Every week, I review the list of dividend increases as part of my monitoring process. I usually focus on companies I already own. However, I also focus on companies that have raised dividends for at least a decade (1), in order to observe their performance from the grounds up.
Over the past week, there were several companies that raised dividends. In the case of Diageo, I missed this company during my review last week, which is why I wanted to include it here. I have highlighted the ones that have managed to reward shareholders with a raise for at least ten years in a row.
The companies include:
Diageo plc (ADR) (NYSE:DEO) produces, markets, and sells alcoholic beverages worldwide It offers scotch whiskey, gin, vodka, rum, beer and spirits, Irish cream liqueurs, wine, Raki, tequila, Canadian and American whiskey, Cachaça, and brandy, as well as adult beverages and ready to drink products. The UK based company raised its interim dividend by 4.90% to 23.70 pence/share. This international dividend company has increased dividends for 19 years in a row. (The UK currency is the British pound, and each pound is divided into 100 pence). Dividends on the ordinary shares are normally paid twice a year: an interim dividend in April and a final dividend in October. The approximate split between the two payments is 40:60. This would translate into an increase in the October payment to 38.40 pence/share, for a total annual dividend of 62.10 pence share.
Diageo plc (ADR) (NYSE:DEO) targets dividend cover (the ratio of basic earnings per share before exceptional items to dividend per share) within the range of 1.8-2.2 times. For the year ended 30 June 2016 dividend cover was 1.5 times. It is expected that dividend increases will be maintained at roughly a mid-single digit rate until cover is back in range.
Over the past decade, earnings per share rose from 55 pence to 89 pence. The company is expected to earn 105 pence per share in 2017. This translates into a P/E ratio of 21 for Diageo at the current price of 2213 pence/share. The stock would be attractively valued on dips below 21 pounds per share.
For reference, each depositary share of Diageo plc (ADR) (NYSE:DEO) traded on the New York Stock Exchange is equivalent to 4 ordinary shares traded on the London Stock Exchange. At the current rate of 80 pence per dollar, I would view Diageo as a decent value on dips below $105/share. The annual dividend in US dollars comes out to $3.10/share. Check my analysis of Diageo for more information about the company.
Compass Minerals International, Inc. (NYSE:CMP) produces and markets salt, sulfate of potash specialty fertilizer, plant micronutrients, and magnesium chloride primarily in North America and the United Kingdom. The company raised its quarterly dividend by 3.60% to 72 cents/share. This was the 14th consecutive year of dividend increases for Compass Minerals International, Inc. (NYSE:CMP). This dividend contender has managed to boost its payout at a rate of 8.60%/year over the past decade. Earnings per share rose from $1.69 to $4.69 over the past decade. Compass Minerals International, Inc. (NYSE:CMP) is expected to earn $2.96/share over the next year. Currently, the stock is overvalued at 27.70 times forward earnings and yields 3.50%. I would give the company a pass at this time.
Eversource Energy (NYSE:ES) is a public utility holding company, engages in the energy delivery business. The company operates in three segments: Electric Distribution, Electric Transmission, and Natural Gas Distribution. The company raised its quarterly dividend by 6.70% to 47.50 cents/share. This was the 19th consecutive year of dividend increases for Eversource Energy (NYSE:ES). This dividend contender has managed to boost its payout at a rate of 9.40%/year over the past decade. Earnings per share rose from $0.82 to $2.76 over the past decade. Eversource Energy (NYSE:ES) is expected to earn $2.97/share over the next year. Currently, the stock is fairly valued at 18.80 times forward earnings and yields 3.40%.I would add the company on my list for further research.