Tag Archives: dividend kings

UNLOCKED: 3 Quality Blue Chip Stocks For Rising Dividends

This is a guest contribution by Bob Ciura with Sure Dividend.  Sure Dividend helps individual investors build and maintain their high quality dividend growth portfolios rising passive income over the long run.

There is no exact definition of what constitutes a “blue-chip” stock, but at Sure Dividend we generally define a blue chip as a stock that belongs to one of three lists. In our view, a blue chip is a dividend stock that is either a Dividend Achiever (10+ consecutive years of dividend increases); Dividend Aristocrat (25+ years); or Dividend King (50+ years).

We have compiled a list of companies that currently qualify as blue chip stocks, as well as our top-ranked blue chip stocks. The following 3 stocks are among our favorite blue chip stocks for dividend growth investors interested in rising dividend income over the long term. These 3 stocks combine strong business models with future growth potential, as well as high current yields.

Blue Chip Stock #3: Exxon Mobil (XOM)

Exxon Mobil is an integrated oil and gas supermajor. It is the largest U.S. energy company, with a market capitalization above $300 billion. It has also increased its dividend for over 30 years in a row, making it a member of the Dividend Aristocrats. The stock has a current yield of 4.9%, which is significantly above the ~2% dividend yield of the broader S&P 500 Index.

Exxon Mobil continues to struggle with weak oil prices, but thanks to its diversified business model, the company still generates impressive cash flows. In the most recent quarter, Exxon Mobil grew its upstream liquids production by 5% over last year’s quarter mostly thanks to impressive growth in the Permian Basin, where output grew 4% for the quarter. Exxon Mobil generated over $9 billion in operating cash flow last quarter, as the company is highly profitable across its large upstream, downstream, and refining businesses.

Despite the difficult short-term conditions, investors should remain confident of Exxon Mobil’s long-term prospects. Production growth will fuel higher profits going forward, as Exxon Mobil expects production to increase 25% by 2025, to 5.0 million barrels per day. The Permian Basin will be a major growth driver, which Exxon Mobil expects to account for more than 1.0 million barrels per day of its production by 2024.

Exxon Mobil continues to generate strong cash flow, which it uses to reward shareholders with annual dividend increases, including the 6% increase in April 2019. It also has the best balance sheet of all the integrated oil and gas majors, which further boosts its dividend sustainability. With a nearly 5% dividend yield, Exxon Mobil is among the safest dividend stocks in the energy sector.

Blue Chip Stock #2: Walgreens Boots Alliance (WBA)

Next up is pharmacy retail giant Walgreens Boots Alliance, which like Exxon Mobil is on the list of Dividend Aristocrats. Walgreens has a global presence with over 18,000 stores in 11 countries, and a market capitalization of approximately $50 billion. Walgreens has increased its dividend for 44 consecutive years, which makes it a member of the Dividend Aristocrats.

Walgreens faces heightened competition, both from established retailers as well as the looming threat of Amazon (AMZN) which purchased online pharmacy PillPack for nearly $1 billion. But Walgreens continues to generate sales growth, including 2.6% comparable revenue growth in the most recent quarter. Pharmacy sales increased 5.4% on a comparable basis, primarily due to higher brand inflation, and prescription volume growth. Pharmacy sales should continue to provide growth for Walgreens, particularly because of the aging U.S. population. Walgreens is also a highly recession-resistant company, as consumers are unlikely to cut spending on prescriptions and other healthcare products even during a recession. Walgreens is one of the most recognized brands in retail, and its huge store count serves as a competitive advantage.

Walgreens is also working aggressively to cut costs to improve its profitability. The company recently raised its cost-cutting target from $1.5 billion, to over $1.8 billion by fiscal 2022. Walgreens returns a significant portion of its profits to shareholders in the form of dividends. The company has a current dividend yield of 3%, and has increased its dividend each year for more than 40 consecutive years.

Blue Chip Stock #1: Altria Group (MO)

Altria Group is a consumer staples giant. Its main product is the Marlboro cigarette brand, but Altria has a diversified product portfolio that also includes smokeless tobacco, wine, and a 10% equity stake in global beer giant Anheuser Busch Inbev (BUD).

