5 Dividend Increases You Need to Know About!

Summary

This video explores five dividend stocks that recently announced increases, including a 4.1% hike by Altria, a high-yielding stock with a 50-year dividend growth history. Coca-Cola Consolidated's astonishing 400% dividend boost is scrutinized for sustainability, while Clorox's modest 1.7% increase raises concerns about inflation-adjusted payouts. McKesson's 15% dividend rise is highlighted as a potential long-term growth play, with the company's robust free cash flow and share buyback strategy underpinning its dividend potential.

Takeaways

• 📈 The S&P 500 is at an all-time high, with many quality dividend growth companies increasing their dividend payouts.
• 📊 The presenter owns Altria in their personal portfolio, which has just announced a 4.1% dividend increase, contributing to a high dividend yield of nearly 8%.
• 📊 Altria's performance has been impressive, with a 33% return on investment and a history of over 50 years of consecutive dividend increases.
• 💰 Concerns about Altria's high dividend payout ratio are addressed by the company's management's intentional strategy to reward shareholders with dividends.
• 📊 Altria's free cash flow has consistently covered its dividend payments, indicating the sustainability of its dividend policy.
• 🚀 Coca-Cola Consolidated has announced a massive 400% dividend increase, which is sustainable due to significant free cash flow growth.
• 📉 Clorox's 1.7% dividend increase is below the rate of inflation, effectively reducing the real value of dividends paid out.
• 📉 Clorox's performance has been lackluster, with a decline in earnings per share and slow revenue growth, impacting its ability to increase dividends significantly.
• 💡 McKesson's 15% dividend increase is a positive sign for investors, especially considering its low payout ratios and strong free cash flow.
• 💹 McKesson's consistent topline growth and aggressive share buyback program contribute to its potential for long-term dividend growth.
• 🔍 The video emphasizes the importance of analyzing a company's free cash flow, payout ratios, and historical dividend growth to assess the sustainability and attractiveness of its dividend policy.

Q & A

What is the significance of the S&P 500 trading at its all-time high in relation to dividend stocks?

The S&P 500 trading at an all-time high indicates a strong market, which can positively influence dividend stocks as many quality dividend growth companies may increase their dividend payouts during such periods.

What is the role of the ticker dat.com and its add-on in analyzing dividend stocks?

Ticker dat.com and its add-on are tools that allow users to automatically import stock financial data into spreadsheets, simplifying the analysis of dividend stocks and their financial performance.

Which company's dividend increase was discussed first in the video, and what was the percentage increase?

The first company discussed was Altria, with a dividend increase of around 4.1%.

How has the presenter's personal portfolio performed with their Altria position?

The presenter's Altria position has performed well, with a current return of around 33%.

What is the current annual dividend payment from the presenter's Altria position, and how much is it expected to increase by after the recent dividend hike?

The current annual dividend payment is around $350, which is expected to increase by about 4.1% after the recent dividend increase.

What is the significance of a company being a 'Dividend King'?

A 'Dividend King' is a company that has a history of over 50 consecutive years of dividend increases, indicating financial stability and a commitment to rewarding shareholders.

What is the concern regarding Altria's high dividend payout ratio, and how does the company justify it?

The concern is the sustainability of high dividend payouts with a payout ratio of around 83.3%. The company justifies it by stating that they target a dividend payout ratio of about 80% of adjusted diluted earnings per share, which is part of their capital allocation strategy.

What was the dividend increase percentage for Coca-Cola Consolidated, and what does it imply about the company's financial health?

Coca-Cola Consolidated announced a 400% increase in their dividend payment. This suggests the company is in a strong financial position as their free cash flow has been growing at a fast pace, making the dividend increase sustainable.

Why might a 1.7% dividend increase for Clorox be considered a negative sign?

A 1.7% dividend increase is considered negative because it is below the rate of inflation, meaning the company is effectively paying out less in real terms, which could indicate financial strain or concerns about sustainability.

What was the significant event in early August for McKesson that affected its stock price?

In early August, McKesson experienced a significant selloff after missing their quarterly revenue estimates in their earnings report, which led to a drop in the stock price.

What does McKesson's 15% dividend increase suggest about the company's future dividend growth potential?

McKesson's 15% dividend increase, along with their low payout ratios and strong free cash flow growth, suggests a high potential for future dividend growth as the company continues to perform well financially.

