Invest in high quality dividend paying companies that can manage their cash flow and payout ratio and be rewarded with constant dividend increases. A dividend increase is something every dividend growth investor can get excited about. Who wouldn’t love earning a little more from an investment without having to add additional capital? Well, August, so far has seen some great dividend increases from a variety of companies. Let’s run down the list and see if any of these dividend raisers are in your portfolio.
First up, is a company that has a very long history of raising dividends, Illinois Tool Works Inc. (ITW). ITW is one of those “behind the scenes” type of company that produces everything from screws, fasteners, janitorial supplies, welding equipment, adhesives, sealants and various types of lubrication and much, much more that is used in commercial and industrial applications daily. This month ITW announced a dividend increase of 15% to $0.485 per share. Currently yielding 1.90% with a moderate payout ratio of 42.3%, ITW has been raising its dividend every year for over fifty years! In fact, the ten year annualized dividend growth rate for ITW is an impressive 13.03%. The current PE for ITW is a little rich at 21.71 but forward PE looks much better at 16.9.
Another dividend raiser this month is a company I just mentioned in a recent post discussing timber REITs. Weyerhaeuser Co. (WY) just announced a quarterly dividend increase of 32% to $0.29 per share. A major player in the lumber and wood production space, WY is currently yielding a decent 2.80% with a PE of 33.90 and a relatively high payout ratio of 85.3%. The forward PE for this one looks better at 20.8. One bright spot for WY is the very attractive yield it will have with the increased dividend payment. The new yield will be about 3.60%.
Our next dividend raiser comes from the tech space, KLA-Tencor Corporation (KLAC). KLAC manufactures and markets semiconductor equipment and wafer and chip manufacturing products. Currently yielding 2.60% with a moderate payout ratio of 49.8%, KLAC has an impressive five year annualized dividend growth rate of 23.16%. Time will tell if KLAC can maintain that hyper dividend growth longer term. The company increased its quarterly dividend 11% to $0.50 per share. The current PE of KLAC is 21.42 which is well below its peers which stand at 51.50. Even at these elevated prices KLAC may offer a decent buying opportunity for someone looking for an accelerated dividend growth stock.
From the makers of Duncan Hines, Vlasic, Aunt Jemima, Mrs. Butterworth’s, Birds Eye and many more is dividend raiser Pinnacle Foods Inc. (PF). Currently yielding 2.50% with a moderate payout ratio of 54.3%, PF increased its quarterly dividend 12% to $0.235 per share. Share prices seem to have jumped ahead of earnings as PF has a current PE of 35.51 making this stock expensive relative to the S&P and industry peers. Forward PE starts looking a lot better at 16.7 which might suggest a pause before pulling the trigger on this one.
Finally, in the aerospace industry we have CAE Inc. (CAE) increasing its quarterly dividend 17% to $0.06 per share. Currently yielding a relatively low 1.70% with an equally low payout ratio of 38.4% might suggest future dividend raises are inevitable. The current PE of CAE is 18.36 which is closely in line to its peers and the market in general but might also suggest fully priced shares at current levels. The forward PE is slightly lower.
Getting a dividend raise is always a welcome gesture. The above companies each raised their respective dividends in the double digits. Not a bad feat considering the shakiness of the market as of late. Are any of the companies mentioned in your portfolio? Let me know.
Disclosure: Long ITW
26 thoughts on “August Dividend Increases”
Fantastic when your stocks give you more! And the best thing is, it genuinely IS more, because the increases are above the rate of inflation
M recently posted…Downshift Trials – Part 1
The best dividend increases are the ones that beat the inflation rate. This way you know you are always ahead. The stocks mentioned in the article each raised their dividends by double digits. Anytime you get that kind of growth it’s time to celebrate. Thank you for stopping by.
Good stuff! I own ITW and the dividend increase is always nice.
Thanks for the post, cheers!
Henry @ Living At Home recently posted…Recent Buy – Markel (MKL)
ITW was one of my first dividend purchases about seven years ago. It’s a great company and often been called a “Mutual Fund” of companies because they are very diversified and produce and operate in various sectors. Thank you for commenting.
It’s always to hear dividend increases. Too bad I don’t own any of these stocks. 🙁
Tawcan recently posted…5 Ways to Frugal Living
Take a look at ITW. It’s a solid player and has a very dividend friendly policy. You might want to wait for a pullback as it is slightly overvalued at current prices but still a great company. Thanks for commenting.
It’s nice when companies decide to increase their dividends. It’s like getting a pay raise! Unfortunately, I do not own any of these stocks. I will keep them on my radar. I am looking to add to my portfolio soon. I am going to check my budget this month any thing left over is going into my dividend portfolio. Keep up the good work.
