There is an old Wall Street maxim that the safest dividend is the one that's just been raised. Which is why if you're not familiar with Dividend Achievers, you should be.
You can always find that occasional company that continued raising its dividend right up until it cut it (Kinder Morgan in 2015). But generally speaking, it's safe to say that a dividend stock aggressively raising its payout is a healthy company and one that is justifiably confident about its future.
Earnings per share can be aggressively manipulated, as can reported revenues. Even the cash flow statement can be suspect because it ultimately pulls most of its key data points from the income statement, which can be a work of creative fiction.
Paying a dividend requires actual cash on hand. And a dividend hike implies that management is confident that there will be a lot more cash coming down the pipeline to support a higher dividend in the quarters ahead.
But even when it comes to dividends, you have to look out for chicanery and focus on quality. That means paying the dividend out of real profits and cash flows, not debt or new share issuance. As forensic accountant John Del Vecchio, co-manager of the AdvisorShares Ranger Equity Bear ETF, says, "Dividends are a distribution of profits; a way for a company to reward its patient shareholders. But a dividend paid from debt or equity proceeds isn't a dividend at all, but rather a return of capital. Don't be fooled by a company returning your own money to you while calling it a dividend."
Today, we're going to take a look at Dividend Achievers -- companies with a history of raising their annual dividends for a minimum of 10 consecutive years -- that aren't just providing token upticks. The idea is that we're limiting our pool to stable companies with a long history of safely delivering the goods, but that also are well-positioned for growth in the immediate future.
Earnings per share can be aggressively manipulated, as can reported revenues. Even the cash flow statement can be suspect because it ultimately pulls most of its key data points from the income statement, which can be a work of creative fiction.
Paying a dividend requires actual cash on hand. And a dividend hike implies that management is confident that there will be a lot more cash coming down the pipeline to support a higher dividend in the quarters ahead.
But even when it comes to dividends, you have to look out for chicanery and focus on quality. That means paying the dividend out of real profits and cash flows, not debt or new share issuance. As forensic accountant
Today, we're going to take a look at Dividend Achievers - companies with a history of raising their annual dividends for a minimum of 10 consecutive years - that aren't just providing token upticks. The idea is that we're limiting our pool to stable companies with a long history of safely delivering the goods, but that also are well-positioned for growth in the immediate future.
Aflac
Market value: $35.1 billion
Dividend yield: 2.4%
Consecutive annual dividend raises: 35
There's something about the Aflac (
All the same, there's nothing funny about Aflac's dividend growth. The company yields 2.4%, which is competitive with its peers in the financial sector, and it just hiked its dividend by a cool 16%. This is completely independent of the 100% stock dividend (effectively a 2-for-1 stock split) that was announced on
Insurance is a tough business to be in these days, but Aflac mitigates its risks by diversifying and by avoiding politically-contentious products. It has operations in both
With the
Church & Dwight
Market value: $12.5 billion
Dividend yield: 1.8%
Consecutive annual dividend raises: 22
If there is a common theme in this article, it would be "boring companies with exciting dividend hikes."
As with most of the rest of the stocks on this list, you're not likely to get rich quick in
Hasbro
Market value: $12.1 billion
Dividend yield: 2.6%
Consecutive annual dividend raises: 15
Up next is toymaker Hasbro (HAS, $97.36), the maker of toys and merchandise covering the Star Wars, Marvel and Transformers franchises, among many, many others. If you are a parent, it's likely that Hasbro has taken a fair bit of your disposable income over the years.
You might as well get some of it back via Hasbro's high and rising dividend.
The toy landscape has been shifting for years, with mobile gaming and other new entertainment options competing for the attention of kids. Hasbro has managed to change with the times and stay relevant, tying their toys to popular movies and TV shows. Others, such as rival Mattel (MAT) - which Hasbro made a merger bid for in 2017 - have been far less successful.
Hasbro made a windfall from the last Star Wars movie, of course, and has profited handsomely from the popularly of the Marvel Cinematic Universe, which includes the Avengers, Thor, and Iron Man franchises, among others. That's likely to step up a notch in 2018 with the widely anticipated launches of Black Panther and the third installment of The Avengers.
Hasbro has done a good job of turning its business success into a long string of dividend hikes. The stock has raised its dividend for 15 consecutive years and currently yields 2.6%.
This premier toymaker recently announced a 12% dividend increase, which is a little higher than the company's average annual bump. But unless children fall out of love with superheroes and Jedi, don't expect that dividend growth to slow down any time soon.
MSC Industrial Direct
Market value: $5.1 billion
Dividend yield: 2.6%
Consecutive annual dividend raises: 15
Chances are good you've never heard of
Last month, MSC hiked its dividend by 21%. And this was just one quarter after raising it by 7%. Over the past 10 years, the company has managed to raise its dividend by about 11% per year. At current prices the stock yields about 2.6%. That's not too shabby.
The beauty of a company like MSC is that it's unlikely to suffer from obsolescence any time soon. These aren't cutting-edge graphics processors we're talking about here. They're boring, old-school metal-working tools that haven't changed a whole lot over the years.
If you're looking for a solid dividend grower that is mostly future proof, then
Texas Instruments
Market value: $103.5 billion
Dividend yield: 2.4%
Consecutive annual dividend raises: 14
Next in the queue is semiconductor designer
Chances are good that you use TI's products without even realizing it. Their chips and controls tend to work behind the scenes in things such as your car's safety system. Graphics processor makers like
Like many tech companies, TI doesn't sport an exceptionally high dividend yield at 2.5%. But make no mistake,
As a general rule, technology companies are much more prone to obsolescence than old-line industrial companies. But TI has proven its ability to shift with the times and stay relevant. It has evolved into a dividend-raising champion along the way.
Toro Company
Market value: $6.8 billion
Dividend yield: 1.3%
Consecutive annual dividend raises: 14
At the end of 2017, Toro raised its dividend by 14%. This followed a nearly 17% dividend hike the year before. Over the past 10 years, the stock has raised its dividend at an annual clip of nearly 20%. The 1.3% current yield might not be exceptionally high, but whatever the stock lacks in yield it more than compensates with dividend growth.
In Toro, you're getting an aggressive dividend grower backed by strong demographic trends. With the Millennials starting to nest, that high dividend growth should continue for a while.
"As Millennials move through their adult lives, they'll hit all the familiar milestones, forming families, having children, and putting down roots," says
Union Pacific
Market value: $106.6 billion
Dividend yield: 2.3%
Consecutive annual dividend raises: 12
There's really nothing sexy about railroad operator
But while it might not be particularly interesting,
This is not the kind of stock to dazzle you with triple-digit annual returns. But if you're looking for a dividend-raising workhorse,
No one knows what the world will look like in another 119 years, but
Charles Lewis Sizemore, CFA, is a Contributing Writer for Kiplinger.