Outlines

00:00

📈 Analysis of Dividend Growth Stocks

This paragraph discusses the performance of the S&P 500 and the focus on quality dividend growth companies. The speaker introduces five dividend stocks that have recently announced increases, including one in their personal portfolio. The analysis uses spreadsheets from tickerdat.com and the Tickerdat add-on for financial data import. The first stock, Altria, is highlighted with a 4.1% dividend increase, a high dividend yield, and a history of over 50 years of consecutive dividend increases. The speaker's personal gains from Altria are shared, along with the company's sustainable dividend payouts and capital allocation strategy.

05:01

🚀 Dramatic Dividend Hike of Coca-Cola Consolidated

The second paragraph examines Coca-Cola Consolidated's astonishing 400% dividend increase. While initially exciting, the speaker questions the sustainability of such a hike. A review of the company's performance shows significant growth over the past years, with a substantial increase in free cash flow from 2017 to 2023. The free cash flow payout ratio is reassuringly low at 8.87%, indicating the dividend increase is sustainable. The starting dividend yield has become more attractive post-increase, and the company's historical lack of dividend growth suggests a potential shift in policy.

10:03

🔍 Closer Look at Clorox's Modest Dividend Increase

The third paragraph addresses Clorox's 1.7% dividend increase, noting its inadequacy in keeping up with inflation. The company's stock performance is analyzed, showing underperformance over the past year and five years. The speaker scrutinizes Clorox's dividend sustainability, focusing on free cash flow payout ratios and historical dividend growth rates. Concerns are raised about the company's slow revenue growth, fluctuating free cash flow, and declining profitability, suggesting the need for improvement to ensure sustainable dividend payments.

💊 McKesson's Impressive 15% Dividend Increase

The fourth paragraph presents McKesson's 15% dividend increase, positioning it as a potential long-term dividend growth play. Despite a recent stock selloff due to missed revenue estimates, the company's low payout ratios and strong free cash flow suggest a solid foundation for dividend growth. The speaker emphasizes the company's capital allocation, including share buybacks, which have increased per share metrics and supported higher dividend payments. The growth in revenue and free cash flow per share over the past decade is highlighted as a positive indicator for future dividend sustainability.

📊 Summary of Dividend Stocks and Investment Tools

The final paragraph wraps up the analysis of the five dividend stocks, inviting viewer feedback in the comments. It also promotes the speaker's spreadsheets and the Tickerdat add-on for Google Sheets, which allows for automatic stock financial data import. The paragraph serves as a call to action for viewers to visit Tickerdat.com for more information on the investment tools discussed throughout the video.

Keywords

💡S&P 500

The S&P 500, or Standard & Poor's 500, is a stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States. It is often used as a benchmark for the overall U.S. stock market. In the video, the S&P 500 is mentioned as trading at its all-time high, indicating a strong market performance and a favorable environment for the discussed dividend stocks.

💡Dividend Growth

Dividend growth refers to the increase in the amount of dividends a company pays out to its shareholders over time. It is a key concept in the video, as the focus is on stocks that have recently announced increases in their dividend payouts, suggesting potential for long-term investment returns.

💡Dividend Stocks

Dividend stocks are shares of companies that pay out a portion of their earnings to shareholders in the form of dividends. The video discusses five specific dividend stocks that have increased their payouts, which is important for investors seeking income from their investments.

💡Ticker Dat

Ticker Dat is mentioned as a source for the spreadsheets used in the video to analyze stocks. It is likely a service or tool that provides financial data and analytics, helping the presenter to evaluate and compare the performance and dividend history of different stocks.

💡Dividend Yield

Dividend yield is the ratio of the annual dividend payment to the market value of the stock. It is used in the video to describe the return on investment for dividend-paying stocks, with a higher yield indicating a larger dividend relative to the stock price.

💡Altria

Altria is a company that is highlighted in the video for its recent dividend increase and its status as a 'dividend king' with over 50 consecutive years of dividend increases. The presenter also mentions owning Altria in their personal portfolio, demonstrating its significance in the context of the video.

💡Payout Ratio

The payout ratio is a financial metric that shows the percentage of earnings a company pays its shareholders in dividends. The video discusses the high payout ratio of Altria, which is a concern for some investors, but the presenter explains that it is a strategic decision by the company's management.

💡Free Cash Flow

Free cash flow (FCF) is the cash a company generates after accounting for cash outflows to support operations and maintain its capital structure. In the video, FCF is used to evaluate the sustainability of dividend payments, with a focus on companies where FCF can cover or exceed dividend payouts.

