Nike has increased its dividend for 21 consecutive years.
David Paul Morris/Bloomberg
Past actions are not always a prologue when it comes to increasing a dividend every year.
Still, it’s not a bad place to start.
Being a member of the
S&P 500 Dividend Aristocrats Index
confers a sign of dividend strength and long-term consistency. Its 67 members have paid out a higher dividend for at least 25 straight years. Last year, the Aristocrats returned minus 6%, including dividends, compared with minus 18% for the
S&P 500.
S&P Dow Jones Indices, which oversees the Aristocrats, recently added three new constituents to the index:
J.M. Smucker
(ticker: SJM),
C.H. Robinson Worldwide
(CHRW) and
Nordson
(NDSN).
That raises the question of who’s in the pipeline to join the group in the next several years?
For some clues, Barron’s looked at the
S&P High Yield Dividend Aristocrats Index,
which requires 20 straight years of dividend hikes. Some of these companies end up in the S&P 500 Dividend Aristocrats.
Barron’s selected the 10 companies in the high-yield index that are also members of the S&P 500.
| Company / Ticker | Recent Price | Dividend Yield | 1-Year Return | Market Value (bil) |
|---|---|---|---|---|
| Eversource Energy / ES | $81.31 | 3.3% | -4.5% | $28.0 |
| FactSet Research System / FDS | 426.88 | 0.8 | 2.4 | 16.4 |
| Fastenal / FAST | 53.22 | 2.6 | -0.7 | 31.0 |
| Intl Flavors & Fragrances / IFF | 112.76 | 2.9 | -8.7 | 28.9 |
| L3Harris Technologies / LHX | 212.33 | 2.1 | 1.5 | 40.2 |
| Lockheed Martin / LMT | 469.10 | 2.6 | 23.6 | 117.2 |
| Microchip Technology / MCHP | 84.47 | 1.7 | 17.3 | 46.7 |
| NIKE / NKE | 125.73 | 1.1 | -12.6 | 199.2 |
| Southern / SO | 67.90 | 4.0 | 2.7 | 73.2 |
| W.R. Berkley / WRB | 68.31 | 0.6 | 16.5 | 17.8 |
Data as of Feb. 6
Source: S&P Dow Jones Indices and FactSet.
The list of companies includes
Eversource Energy
(ES), which generates natural gas and electricity. The stock yields 3.4%, one of the highest on the accompanying table. Eversource has increased its dividend every year since 2001.
Similarly,
Southern
(SO), a utility holding company based in Atlanta, last April announced it was raising the dividend for the 21st straight year. The stock yields 4%.
Southern
pays a quarterly dividend of 68 cents a share, for an annualized distribution of $2.72.
Nike
(NKE) also has had 21 straight years of boosting its dividend, most recently to 34 cents on a quarterly basis—an 11% increase. The apparel giant’s annualized dividend is $1.36 a share, and the stock was recently yielding 1.1%—below the 1.65% average for the S&P 500.
In another sector,
Microchip Technology
(MCHP), which yields 1.7%, has boosted its dividend every year for about two decades. The chip company recently announced that it will raise the quarterly dividend to 35.8 cents a share, an increase of 9%. That puts the annualized dividend at $1.43 a share.
Defense and aerospace company
Lockheed Martin
(LMT) has increased its quarterly cash dividend for 20 straight years. The quarterly payout is at $3 a share, up from $2.80 previously, for an annualized disbursement of $12.
Other S&P 500 companies that have increased dividends for at least 20 straight years but shy of 25 years are
Fastenal
(FAST),
FactSet Research
(FDS),
International Flavors & Fragrances
(IFF),
L3Harris Technologies
(LHX), and
W.R. Berkley
(WRB).
Fastenal’s large product portfolio includes fasteners along with tools and equipment. The stock yields 2.6%. It pays an annualized dividend of $1.40 a share, having recently announced an increase of 13% from $1.24.
For FactSet Research, which supplies financial data to customers, its 2022 fiscal year marked its 23rd year of dividend growth. It’s currently at 89 cents on a quarterly basis or $3.56 annualized. The stock yields 0.8%.
When
L3Harris Technologies
boosted its quarterly dividend nearly a year ago to $1.12 a share from $1.02, it marked the 21st annual dividend increase for the company. The stock yields 2.1%.
Insurer W.R. Berkley has raised its dividend every year for about two decades. Its quarterly dividend is 10 cents a share, and the stock yields 0.6%.
There are no guarantees that these companies will become full-fledged S&P 500 Dividend Aristocrats, but they are well on their way.
Write to Lawrence C. Strauss at lawrence.strauss@barrons.com
Credit: marketwatch.com