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9 Upcoming Dividend Increases Including Philip Morris

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Includes: BAC, BANF, CONE, DDS, EGP, ITW, KBAL, MDLZ, PM, SPY, UTX, XRAY
by: Dividend Derek
Summary

All stocks have at least five fiscal years of dividend growth history.

All stocks come from the U.S. Dividend Champion list.

Nine increases for next week (up from six last week).

An average increase of 12.84% with three having at least a 10% increase (one has 50%). Median increase of 8.70%.

Introduction

This article series is designed to keep investors informed of upcoming dividend increases. For dividend growth investors, this can be an opportunity to start or add to positions prior to a new increased payout. This can be especially important for retirees who live on dividend checks.

The lists I've compiled provide various stats for the stocks that are increasing their dividends next week.

This list is a trimmed-down version only covering dividend increases. A full upcoming dividend calendar is always available here. If you know how this was built and 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 five-year dividend growth history.

As a point of clarification, companies are included that may not raise their dividend every calendar year - but the total annual dividend received will still be higher each year. One example is Bank of America (BAC).

In the table here on SA, the annual dividend payout received by a shareholder increased for each year in this time frame. Thus it is eligible for inclusion on the "CCC" list.

That said - it did payout the same amount for eight quarters in a row - but again, the total annual amount increased each year.

United Technologies (UTX) is another example.

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 is 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 0
Champion 2
Contender 1
Challenger 6

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
Philip Morris International Inc (PM) 11 6.54 24-Sep-19 2.63% Contender
Kimball International, Inc. - Class B Common Stock (KBAL) 5 1.8 24-Sep-19 12.50% Challenger
DENTSPLY SIRONA Inc. (XRAY) 8 0.8 26-Sep-19 14.29% Challenger
CyrusOne Inc (CONE) 7 2.69 26-Sep-19 8.70% Challenger
Illinois Tool Works Inc. (ITW) 45 2.72 27-Sep-19 7.00% Champion
BancFirst Corporation (BANF) 26 2.22 27-Sep-19 6.67% Champion
Dillard's, Inc. (DDS) 9 1.01 27-Sep-19 50.00% Challenger
Mondelez International, Inc. - Class A Common Stock (MDLZ) 8 2.08 27-Sep-19 9.62% Challenger
EastGroup Properties, Inc. (EGP) 8 2.38 27-Sep-19 4.17% Challenger

Field Definitions

Streak: This is years of dividend growth history sourced from the U.S. Dividend Champions spreadsheet.

Forward Yield: This is the new payout rate divided by the current share price.

Ex-Dividend Date: This is the date before 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.

Show Me the Money

Here's a table mapping the new rates versus the old rates. It also reiterates the increase in percentage. This table is sorted the same way as the first table (ex-dividend day ascending, dividend streak descending).

Ticker Old Rate New Rate Increase Percent
PM 1.14 1.17 2.63%
KBAL 0.08 0.09 12.50%
XRAY 0.088 0.1 14.29%
CONE 0.46 0.5 8.70%
ITW 1 1.07 7.00%
BANF 0.3 0.32 6.67%
DDS 0.10 0.15 50.00%
MDLZ 0.26 0.285 9.62%
EGP 0.72 0.75 4.17%

Additional Metrics

Here are some additional metrics related to these companies, including yearly pricing action and the P/E ratio. This table is sorted the same way as the table above. The value investor may find stock ideas with those companies near their 52-week lows. They may provide a larger margin of safety and inflated yield.

Ticker Current Price 52 Week Low 52 Week High PE Ratio % Off Low % Off High
PM 71.54 64.67 92.74 14.33 10% Off Low 22% Off High
KBAL 20.02 13.49 20.21 18.9 47% Off Low New High
XRAY 49.86 33.93 59.4 109.04 46% Off Low 13% Off High
CONE 74.36 48.94 75.48 0 51% Off Low 1% Off High
ITW 157.26 117.75 161.71 21.14 32% Off Low 3% Off High
BANF 57.64 48.07 63.3 14.58 19% Off Low 9% Off High
DDS 59.6 47.95 86.71 12.26 23% Off Low 30% Off High
MDLZ 54.72 38.79 56.72 21.58 39% Off Low 3% Off High
EGP 126.31 87.69 127.97 50.82 43% Off Low 0% Off High

Tickers by Yield and 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, which is the current yield + five-year dividend growth rate.

Ticker Yield 1 Yr DG 3 Yr DG 5 Yr DG 10 Yr DG Chowder Rule
PM 6.54 5.5 3.2 4.8 16 11.3
ITW 2.72 22.3 18.5 16.4 11.3 19.1
CONE 2.69 9.8 15.9 30.3 33
EGP 2.38 4.8 4.1 4.3 2.4 6.7
BANF 2.22 19.2 10.5 9.5 8.5 11.7
MDLZ 2.08 12.2 12.9 11.2 13.3
KBAL 1.8 16 12.3 7.7 -7.6 9.5
DDS 1.01 29 17 13.8 9.6 14.8
XRAY 0.8 2.9 7.2 7.6 6.9 8.4

Bonus

I'll highlight Philip Morris International this week. The company has been in the news lately - an understatement itself. I recently covered Altria (NYSE:MO) and its dividend increase a few weeks ago. PM is now following suit with another 2.6% increase. This is its 11th year of consecutive increases since spinning off with the old Philip Morris. The news these days centers around the re-merger with Altria and also the vaping health sickness issues as of late. I won't opine here on those topics, but feel free to dive into some great research pieces here on SA.

(Source: F.A.S.T. Graphs)

With that said, shares currently look quite attractive with a fat yield over 6.5% and the stock under 14x earnings. Some of the details around the merger still need to be ironed out, so it's not clear at this time what the new payout structure may look like.

Looking at the scorecard from Simply Safe Dividends, here's how it ranks.

(Source: Simply Safe Dividends)

PM scores an above-average safety score - though that figure will change if the merger goes through. That said, shares are better than 80% of other dividend-paying stocks within this universe.

Here are the aggregate stats once more:

Name Ticker Streak Forward Yield Ex-Div Date Increase Percent Streak Category
Philip Morris International Inc PM 11 6.54 24-Sep-19 2.63% Contender

Stock Returns

I ran a stock return calculation comparing PM to the S&P (SPY) since September 2010. An alternative option would be to compare to something like SPYD which is the top 80 highest-yielding stocks in the S&P, but that only has history going back to 2015. In any event, SPY won in absolute terms though PM understandably delivered more than twice the income. Here's the look at the investments over time:

  • PM is the blue line
  • SPY is the black/gray line

The final results do not reflect the full impact of the investment over time. There were several periods that PM outperformed the broader market while delivering higher income. Perhaps some investors here saw the writing on the wall and took some profits. With perfect hindsight, that last big move upward in 2017 was the sign of maximum bullishness. At their pinnacle, shares were trading about 26x earnings and now they are half of that at 13x.

(Courtesy: Custom Stock Alerts)

Conclusion

I hope you 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. Happy investing!

Disclosure: I am/we are long ITW. 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.