💡Coca-Cola Consolidated

Coca-Cola Consolidated is distinguished from the more well-known Coca-Cola (KO) and is highlighted in the video for its significant 400% dividend increase. The discussion around this company emphasizes the importance of evaluating the sustainability of such a large dividend increase in relation to its free cash flow.

💡Clorox

Clorox is mentioned as a company that announced a 1.7% dividend increase, which is below the rate of inflation, effectively meaning that investors are receiving less in real terms. The video uses Clorox as an example to discuss the importance of dividend growth keeping pace with inflation.

💡McKesson

McKesson is a healthcare company and drug distributor that is featured in the video for its 15% dividend increase. The discussion around McKesson highlights its low dividend yield, high dividend growth potential, and the company's use of capital for share buybacks and dividend increases.

Highlights

S&P 500 is currently at an all-time high with many quality dividend growth companies increasing their dividends.

Introduction of five dividend stocks that recently announced dividend increases.

Personal portfolio includes Altria with a 4.1% dividend increase and a high-yielding stock.

Altria's performance in the portfolio has been positive with a 33% return.

Altria's dividend yield is expected to increase to around 8% post-dividend hike.

Altria has a history of over 50 consecutive years of dividend increases and a 10-year dividend CAGR of 7%.

Concerns about the sustainability of Altria's high dividend payout ratios.

Management's strategy at Altria is to reward shareholders through dividends with a target payout ratio of 80%.

Altria's free cash flow has been consistently covering dividend payments.

Coca-Cola Consolidated announced a 400% increase in dividend payments.

The sustainability of Coca-Cola Consolidated's dividend increase is supported by robust free cash flow growth.

Clorox's 1.7% dividend increase is below the rate of inflation, effectively reducing dividend value.

Clorox's free cash flow growth is slow, impacting the sustainability of dividend increases.

McKesson announced a 15% dividend increase, indicating strong potential for future growth.

McKesson's low payout ratios and strong free cash flow suggest potential for increased dividend payments.

McKesson's capital allocation includes share buybacks, boosting per-share metrics and supporting dividend growth.

Resource provided for downloading spreadsheets and accessing the Ticker Dat add-on for stock financials.

