5 Dividend Increases You Need to Know About!
Summary
TLDRThis 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
📈 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.
🚀 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.
🔍 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.
Mindmap
Keywords
💡S&P 500
💡Dividend Growth
💡Dividend Stocks
💡Ticker Dat
💡Dividend Yield
💡Altria
💡Payout Ratio
💡Free Cash Flow
💡Coca-Cola Consolidated
💡Clorox
💡McKesson
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
forget to like And subscribe to the
channel
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