As part of my monitoring process, I evaluate the list of dividend increases every week. This exercise helps me observe the rate of dividend growth for companies I own. It also helps me to familiarize myself with other dividend growth companies. I also believe that running through the list, and narrowing it down to a more manageable level using my screening criteria is helpful to readers for educational purposes.
I find it helpful to run through the exercise of narrowing the list of companies that raised dividends in a given week, by focusing on those that have raised dividends for at least ten years in a row. I also find it helpful to then evaluate each company quickly, using my well-publicized entry criteria, and then zooming in further on the fundamental performance and valuation criteria in order to determine whether a stock is worth a further look today. This is the type of decision making that goes in my head while I review different companies.
Over the past week, there were several dividend companies with a track record that raised distributions. The companies include:
Digital Realty Trust, Inc. (NYSE:DLR), is a real estate investment trust (REIT), through its controlling interest in Digital Realty Trust, L.P., which engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. This REIT raised its quarterly dividend by 5.70% to 93 cents/share. This marked the 13th consecutive annual dividend increase for this dividend achiever (1). Over the past decade, Digital Realty Trust, Inc. (NYSE:DLR) has managed to boost annual dividends at a rate of 12.80%/year. This was supported by growth in FFO from $2.02/share in 2007 to $5.76/share in 2016. The REIT is expected to generate $6.01/share in FFO in 2017. Unfortunately, Digital Realty is a little pricey at 18 times forward FFO and yields 3.50%. Digital Realty Trust, Inc. (NYSE:DLR) may be a better value if it sold in the low $90s or below. If you want to buy it at a cheaper price, let’s hope that another hedge fund manager launches a bear attack on the stock, like the one we had in 2013.
General Dynamics Corporation (NYSE:GD) operates as an aerospace and defense company worldwide. It operates through four business groups: Aerospace; Combat Systems; Information Systems and Technology; and Marine Systems. The company raised its quarterly dividend by 10.50% to 84 cent/share. This marked the 26th consecutive annual dividend increase for this dividend champion (2). Over the past decade, General Dynamics Corporation (NYSE:GD) has managed to boost its annual dividend at a rate of 12.80%/year. This was supported by a rise in earnings per share from $5.10 in 2007 to $9.87/share in 2016. General Dynamics Corporation (NYSE:GD) is estimated to earn $9.79/share in 2017. The stock is fairly valued at 19.40 times forward earnings and yields 1.80%.
Ross Stores, Inc. (NASDAQ:ROST), operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd’s DISCOUNTS brand names in the United States. It primarily offers apparel, accessories, footwear, and home fashions. Ross Stores, Inc. (NASDAQ:ROST) raised its quarterly dividend by 18.50% to 16 cents/share. This marked the 24th consecutive annual dividend increase for this dividend achiever (1). Over the past decade, the company managed to boost its annual dividends at a rate of 24.60%/year. The company also managed to grow earnings from $0.48/share in 2008 to $2.83/share in 2017. Ross Stores, Inc. (NASDAQ:ROST) is expected to earn $3.14/share in 2018. The stock is overvalued at 21.20 times forward earnings and yields 1%. I would be somewhat interested in the stock on dips below $62/share. Check my analysis of Ross Stores for more information.