Transcripts

the S&P 500 is currently trading right

at its all-time high and along with this

we're seeing many quality dividend

growth companies continue to increase

the amount they pay out in dividends so

in this video we're going to be looking

at five different dividend stocks that

just recently announced dividend

increases and one of these companies I

actually own in my personal portfolio to

analyze these stocks we'll be using my

spreadsheets from ticker dat.com and the

ticker dat add-on that allows you to

automatically import stock Financial

straight into your spreadsheet now let's

go ahead and jump in the first dividend

hike we're going to look at is going to

be one that I own in my personal

portfolio and that is all true and they

just announced a dividend increase of

around

4.1% I'm pretty happy with this dividend

increase and the main reason is this is

a very high yielding dividend stock now

I don't own many high yielding dividend

stocks in my portfolio but again this

actually is one that I own in my

personal portfolio and actually if we

blow up my growth chart I've done pretty

well with this Altria position you can

see as of right now I'm currently up

around 33% if we jump over to my

dividend dashboard we can see over here

this position is currently paying me

around $350 every year but this amount

is about to increase by about

4.1% because of that recent dividend

increase now if we look at them over the

past year they're up around 22.6 1% and

year to date currently up exactly 30% if

we jump over to my dividend breakdown

sheet we'll come up here and plug in m

and we can see all this data will

automatically load in now this is a very

recent dividend hike so this isn't

reflected on the dividend sheet yet but

their dividend payout after this

dividend increase it's going to be

closer to around

$48 and that's going to put their

starting dividend yield a little bit

closer to around 8% and we can see this

company has a very nice history of

dividend increases in fact they're a

dividend King with over 50 consecutive

years of dividend increases and look at

that 10-year dividend CER it's sitting

at about 7% which is actually really

really impressive when you consider the

fact that this is a very high yielding

stock so a nice combination of high

starting dividend yield and high

dividend growth over the past decade now

it has slown down a little bit over the

past 5 years closer to about 3.6% % but

again this most recent dividend hike was

a solid one at about

4.1% now the main concern a lot of

people have when it comes to Altra is

how sustainable are those dividend

payouts they do have high payout ratios

payout ratio is looking at about 83.3%

in the free cash payout ratio at about

74.5 7% and if we look at the free cash

payout ratio over time we can see it's

remained pretty high for quite some time

now so is this something to be concerned

about and this is where we have to

understand the role of management in

deciding Capital allocation there's five

different things they can do with free

cash flow they can reinvest back into

the business they can buy back shares

pay down debt or attempt mergers and

Acquisitions or pay out dividends and

what the management team at Altra has

decided is that one of the best way to

reward their shareholders is by paying

out dividends and actually we can see

they've talked about this we can see

they're actually targeting a dividend

payout ratio of about 80% of adjusted

diluted earnings per share so this High

payout ratio isn't by chance it's not by

accident this is actually what

management is intending and if we look

to since 2018 we can see free cash flow

has been covering those dividend

payments which is exactly what we want

to see and if we jump over to the stock

screener sheet come up here and plugin

Mo and one of the things I do want to

point out about Altra yes they are

buying back some shares but their return

on invested capital is actually really

really good for this company and this

catches a lot of people by surprise

because typically you only see really

high quality tech stocks with high

levels of return on invested Capital

think of companies like Visa or

Microsoft but alria had a return on

invested capital in 2023 of 39.27 % look

at this in 2022 29.311010

here and plug in RSG and we can see yes

this is a company with a lower starting

dividend yield but the 5-year dividend

growth rate is now sitting at about

8.26% which like we just saw is actually

right at around where that most recent

dividend increase was at about 8.4% so

we can see they're now paying out about

58 cents per share quarterly and if we

jump over to the dividend breakdown

sheet again history of dividend

increases and the free cash flow is

growing at a very healthy rate easily

covering those dividend increases and

here's what I really like to see out of

dividend growth stocks when the free

cash low payout ratio is decreasing over

time so yes they're still increasing

those dividend payments but the free

cash low payout ratio is actually

decreasing because free cash flow is

growing at a rate even faster than the

dividend payments this is something I

really like our next stock is a company

that probably just had the largest

dividend increase that you're going to

see all year and that's Coca-Cola

Consolidated now don't get this confused

with stock ticker KO this is a

completely different company this is the

bottling company for Coca-Cola and we

can see they just announced a 400%

increase to their dividend payment now

when you see an increase of around 400%

at first glance that's exciting but we

have to ask ourselves is that a

sustainable dividend increase because if

their free cash flow can't back that

dividend payment then this is actually

bad news for the company so let's dig

into this now first off if we go over to

Seeking Alpha we can see the company's

done really well over the past year up

99.23% in the past 5 years now up around

289 per. so pretty impressive and if we

jump over to our dividend breakdown

sheet we'll go ahead and come up here

and plug in Coke in this that will load

in and we can see the starting dividend

yield low sitting at about

0.74% that most recent dividend increase

again was 400% but what we can see is

free cash flow has been growing at an

extremely fast pace look at this 2017

The company generated around 131 million

in free cash flow and then look at them

in 2023 528 million that's a massive

increase we can see a 5year free cash

flow kager of 76.7 3% 10e of 31.2 1% and

at the end of 2023 their free cash flow

payout ratio was only

8.87% so this 400% increase in dividend

payouts really isn't anything to be

concerned about I think this is

completely good news this is very

sustainable for the company and we have

to keep in mind after this most recent

dividend increase one of the things we

can see is the starting dividend yield

has now been bumped up closer to about

1.92% which is much more attractive if

you're interested in receiving dividends

now one of the things we do have to take

