7 Upcoming Dividend Increases With One King

|
Includes: BR, CARO, FRT, IFF, MAIN, NJR, RCL
by: Dividend Derek
Summary

All stocks have at least 5 years of dividend growth history.

A dip to 7 companies from 14 last week.

3 of the 7 are increasing more at least 10%.

Dividend King Federal Realty Investment Trust is hiking for the 51st year in a row!

Introduction

I love dividend stocks that grow their dividends year in and out. Using my technical chops, 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.

The information presented below was created by combining the "U.S. Dividend Champion" spreadsheet hosted here, with upcoming dividend information from the 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 approximately a 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

Fun Facts

Category Count
King 1
Champion 0
Contender 3
Challenger 3

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
Broadridge Financial Solutions, Inc. Common Stock (BR) 12 1.42 17-Sep-18 32.88% Contender
Main Street Capital Corporation (MAIN) 8 5.9 19-Sep-18 2.63% Challenger
Carolina Financial Corporation (CARO) 6 0.68 19-Sep-18 16.67% Challenger
Federal Realty Investment Trust (FRT) 51 3.13 20-Sep-18 2.00% King
New Jersey Resources Corporation (NJR) 22 2.51 20-Sep-18 6.96% Contender
Royal Caribbean Cruises Ltd. (RCL) 7 2.29 20-Sep-18 16.67% Challenger
International Flavors & Fragrances Inc. (IFF) 16 2.29 21-Sep-18 5.80% Contender


Field Definitions

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 you need to own the stock by.

Increase Percent: The amount the dividend is being increased.

Streak Category: This is the overall dividend history classification of the company.

Additional Metrics

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 P/E Ratio % Off Low % Off High
BR 136.82 78.44 137.86 38.43 74% Off Low 1% Off High
MAIN 39.5 34.13 41.21 12.42 15% Off Low 6% Off High
CARO 40.3 31.6 45.58 23.53 27% Off Low 12% Off High
FRT 130.94 106.41 134.52 45.54 23% Off Low 3% Off High
NJR 47.15 35.55 47.6 19.4 33% Off Low 1% Off High
RCL 123.7 101.2 135.65 15.39 22% Off Low 9% Off High
IFF 131.15 122.11 157.4 34.88 7% Off Low 17% 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 Yr DG 3 Yr DG 5 Yr DG 10 Yr DG Chowder Rule
MAIN 5.9 2.8 3.9 5.5 21.1 11.4
FRT 3.13 3.7 7.1 7.1 5.4 10.2
NJR 2.51 6.4 6.7 6.1 7.4 8.6
RCL 2.29 27.1 24.8 37.2 13 39.5
IFF 2.29 12.5 16.8 15.5 11.7 17.8
BR 1.42 10.2 14.6 15.5 27.4 16.9
CARO 0.68 30.8 17.4

I want to highlight here the one-year growth rates are still stale (as they are on the "CCC" list currently). I'm still working to calculate these myself.

Bonus Charts

The highlight this week is the Dividend King Federal Realty Investment Trust. They've raised over 51 years now with this upcoming hike.

From the F.A.S.T. Graph mapping historical P/AFFO, shares took quite the nosedive with the rest of the retail space near the tail end of 2015 even well into this year. In fact, results only got stronger each year as AFFO continued to grow. The market tends to value these shares quite highly with an average P/AFFO (P/E equivalent for REITs) of 26x over the past decade.

While they are under that mark now, using the longer term P/FFO chart (yes, this is slightly apples to oranges), shares still look a bit pricey.

Going back to 12/31/2010 (same time period as the first F.A.S.T. Graph), FRT has beaten the benchmark VNQ (Vanguard Real Estate ETF) by about 0.5% per year compounded.

If you had shares looking to be a market beater you may be a bit disappointed as they've lagged in absolute terms to the S&P. Of course, you've collected about 50% more dividends along the way.

Lastly, here is a view of a hypothetical investment of the two over time. FRT (the blue line) had the large run-up I alluded to in 2015. That would have been the time to sell some shares and in that case, you would have had a market-beating investment. Notice the blue line over the other two from early 2015 until about September of 2016.

(Courtesy: Custom Stock Alerts)

Conclusion

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/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.