As a dividend growth investor, I value consistency in the types of companies I own. When I buy shares, I view myself as a partial owner in a business. My success is therefore dependent on the ability of that business to earn more money over time, in order to pay me more dividends in the future.
I picked the following dividend stocks based on companies that announced distribution increases in the past week and then focused only on those that have grown dividends for at least a decade. Here are three dividend stocks to buy from my screen:
McDonald’s (MCD) franchises and operates in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. McDonald’s raised its quarterly dividend by 4.9% to 85 cents per share, which marked the 38th consecutive dividend increase for this dividend champion. Per the words of McDonald’s CEO Don Thompson,
“McDonald’s global growth priorities — providing great-tasting food and beverages, creating memorable experiences, offering unparalleled convenience and becoming an even more trusted brand — focus on what matters most to our customers and serve as the foundation to building our business over the long term. Today’s dividend increase reflects the continued strength and sustainability of our cash flow and our commitment to enhancing shareholder value. We expect to return $18 to $20 billion to shareholders between 2014 and 2016 and have returned $3.2 billion year-to-date August toward that target.”
The recent dividend increase is the slowest since the late 1990s. The stock sells for 17.5 times forward earnings and yields 3.6%. Check my analysis of McDonald’s for more details.
W.P. Carey (WPC)
W.P. Carey (WPC) invests in commercial properties that are generally triple-net leased to single corporate tenants including office, warehouse, industrial, logistics, retail, research and development, hotel and self-storage properties across the globe.
This REIT hiked quarterly distributions to 94 cents per share. WPC has increased distributions for 16 years in a row. Over the past decade, WPC has managed to hike distributions by 6.3% per year. W.P. Carey yields 5.5% after the hike.
I missed out on the opportunity to acquire W.P. Carey in 2012 when the plans for conversion to a REIT were announced. I then continuously decided against investing in W.P. Carey “because the price went too high.” Maybe one of these months I will admit I was wrong and initiate a position, using the dividends I receive from Realty Income (O) and American Realty (ARCP).
Microsoft (MSFT) develops, licenses, markets, and supports software, services, and devices worldwide. Microsoft raised its quarterly dividend by 10.7% to 31 cents per share, which marked its 12th consecutive annual dividend increase. Over the past decade, Microsoft has managed to boost dividends by 15% year. MSFT stock sells for 17.3 times forward earnings and yields 2.7%.
I have analyzed Microsoft before but never really did anything about initiating a position. Microsoft has a strong brand and a business model I understand very well. However, I am not sure what the future of computing will be in 20 years and how Microsoft will fit into it.
That being said, I value McDonald’s, W.P. Carey and Microsoft for their consistent dividend increases.
Full Disclosure: Long MCD
- How to be a successful dividend investor
- How to read my weekly dividend increase reports
- The work required to have an opinion
- Dividends Provide a Tax-Efficient Form of Income
- My Dividend Goals for 2014 and after