I love stocks that grow their dividends year in and out. Hopefully, you do too! If so, you are in the right place.
I’ve created a list of stocks that grow their dividends and happen to be increasing them next week. This list is a trimmed-down version only covering dividend increases. A full upcoming dividend calendar is available here.
This week, in particular, is rather light on increases, but I think the JPMorgan (NYSE:JPM) hike more than makes up for it.
If you know the caveats, feel free to jump down to the lists themselves.
How It’s Assembled
The information presented below was created by combining the “U.S. Dividend Champion” spreadsheet hosted here, with upcoming dividend information from Nasdaq. This meshes metrics about companies with dividend growth history with upcoming dividend payments (and whether those payments are increasing). These companies all have a minimum 5-year dividend growth history.
Why Should I Care?
Dividend increases are one of the most outward signs by management as to how business is going. Dividend yields also don’t live in isolation; share prices tend to follow increases, as investors will move into a stock to claim the new payments. All else being equal, a 10% dividend hike should see an approximately 10% share price appreciation over time as the market adjusts to the higher payment. This produces a great flywheel effect whereby an investor can increase their income and see the face value of their investment increase.
Especially for retirees not receiving paychecks, dividend increases help cushion the never-ending force of inflation. As an added bonus, companies that grow their dividends by a rate greater than inflation can help investors improve their wealth over time.
What these lists provide is an opportunity for an investor to buy more shares prior to the dividend increase. An investor could start a position or increase their position size prior to the market readjusting to the new and higher dividend rate.
What Is The Ex-Dividend Date?
The “ex-dividend” date is the day you are no longer entitled to the dividend or distribution. You need to have made your purchase by the preceding business day. If the date is a Tuesday, you need to have purchased (or already owned) shares by market close on Monday. Be aware that for any stock going ex-dividend on a Monday (or Tuesday, if Monday may be a holiday), you must own it by the prior Friday.
Dividend Streak Categories
Here are the definitions of the streak categories as I’ll be using them throughout the piece:
- King: 50+ years
- Champion/Aristocrat: 25+ years
- Contender: 10-24 years
- Challenger: 5+ years
The Main List
The data is sorted by the ex-dividend day (ascending) and then the streak (descending):
|Name||Ticker||Streak||Forward Yield||Ex-Div Date||Increase Percent||Streak Category|
|Healthcare Trust of America, Inc. Class A||HTA||7||4.71||1-Oct-18||1.64%||Challenger|
|Terreno Realty Corporation||TRNO||8||2.59||4-Oct-18||9.09%||Challenger|
|JPMorgan Chase & Co.||JPM||7||2.75||4-Oct-18||42.86%||Challenger|
Streak: This is years of dividend growth history sourced from the U.S. Dividend Champions spreadsheet. Here are some definitions to clarify the fields.
Forward Yield: This is the new payout rate divided by the current share price.
Ex-Dividend Date: This is the date by which you need to own the stock.
Increase Percent: This is the amount by which the dividend is being increased.
Streak Category: This is the overall dividend history classification of the company.
Here are some additional metrics related to these companies, including yearly pricing action and the P/E ratio. This table is sorted in exactly the same way as the table above. The value investor may find stock ideas with those companies near their 52-week low.
|Ticker||Current Price||52-week Low||52-week High||PE Ratio||% Off Low||% Off High|
|HTA||25.95||24.06||31.69||66.56||8% Off Low||18% Off High|
|TRNO||36.63||31.56||39.27||33.67||16% Off Low||7% Off High|
|JPM||115.02||94.58||119.33||15.34||23% Off Low||4% Off High|
Tickers By Yield (With Growth Rates)
Some investors are more interested in current yield, so this table is sorted descending by yield. This also includes some of the historical dividend growth rates as a bonus. Additionally, the “Chowder Rule” has been included (the current yield + 5-year dividend growth rate). That is the current yield plus the 5-year dividend growth rate.
|Ticker||Yield||1-Year DG||3-Year DG||5-Year DG||10-Year DG||Chowder Rule|
I want to highlight here the 1-year growth rates are still stale (as they are on the “CCC” list currently). I’m still working to calculate these myself.
It’s slim pickings this week but I will call out JPMorgan. Obviously, a big part of the story goes back to the recession days. Bank shares in general have been extremely out of favor until the past two years as interest rates have slowly started to tick up.
Going back to this time in 2010, shares of JPM have beaten the market, generating alpha of about 3% per year over the S&P.
The value of the investment lagged the market for many years until the election in 2016. From there, shares have steadily risen above the market return, and now there is a 42% incoming dividend hike coming. That puts the forward yield at right around 2.8%, which isn’t too shabby these days.
(Courtesy: Custom Stock Alerts)
I hope you are able to find this information valuable. Let me know if you want to see additional data points or what may help make this more useful.
As always, do your due diligence on any stock before buying or selling.
Disclosure: I am/we are long JPM.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.