Month: November 2023

Dividend Increases – Nov 2023

~ LifeWithDividends ~ Leave a comment

Mr. Market can go up, down or sideways but the stream of dividend income always keeping flowing. While that is great, a key component of this strategy is to invest in companies that an afford to raise their dividend payments annually.

We have had some stellar dividend increase announcements in the recent weeks, so this deserved its own post.

Double-digit hikes

We are in an environment where inflation is at record high levels. Several companies in their recently concluded quarterly earnings have reported a disappointing quarter due to this situation. Yet, I have some companies in my portfolio that have made announcements regarding double-digit hike to their quarterly dividend payments. I am not sure how many 9-5 jobs can claim such a hike in this environment. Just goes to show the strength of certain businesses even in turbulent times. Let us see which companies made such announcements:

  • Snap-On (ticket: SNA): announced a 14.8% hike to its quarterly dividend. The stock now pays a quarterly dividend of $1.86 per share. This company has now increased its dividends for 14 consecutive years. I find this to be a fascinating business because while this appears to be a boring industrial tool-maker like business, under the hood this is more like a technology company that needs to innovate constantly to retain its competitive advantage.
  • Visa (ticker: V): announced a 15.6% hike to its quarterly dividend. The stock now pays a quarterly dividend of $0.52 per share. This has company has now increased its dividend for 15 consecutive years. The interweb is full of articles on how Visa and Mastercard are such high-margin businesses that are incredibly hard to dislodge from the financial space. I have some thoughts about this business, but I will reserve them for a future post.
  • Aflac Inc. (ticker: AFL): announced a 19% hike to its quarterly dividend. The stock now pays a quarterly dividend of $0.50 per share. This has company has now increased its dividend for 40 consecutive years. This is quite outstanding! This is such a boring old insurance business but yet a fantastic investment for its shareholders.

Other hikes

Here are some other hike announcements for stocks in my portfolio over the last few weeks that I missed discussing:

Hike disappointments

Of course, it is not all song-and-dance and good news as far as dividend hikes. The one stock that has been a dud as far as dividend hike announcements is Whirlpool (ticker: WHR). The board has decided to not increase the payable quarterly dividend. This comes as no surprise though. The company reported a rather disappointing Q3 results and also revised their full-year guidance for free-cash-flow to $500 million. The market did not like this and the stock got punished as a result.

This has been a rather difficult business to hold in the past year. And while I think management is doing the right thing to fight through these difficult economic times, I think they kinda shot themselves in the foot back in 2022 when they decided to increase the dividend by 25%. This might sound counter-intuitive, but I think it would have been wise had management exercised caution then and retained a portion of this cash especially since they had a planned acquisition of the InSinkErator business and potentially turbulent times ahead. But it is easy to make such assertions now after the fact.

Summary

Dividend growth investors love dividend hikes. It is critical to keep tracking these as this is a great indicator of what management believes there expected cash flow trends are going to be like in the year(s) ahead. I am especially happy with the three massive double-digit hikes, but also equally celebrate some of the smaller dividend hikes as some of these businesses navigate some tricky times ahead.

PS: I am a little late on my monthly income report for October. I will post this update within the next few days. As always, I appreciate your readership and value your time.

Thank you for reading thus far. Cheers!

LWD