3 dividend aristocrats who increased their payouts for 140 years combined
Investing in dividend growth stocks is one of the best ways to build wealth. What today could generate 2% dividend income on your investment could, in a decade, bring in much more. As long as you are comfortable buying and holding an investment, dividend growth stocks can provide you with excellent long-term cash flow.
Dividend Aristocrats are stocks with an impressive track record of not only paying, but also increasing their payouts over the years. And three of the most impressive actions of this group are Medtronic (NYSE: MDT), RPM International (NYSE: RPM), and Walmart (NYSE: WMT).
Medical device maker Medtronic pays shareholders a 2% dividend yield, which is better than the S&P 500 average less than 1.3%. While that might seem like a modest amount (there’s no shortage of high yielding stocks), long-term investors earn a lot more than that on their initial investments. Medtronic has increased dividend payments for 44 consecutive years.
This year, the company’s board of directors approved a 9% rate hike. At $ 0.63, the current dividend is 47% higher than the $ 0.43 the company paid just five years ago, averaging a compound annual growth rate of just under 8%.
There is no need to worry about future increases as the company expects revenue to grow organically by 9% for fiscal 2022 and its diluted earnings per share to be between $ 5.65 and 5.75. $, more than double its annual dividend of $ 2.52.
Medtronic is experiencing a strong recovery from the pandemic as more patients undertake elective procedures. Thus, during the last quarter, leading segments such as neuroscience and medical-surgical surgery grew at impressive rates of 26% and 25%, respectively.
Medtronic looks good as a salvage stock and is an even better investment that you can just buy and forget.
2. RPM International
RPM International manufactures a variety of coatings, sealants and building materials that can be used in the home and in large construction projects. Its products are necessities – and that makes the company as a whole a pretty stable buy. Over the past five years, the company has consistently generated profits (albeit with modest margins typically of 8% or less of sales).
This consistency is important for a dividend growth action. And last month, RPM announced it would increase its dividend by more than 5% to $ 0.40 per quarter, providing investors with a return of 1.9%. This is the 48th consecutive year that RPM has increased its payments. And in the last five years alone, it has increased the dividend by 33%, averaging a compound annual growth rate (CAGR) of around 6% during that time.
The company notes difficult conditions ahead due to shortages of raw materials and wage inflation. In fact, in its most recent quarter ended Aug.31, net income of $ 134.6 million was down 25% year-over-year due to a challenge comparable to that of 2020, when the company said it saw “unprecedented demand for its home improvement products.”
But even with the decline, its earnings per share of $ 1.04 is more than double the size of its quarterly dividend. While in the short term, RPM may report weaker numbers, the company remains solid in which to invest in the long term.
Big box retailer Walmart is another solid and secure investment that you can buy without having to worry. Her business is essential for millions of people around the world – and she proved it during the pandemic when she produced fantastic results. For the four quarters ended last January, sales rose 6.7% to $ 559 billion. It might sound small, but for a big company like Walmart, it’s a significant increase. The previous year, its turnover increased by only 1.9%.
Even now, with the reopening of businesses, consumers are still flocking to its stores. For the quarter ended July 31, Walmart’s revenue increased 2.4% to $ 141 billion, while comparable store sales in the United States rose 5.2%. In addition, his quarterly diluted earnings per share stood at $ 1.52, which is more than enough to cover his quarterly dividend payment of $ 0.55.
And Walmart is almost a dividend king. The company increased its payout by $ 0.01 this year, marking the 48th consecutive year of its dividend increase. With a payout of 1.5%, Walmart may be the lowest dividend-paying stock among the three here, but it’s arguably the safest due to its size and strong position in the industry. retail.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.