3/share in 2010 to $5.06/share in 2019. The company is expected to earn $5.12/share in 2020.
The stock is attractively priced at 15.90 times forward earnings and offers a dividend yield of 4.75%. The forward payout ratio is at 75.40%, which is adequate for a utility.