Altria stock has performed poorly this year, with a year-to-date decline of 7% versus a 23% gain for the S&P 500 Index. The company is struggling with the persistent trend of declining smoking rates in the United States. Altria expects cigarette volumes will decline at a 4% to 6% annual rate through 2023.

In response, Altria has invested heavily in expanding its product portfolio beyond traditional cigarettes. Its most recent investments include a $1.8 billion investment for 45% of Canadian marijuana producer Cronos Group (CRON). Separately, Altria invested $12.8 billion in e-vapor manufacturer JUUL Labs for a 35% equity stake in the company. In June, Altria announced that it took control of Burger Söhne, a Swiss company that makes oral nicotine pouches. The 80% stake was purchased for $372 million.  

These investments have allowed Altria to continue generating growth in its core metrics this year. In late October, Altria reported strong third-quarter earnings. Revenue (net of excise taxes) increased 2.3% year-over-year to $5.4 billion. Adjusted earnings-per-share came of $1.19 increased 10% over the year-ago period. Revenue and earnings-per-share both beat analyst expectations. Altria said it was on track to achieve $575 million in annual cost savings this year as it combats lower smoking rates in its markets.

Altria took a non-cash impairment charge of $4.5 billion related to its investment in Juul. But its investments in Juul, Cronos Group, and Burger Söhne represent major growth opportunities and the company’s best chance to diversify away from cigarettes. These investments will fuel Altria’s long-term growth. Altria expects 5% to 7% growth in adjusted earnings-per-share in 2019, as well as 5% to 8% adjusted EPS growth from 2020-2022. This growth will allow Altria to continue increasing its dividend to shareholders, as it has done for 50 consecutive years, making Altria a member of the Dividend Kings list.

Final Thoughts

Dividend growth investors are generally interested in a strong current yield that is well above the market average, and a sustainable dividend with room for growth over the long term. Blue chip stocks are a great place to look for stocks that combine both qualities. The three stocks in this article have dividend yields that significantly exceed the S&P 500 Index average. And, thanks to their steady profitability, durable competitive advantages, and future growth potential, they are likely to continue increasing their dividends each year for the foreseeable future.

3 Quality Blue Chip Stocks For Rising Dividends

This is a guest contribution by Bob Ciura with Sure Dividend.  Sure Dividend helps individual investors build and maintain their high quality dividend growth portfolios rising passive income over the long run.

There is no exact definition of what constitutes a “blue-chip” stock, but at Sure Dividend we generally define a blue chip as a stock that belongs to one of three lists. In our view, a blue chip is a dividend stock that is either a Dividend Achiever (10+ consecutive years of dividend increases); Dividend Aristocrat (25+ years); or Dividend King (50+ years).

We have compiled a list of companies that currently qualify as blue chip stocks, as well as our top-ranked blue chip stocks. The following 3 stocks are among our favorite blue chip stocks for dividend growth investors interested in rising dividend income over the long term. These 3 stocks combine strong business models with future growth potential, as well as high current yields.

Blue Chip Stock #3: Exxon Mobil (XOM)

Exxon Mobil is an integrated oil and gas super-major. It is the largest U.S. energy company, with a market capitalization above $300 billion. It has also increased its dividend for over 30 years in a row, making it a member of the Dividend Aristocrats. The stock has a current yield of 4.9%, which is significantly above the ~2% dividend yield of the broader S&P 500 Index.

Exxon Mobil continues to struggle with weak oil prices, but thanks to its diversified business model, the company still generates impressive cash flows. In the most recent quarter, Exxon Mobil grew its upstream liquids production by 5% over last year’s quarter mostly thanks to impressive growth in the Permian Basin, where output grew 4% for the quarter. Exxon Mobil generated over $9 billion in operating cash flow last quarter, as the company is highly profitable across its large upstream, downstream, and refining businesses.

Despite the difficult short-term conditions, investors should remain confident of Exxon Mobil’s long-term prospects. Production growth will fuel higher profits going forward, as Exxon Mobil expects production to increase 25% by 2025, to 5.0 million barrels per day. The Permian Basin will be a major growth driver, which Exxon Mobil expects to account for more than 1.0 million barrels per day of its production by 2024.

Exxon Mobil continues to generate strong cash flow, which it uses to reward shareholders with annual dividend increases, including the 6% increase in April 2019. It also has the best balance sheet of all the integrated oil and gas majors, which further boosts its dividend sustainability. With a nearly 5% dividend yield, Exxon Mobil is among the safest dividend stocks in the energy sector.

