Historically speaking, consistent dividend growers have been among the best long-term performers in the market. Dividend increases are often a signal of management’s confidence in the company’s future.
Several companies even define a dividend policy focussed on dividend growth while keeping a sustainable dividend payout ratio.
Two examples are the US health company, Johnson & Johnson and the German company Fresenius. Below a quote from the Johnson and Johnson management and the Fresenius company presentation (December 2020).
“In recognition of our 2019 results, strong financial position and confidence in the future of Johnson & Johnson, the Board has voted to increase the quarterly dividend for the 58th consecutive year,” said Alex Gorsky, Chairman and Chief Executive Officer of the company.
Monitoring Dividend increases could be a good starting point for dividend growth investors. To make life easy we created several screeners for our members based on this concept, e.g. the Dividend Aristocrats, DAX, Dividend Kings, DOW-30 etc.
Below an example:
The Dividend Kings list is a select group of US companies that have increased dividends every year for the last 50 straight years. The following table lists the dividend kings that have increased their dividend over the last six months, including the date of the last dividend change, the old and new dividend per share, the change percentage, and the current dividend yield.
Name Ticker Date of change Old dividend New dividend Change Change Dividend Yield Hormel Foods Corp.
ABM Industries Incorporated
Farmers & Merchants Bancorp
Lancaster Colony Corporation
Emerson Electric Company
Northwest Natural Holding Company
Federal Realty Investment Trust
Altria Group, Inc.
Stanley Black & Decker
American States Water Company
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market in the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors, there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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