Every week, I diligently review the list of dividend increases as part of my monitoring process. This practice not only helps me visualize the key drivers I seek in dividend growth stocks but also allows me to assess their fundamentals and valuation.
Ultimately, returns are influenced by three main factors:
- Dividends
- Earnings Per Share Growth
- Change in Valuation
As a long-term investor, my focus is on identifying companies that consistently grow their earnings and dividends, acquiring them at favorable prices. My strategy is to sit back and let the power of compounding work in my favor.
I anticipate being incorrect 40% to 60% of the time, but I trust that the successful investments will more than offset any losses. While I may not always predict which companies will be the biggest winners, I diversify my portfolio and hold onto my investments for as long as possible. I also manage risk by limiting potential downsides while allowing for significant upside growth.
In the past week, five dividend growth companies not only raised their dividends but have also managed to increase them annually for at least ten consecutive years. Here’s a closer look at these companies:
Bank OZK (OZK) operates as a full-service Arkansas state-chartered bank, providing retail and commercial banking services across the United States.
Bank OZK raised its quarterly dividend by 2.30% to $0.45 per share. This marks the 61st consecutive quarter and 27th consecutive year of dividend increases. Over the past decade, this dividend champion has achieved an annualized dividend growth rate of 12.90%. The new payment is 9.75% higher than the dividend paid during the same period last year.
The bank’s earnings have grown from $2.10 per share in 2015 to an expected $6.34 per share in 2025, with the stock currently trading at 8.08 times forward earnings and a dividend yield of 3.51%.
Farmers & Merchants Bancorp, Inc. (FMAO) serves as the bank holding company for The Farmers & Merchants State Bank, offering commercial banking services to individuals and small businesses in Northwest Ohio, Northeast Indiana, and Southeast Michigan.
Farmers & Merchants Bancorp raised its quarterly dividend by 2.80% to $0.2275 per share, marking the 20th consecutive year of annual dividend increases for this dividend achiever. Over the last decade, the company has grown dividends at an annualized rate of 7.70%.
Its earnings have increased from $1.12 per share in 2015 to an expected $2.27 per share in 2025, with the stock trading at 11.15 times forward earnings and a dividend yield of 3.60%.
RPM International Inc. (RPM) provides specialty chemicals for various markets, including construction and consumer sectors.
RPM raised its quarterly dividend by 5.90% to $0.54 per share, marking the 52nd consecutive year of dividend increases for this dividend king. The company has achieved an annualized dividend growth rate of 6.80% over the past decade.
RPM’s earnings have grown from $2.70 per share in 2016 to an expected $5.68 per share in 2026, with the stock selling at 20.59 times forward earnings and a dividend yield of 1.85%.
Starbucks Corporation (SBUX) operates as a global roaster, marketer, and retailer of coffee.
Starbucks raised its quarterly dividend by 1.60% to $0.62 per share, marking the 15th consecutive annual increase for this dividend achiever. This increase is the smallest in the company’s history, yet it has managed to grow dividends at an annualized rate of 15.50% over the past decade.
The company’s earnings have risen from $1.84 per share in 2015 to an expected $2.17 per share in 2025, with the stock trading at 39.84 times forward earnings and a dividend yield of 2.87%.
Trinity Bank, N.A. (TYBT) provides personal and business banking products and services in Texas.
Trinity Bank raised its semi-annual dividends by 5.30% to $1 per share, representing the 13th consecutive annual increase for this dividend achiever. Over the past decade, the company has achieved an annualized dividend growth rate of 10.80%.
Its earnings have grown from $2.91 per share in 2014 to an expected $7.83 per share in 2024, with the stock trading at 12.26 times earnings and yielding 2.20%.
I appreciate how Trinity Bank showcases the dividends paid over the past 13 years, totaling it in the press release. For reference, the stock was around $26.50 per share at the end of 2011.
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