Blue Chip Stock #2: Walgreens Boots Alliance (WBA)

Next up is pharmacy retail giant Walgreens Boots Alliance, which like Exxon Mobil is on the list of Dividend Aristocrats. Walgreens has a global presence with over 18,000 stores in 11 countries, and a market capitalization of approximately $50 billion. Walgreens has increased its dividend for 44 consecutive years, which makes it a member of the Dividend Aristocrats.

Walgreens faces heightened competition, both from established retailers as well as the looming threat of Amazon (AMZN) which purchased online pharmacy PillPack for nearly $1 billion. But Walgreens continues to generate sales growth, including 2.6% comparable revenue growth in the most recent quarter. Pharmacy sales increased 5.4% on a comparable basis, primarily due to higher brand inflation, and prescription volume growth. Pharmacy sales should continue to provide growth for Walgreens, particularly because of the aging U.S. population. Walgreens is also a highly recession-resistant company, as consumers are unlikely to cut spending on prescriptions and other healthcare products even during a recession. Walgreens is one of the most recognized brands in retail, and its huge store count serves as a competitive advantage.

Walgreens is also working aggressively to cut costs to improve its profitability. The company recently raised its cost-cutting target from $1.5 billion, to over $1.8 billion by fiscal 2022. Walgreens returns a significant portion of its profits to shareholders in the form of dividends. The company has a current dividend yield of 3%, and has increased its dividend each year for more than 40 consecutive years.

Blue Chip Stock #1: Altria Group (MO)

Altria Group is a consumer staples giant. Its main product is the Marlboro cigarette brand, but Altria has a diversified product portfolio that also includes smokeless tobacco, wine, and a 10% equity stake in global beer giant Anheuser Busch Inbev (BUD).

Altria stock has performed poorly this year, with a year-to-date decline of 7% versus a 23% gain for the S&P 500 Index. The company is struggling with the persistent trend of declining smoking rates in the United States. Altria expects cigarette volumes will decline at a 4% to 6% annual rate through 2023.

In response, Altria has invested heavily in expanding its product portfolio beyond traditional cigarettes. Its most recent investments include a $1.8 billion investment for 45% of Canadian marijuana producer Cronos Group (CRON). Separately, Altria invested $12.8 billion in e-vapor manufacturer JUUL Labs for a 35% equity stake in the company. In June, Altria announced that it took control of Burger Söhne, a Swiss company that makes oral nicotine pouches. The 80% stake was purchased for $372 million.  

These investments have allowed Altria to continue generating growth in its core metrics this year. In late October, Altria reported strong third-quarter earnings. Revenue (net of excise taxes) increased 2.3% year-over-year to $5.4 billion. Adjusted earnings-per-share came of $1.19 increased 10% over the year-ago period. Revenue and earnings-per-share both beat analyst expectations. Altria said it was on track to achieve $575 million in annual cost savings this year as it combats lower smoking rates in its markets.

Altria took a non-cash impairment charge of $4.5 billion related to its investment in Juul. But its investments in Juul, Cronos Group, and Burger Söhne represent major growth opportunities and the company’s best chance to diversify away from cigarettes. These investments will fuel Altria’s long-term growth. Altria expects 5% to 7% growth in adjusted earnings-per-share in 2019, as well as 5% to 8% adjusted EPS growth from 2020-2022. This growth will allow Altria to continue increasing its dividend to shareholders, as it has done for 50 consecutive years, making Altria a member of the Dividend Kings list.

Final Thoughts

Dividend growth investors are generally interested in a strong current yield that is well above the market average, and a sustainable dividend with room for growth over the long term. Blue chip stocks are a great place to look for stocks that combine both qualities. The three stocks in this article have dividend yields that significantly exceed the S&P 500 Index average. And, thanks to their steady profitability, durable competitive advantages, and future growth potential, they are likely to continue increasing their dividends each year for the foreseeable future.

UNLOCKED: Three Of Our Favorite Dividend Kings For Rising Income

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Dividend growth stocks can offer strong shareholder returns over the long term. One place to look for high-quality dividend growth stocks is the list of Dividend Kings, which have increased their dividends for at least 50 consecutive years.