note of is this company hasn't

historically increased its dividend

payouts in a very long time in 2023 they

actually paid out a special dividend

which is the reason we see this bump

here but perhaps moving forward this is

a sign they plan on increasing their

dividend payouts as their free cash low

grows and then our fourth dividend

increase is not a good one this is

Clorox and they just announced a 1.7%

dividend increase okay now before we

look at anything else one of the things

I always have to make note of anytime

you see a dividend increase that is

below the rate of inflation that company

is technically paying out less in

dividends so while on paper yes they did

increase their dividend payouts it

didn't keep up with inflation so they're

technically paying out less something to

keep in mind now if we JP over to

Seeking Alpha we can see over the past

year traded pretty flat up around 1.38%

but pretty bad compared to that of the

market which is up pretty big this year

if we look at the past 5 years they've

way underperformed they're actually down

1.84% now if we go ahead and jump over

to the dividend breakdown we'll come up

here and plug in CLX and we can see this

company has a decent starting dividend

yield it's sitting at about

3.2% and as of the end of 2023 the

payout ratio looks unsustainable looks a

little bit crazy but keep in mind mind

we want to focus more on the free cash

flow payout ratio earnings can be

manipulated by accounting practices but

the free cash flow payout ratio isn't

going to lie to us which is why it's so

important to pay attention to this

metric so we can see the free cash flow

has been covering those dividends for

the past decade a little bit of a slip

up in 2022 when free cash flow was down

by quite a bit but overall free cash

flow is covering those dividend payments

we can see a 10-year dividend kager of

about 5.34% in a 5year closer to about

4% but free cash flow really isn't

growing at a very high rate we can see

that 5year free cash cash flow kager at

just about

3.6% so with free cash flow recently

kind of fluctuating up and down and

definitely not growing at a very high

rate it's easy to see why they're

concerned about increasing their

dividend payments at a high rate they

don't know if that's sustainable and if

we jump over to our stock screener and

plugin CLX what we'll see is there

really hasn't been a lot of growth on

the top and bottom lines look at the

past decade of Revenue per share sitting

about $43 per share in 2013 to 2023

about

$59.80 so yes it has grown but not at a

very high rate free cash flow shares

kind of been all over the place but

overall it has grown but again not at a

high rate we can see earnings per Shar

has actually plummeted over the past few

years and then if we jump over to the

profitability sheet in plugin CLX what

we'll see is revenue growth has been

pretty slow over the past decade just

2.7% in the 5-year Revenue kager just

3.8% and to make matters worse the gross

profit ratio has actually been declining

a little bit over the past couple of

years so there's a lot this company

needs to clean up to get back on the

right track and then finally our fifth

company is McKesson stock ticker MC K

and they just announced a 15% dividend

increase that's a really good one this

is a Healthcare company and a drug

distributor and you can see they're

currently trading at

$52.5 and the past year overall has been

good up around

31.6% and if we look at the miror to

date currently up around 19% now if

you're paying attention to this chart

you can see looks like there's a huge

selloff in early August so what was

going on here well this had to do with

their recent earnings report the stock

fell pretty big after the company missed

their quarterly Revenue estimates and if

we take a quick glance at this we can

see q1 non-gaap earnings per share of

$788 was actually a pretty nice beat of

around 67 but Revenue was a Miss by

about 3.33 billion it came in at about

79.3 billion the market didn't like this

so the stock sold off pretty heavily now

let's look at them from a dividend

perspective come up here and plug in mck

and what we'll see is yes this is a low

yelding company it's sitting at just

0.51% but for certain types of dividend

investors this company may be a good fit

let me show you what I mean now first

off we can see double digit dividend

growth which is definitely something you

want to see if you're looking at a lower

yielding stock but the payout ratios are

also very very low look at this payout

ratio just 8.2% and free casual payout

ratio just

6.35% so really this company is using

very little of their Capital to pay out

dividends and this is very evident when

we look at the free cash flow versus

dividends being paid out 2023 free cash

flow was about 4.6 billion while the

dividends they paid out was only 292

million so this company could easily

massively increase the amount they pay

out in dividends in the coming years if

they should choose to do so and keep in

mind like we just saw they actually are

doing this we already saw a 15% dividend

increase so there's probably a lot more

dividend growth on the way from this

company if we jump over to our stock

screener and plug in the stock ticker

and what you're going to see is the

exact reason the companies been able to

increase their dividend payments at such

a high rate look at the Topline growth

Revenue per share going from $521 per

share all the way up to

1,961 and look at how consistently the

free cash flow per share has grown over

the past decade this is exactly what I

want to see from the holdings my

portfolio now keep in mind like we saw

they're actually using very little of

their free cash flow to pay out

dividends so how else are they using

their Capital well one of the things we

can see is they've also rapidly bought

back shares over the past decade and

especially in the past 5 years they've

gone from around 235 million shares

outstanding to just 141 million so

remember buying back shares increases

all the other per share metrics it

boosts things like earnings per share

Revenue per share and free cash flow per

share and actually helps the company pay

out even more in dividend payments so

with this company no you're not going to

get big dividend payments immediately

but this could be a long-term dividend

growth play if you're someone looking

for very safe stable and growing

dividend payments so there you go those

are five different dividend stocks that

just recently increased their dividend

payments go ahead and let me know what

you think of these companies in the

comments down below and like always if

you'd like be able to download any of my

spreadsheets and also get access to the

ticker data add-on in Google Sheets that

allows you to automatically import stock

Financial straight into your spreadsheet

then you can head over to Ticker dat.com

at the link in the the description so

with that being said thank you guys so

much for watching and please don't

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