Hail the dividend aristocrats   Recently updated

There’s an old Wall Street maxim that the safest dividend is the one that’s just been raised. Which is why, if you’re not familiar with “dividend achievers,” you should be in my opinion.

Earnings per share can be aggressively manipulated, as can reported revenues.

Even the cash flow statement can be suspect because it ultimately pulls most of its key data points from the income statement, which can be a work of creative fiction.





Real Cash

Paying a dividend requires actual cash on hand.

In my view, a dividend hike implies that management is confident that there will be a lot more cash coming down the pipeline to support a higher dividend in the quarters ahead.

Here are 5 dividend achievers that I think are worth a look.



Market value: $35.1 billion

Consecutive annual dividend raises: 35

There’s something about the Aflac (AFL) mascot duck quacking “Aflac!” that gives this insurance giant something of a cartoonish vibe.

All the same, there’s nothing funny about Aflac’s dividend growth in my opinion.

The company yields 2.4%, which is competitive with its peers in the financial sector, and it just hiked its dividend by a cool 16%.

This is completely independent of the 100% stock dividend (effectively a 2-for-1 stock split) that was announced on Feb. 13.

Aflac has raised its dividend at least once per year for 35 years and counting, which means it’s not just a Dividend Achiever, but a Dividend Aristocrat.

That’s an impressive streak, in my opinion, and one that likely won’t break anytime soon.

Aflac has operations in both the United States and Japan, and its U.S. operations avoid most of the expensive traps of the Affordable Care Act era.

The insurer focuses on supplemental policies rather than broad health plans and on loss-of-income products, such as short-term disability insurance.


Church & Dwight

Market value: $12.5 billion

Consecutive annual dividend raises: 22

Church & Dwight (CHD) makes a variety of household cleaning and personal care items.

Some of its brands include Arm & Hammer baking soda, Arrid deodorant, OxiClean stain remover and Trojan condoms, among others.

None of its products are particularly noteworthy or interesting. But they are staple brands that have been around for decades, and likely still will be thriving long after anyone reading this article is dead and in the ground.

But the company has been an aggressive dividend raiser of late. Church & Dwight recently boosted its dividend by nearly 15%, and the stock has boosted its dividend for 22 consecutive years.


MSC Industrial Direct

Market value: $5.1 billion

Consecutive annual dividend raises: 15

Chances are good you’ve never heard of MSC Industrial Direct (MSM). The company markets and distributes metalworking tools and machinery.

It’s a gritty, old-economy business in my view. But it’s one that has generated very solid dividend growth over the years.

Last month, MSC hiked its dividend by 21%. And this was just one quarter after raising it by 7%.

Over the past 10 years, the company has managed to raise its dividend by about 11% per year. At current prices the stock yields about 2.6%.


Texas Instruments

Market value: $103.5 billion

Consecutive annual dividend raises: 14

Next in the queue is semiconductor designer Texas Instruments (TXN), better known as “TI” for short.

Like many tech companies, TI doesn’t sport an exceptionally high dividend yield at 2.5%. But make no mistake, Texas Instruments is a dividend-raising monster in my opinion.

Late last year, the company raised its dividend by 24%. The dividend payout ratio, at 47%, is low enough to suggest that additional large dividend hikes are doable. TXN also is a reliable Dividend Achiever, having paid a distribution every year since 1962.


Toro Company

Market value: $6.8 billion

Consecutive annual dividend raises: 14

Toro Company (TTC), a maker of lawn irrigation systems and high-end riding lawn mowers, might not have a particularly sexy or interesting business, but the industry is a resilient one.

Toro has raised its dividend every year since 2003 – the one asterisk is that it kept the quarterly payout level in 2008 amid the market meltdown, but paid more on an annual basis than it did the year prior.

At the end of 2017, Toro raised its dividend by 14%. This followed a nearly 17% dividend hike the year before. Over the past 10 years, the stock has raised its dividend at an annual clip of nearly 20%. The 1.3% current yield might not be exceptionally high.

Yet, in my opinion, whatever the stock lacks in yield, it more than compensates with dividend growth.

A version of this article first appeared at Kiplinger.com

Photo Credit: Poona Agarwal via Flickr Creative Commons



Author profile

Charles Sizemore
Charles Sizemore
Sizemore Capital Management LLC is a registered investment advisory firm located in Dallas, Texas. Charles Lewis Sizemore, CFA is the founder and Chief Investment Officer of the firm.