3 Dividend Paying Stocks Delivering Dividend Growth

by Dividend Growth Investor | March 25, 2013 1:00 am

As a dividend growth investor[1], I uncover attractively valued companies by running my monthly screen[2] against the dividend champions and dividend achievers’ indexes. I also tend to focus on the weekly list of companies that boosted distributions, in order to monitor the dividend growth of companies I own or might consider for further analysis. I also use this list in order to uncover any emerging dividend stocks, which are in the first phase[3] of their dividend growth journey.

Over the past week, there were sixteen companies which announced increases[4] in distributions. I narrowed the list by excluding companies which had raised dividends for less than five years in a row, and came up with the following three stocks:

Air Products and Chemicals  (NYSE:APD[5]) provides atmospheric gases, process and specialty gases, performance materials, equipment, and services worldwide. The company increased the quarterly dividend on the company’s common stock by 10.90% to 71 cents per share. This marked the 31st consecutive year that Air Products has increased its dividend payment.

Over the past decade, this dividend champion[6] has raised distributions by 11.80% per year. Between 2003 and 2012, the company’s earnings rose from $1.81 per share to $5.53 per share. Analysts expect earnings to hit $5.78 per share in 2013, and increase to $6.40 per share by 2014. Currently the stock is attractively valued at 15.70 times earnings and yields 3.20%. I plan on adding to my position in the stock within the next couple of months. Check my analysis of Air Products & Chemicals[7] for more information.

Raytheon (NYSE:RTN[8]) provides electronics, mission systems integration, as well as a range of mission support services in the United States and internationally. The company’s Board of Directors voted to increase the company’s annual dividend payout rate by 10 percent, from $2.00 to $2.20 per share. This marked the ninth consecutive year that Raytheon has increased its dividend payment.

Over the past decade, the company has raised distributions by 25.40% per year. Between 2003 and 2012, the company’s earnings rose from 88 cents per share to $5.67 per share. Analysts expect earnings to decline in 2013 to $5.33 per share, and increase to $5.54 per share by 2014. Currently the stock is attractively valued at 10.30 times earnings and yields 3.90%. While the dividend is sustainable and has room to grow, the focus on budget cuts in the company’s biggest customer might not bode well for long-term profitability.

Williams-Sonoma (NYSE:WSM[9]) operates as a specialty retailer of home products. The company’s Board of Directors has authorized a 41% increase in the company’s quarterly cash dividend to 31 cents per share. This marked the eighth consecutive year that Williams-Sonoma has increased its dividend payment.

Over the past five years, the company has raised distributions by 14.60% per year. Currently the stock is trading at 20.80 times trailing earnings and yields 2.50%. The trailing earnings per share over the past four quarters nets to $2.39. Analyst projections for 2013 and 2014 are for earnings growth to $2.78  per share and $3.17 per share. Between 2004 and 2012, the company’s earnings rose from $1.36 per share to $2.27 per share. I am going to add Williams-Sonoma to my list for further analysis.

Full Disclosure: Long APD

Endnotes:
  1. dividend growth investor: http://www.dividendgrowthinvestor.com/2011/08/why-i-am-dividend-growth-investor.html
  2. my monthly screen: http://www.dividendgrowthinvestor.com/2011/03/my-entry-criteria-for-dividend-stocks.html
  3. in the first phase: http://www.dividendgrowthinvestor.com/2013/03/three-stages-of-dividend-growth.html
  4. announced increases: http://investorplace.com/2013/03/7-companies-increasing-dividends-march-18-22-hpq-rtn-wsm/
  5. APD: http://studio-5.financialcontent.com/investplace/quote?Symbol=APD
  6. dividend champion: http://www.dividendgrowthinvestor.com/2011/02/dividend-champions-best-list-for.html
  7. analysis of Air Products & Chemicals: http://www.dividendgrowthinvestor.com/2012/06/air-products-and-chemicals-apd-dividend.html
  8. RTN: http://studio-5.financialcontent.com/investplace/quote?Symbol=RTN
  9. WSM: http://studio-5.financialcontent.com/investplace/quote?Symbol=WSM

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