Financial Forager recently posted…Wednesday’s Weekly Financial Tip
Keep building your dividend portfolio brick by brick. I think these dividend raises were all exceptional. Anytime you get double digit growth you know management is pretty confident about future earnings. Thanks for commenting.
Yay, it’s always a positive signal on the overall economy when businesses continue to raise dividends. Another group of high quality dividend paying companies is the Canadian banking sector. I currently have TD, BNS. But I’m thinking about buying some RY and BMO too. BMO is trading at 12.7 times P/E so maybe it’s not a bad time to get in 🙂
Liquid recently posted…Path to Debt Freedom
Everyone loves a dividend raise! I’m very happy with the ITW increase of 15%. The Canadian banks have been my August purchases. I added TD, BNS and RY and have CM and BMO on my watch list for now. For many months I feel the best relative values, in general, can be found in the financial and energy sectors. Thank you for stopping by.
Thanks for the update, Keith. ITW looks like it merits further review.
ITW has been with me since 2007 and looks like a good long term play. They are very diversified and produce items that are used every day worldwide. It’s a little expensive at current levels but it is always a good idea to keep an eye on it in case there is a sell off. Thank you for commenting.
I’m a shareholder of ITW. It’s been one of my best investments thus far. Wish I would have bought more, but hindsight is always 20/20.
Some of these increases have been really generous, and I’ve noticed a general trend of such all year long. It’s great to be a dividend growth investor!
Watching the dividends grow on their own is always a good feeling. You are correct about the general trend of fairly robust dividend increases this year with a few notable exceptions… CLX was a little downer. But an increase is an increase and with a 15% boost to ITW you have to be happy with that. Keep on inspiring.
Always nice to see high quality companies increase their dividends. I honestly haven’t done any investing with dividends in mind, but I really would like to start. I hope to one day have enough dividend income to live off of.
DC @ Young Adult Money recently posted…How to Make Money Entering Giveaways
That’s the goal of many dividend investors. Create a portfolio of dividend payers that can pay 100% of you living expenses or at the very least cover the majority of them. It all starts with buying high quality companies that consistently raise their dividends and let the power of time and compounding work their magic. Thank you for commenting.
Sounds like ITW is the way to go, who doesn’t need the behind the scenes of screws and fasteners, those aren’t going away anytime soon.
Even Steven recently posted…Starting an Ebay Business on a Credit Card
You have to love those ‘behind the scenes’ companies. ITW has a great dividend history and has been raising for over 50 years. Another great ‘behind the scenes’ dividend raiser is BMS. We use their products daily and it too has a long dividend history. Thanks for commenting.
Looks like big MO is raising its quarterly dividend to $.52 up from $.48. The new yield will be just under 5%, Hopefully PM will follow MO’s lead.
My Dividend Pipeline recently posted…Altria raises dividend 8.3%—New yield is 4.88%
As a PM shareholder that would be welcome news. Seems like a lot of great dividend increases have been announced in August. Thanks for sharing.
Lots of great increases here. I’m sad I missed out on ITW a few years back because I wanted it $1 or 2 cheaper per share. That’s a mistake I made often early in my investing “career”. I’ll be ready whenever the next recession hits though because I really like ITW. Screws, nuts, bolts everyone needs those. What does WY’s numbers look like on a FFO or Distributable Cash Flow basis? EPS can be wonky with REITs. Lots to like. It’s always nice to get a raise.
JC @ Passive-Income-Pursuit.com recently posted…Life Can Change In An Instant
You and I both missed opportunities trying to save a dollar here or there. I’m still guilty of doing that every now and then. The key is to just start and invest. You know the saying, “penny-wise and pound-foolish.” Regarding WY, you can use traditional valuation methods as it is not a REIT like the other stocks I mentioned in Planting Dividend Seeds With Timber REITs. Thank you for stopping by.
Interesting about WY. I’ll have to look more into that since that changes things a bit.
JC @ Passive-Income-Pursuit.com recently posted…How To Get Someone Started
Glad to be of help!
Great post! All of these had some pretty astounding dividend increases this month. I particularly like the ITW play, but the entry yield is very very low, however, if they continue to increase it by a similar rate, could prove to be quite an income producer. I enjoyed reading your take on timber REITs as well, different play, different mindset. It’s interesting. Nice post, talk soon.
Dividend Diplomats recently posted…August Dividend Diplomat Watch List
ITW is a great long term stock. Don’t focus too much on current yield rather on dividend growth rate. I happen to agree with you that all these dividend increases are pretty solid. Double digits all around despite the current shaky global and market conditions. I’m happy you found the timber REIT article interesting too. I was surprised to learn that many of the other bloggers never even heard of timber REITs. I guess it’s the commercial, health and industrial plays that get most of the attention. Thank you for commenting.