In order for a company to raise its dividend for over five decades, it must have durable competitive advantages and consistent growth. It must also have a shareholder-friendly management team dedicated to raising its dividend.

The Dividend Kings have raised their dividends each year, no matter the condition of the broader economy. They have outlasted recessions, wars, and a variety of other challenges, while continuing to increase their dividends every year.

With this in mind, these three Dividend Kings are attractive for rising dividend income over the long term.

Dividend King #1: Genuine Parts Company (GPC)

Genuine Parts Company is a diversified distributor of auto and industrial parts, as well as office products. Its biggest business is its auto parts group, which includes the NAPA brand. Genuine Parts has the world’s largest global auto parts network, with over 6,700 NAPA stores in North America and over 2,000 stores in Europe. Genuine Parts generated over $18 billion of revenue in 2018.

Genuine Parts is benefiting from changing consumer trends, which is that consumers are holding onto their cars longer. Rather than buy new cars frequently, consumers are increasingly choosing to make minor repairs. At the same time, repair costs increase as a car ages, which directly benefits Genuine Parts. For example, Genuine Parts stats that average annual spend for a vehicle aged six to 12 years is $855, compared with $555 for a vehicle aged one to five years.

Vehicles aged six years or older now represent over 70% of cars on the road, and Genuine Parts has fully capitalized on the market opportunity. The company has reported record sales and earnings per share in seven of the past 10 years. As the total U.S. vehicle fleet is growing, and the average age of the fleet is increasing, Genuine Parts has a positive growth outlook.

Acquisitions will also help pave the way for Genuine Parts’ future growth, particularly in the international markets. In 2017, it acquired Alliance Automotive Group, a European distributor of vehicle parts, tools, and workshop equipment. The $2 billion acquisition gave Genuine Parts an instant foothold in Europe, as Alliance Automotive holds a top 3 market share position in Europe’s largest automotive aftermarkets.

The company has reported steady growth for decades. In fact, profits have increased in 75 years out of its 91-year history. This has allowed the company to raise its dividend every year since it went public in 1948, and for the past 63 consecutive years. The stock has a current dividend yield of 3.3%.

Dividend King #2: Altria Group (MO)

Altria is a tobacco giant with a wide variety of products including cigarettes, chewing tobacco, cigars, e-cigarettes and wine. The company also has a 10% equity stake in Anheuser Busch Inbev (BUD).

Altria is challenged by the continued decline in U.S. smoking rates. However, last quarter Altria still managed 5% revenue growth from the same quarter last year. Its core smokeable product segment reported 7.4% sales growth, as price increases more than offset volume declines. Adjusted earnings-per-share increased 9% for the quarter, and Altria expects 4%-7% growth in adjusted EPS for 2019.

This growth allowed Altria to raise its dividend by 5% in late August, marking its 50th consecutive year of dividend increases.

Altria has tremendous competitive advantages. It has the most valuable cigarette brand in the U.S., Marlboro, which commands greater than a 40% domestic retail share. This gives Altria the ability to raise prices to drive revenue growth, as it has done for many years.

Going forward, Altria is preparing for a continued decline in the U.S. smoking rate, primarily by investing in new product categories. In addition to its sizable investment stake in ABInbev, Altria invested nearly $13 billion in e-cigarette manufacturer Juul, as well as a nearly $2 billion investment in Canadian marijuana producer Cronos Group (CRON).

Altria also recently invested $372 million to acquire an 80% ownership stake in Swiss tobacco company, Burger Söhne Group, to commercialize its on! oral nicotine pouches. Lastly, Altria is preparing its own e-cigarette product IQOS, which is being readied for an imminent nationwide launch.

Like Coca-Cola, Altria is taking the necessary steps to respond to changing consumer preferences. This is how companies adapt, which is necessary to maintain such a long streak of annual dividend growth.

Dividend King #3: Dover Corporation (DOV)

Dover Corporation is a diversified global industrial manufacturer with annual revenues of ~$7 billion and a market capitalization of $14 billion. Dover has benefited from the steady growth of the global economy in the years following the Great Recession of 2008-2009. In the most recent quarter, Dover grew earnings-per-share by 20% excluding the spinoff of Dover’s energy business Apergy. Revenue from continuing operations increased 1%.

It may be a surprise to see an industrial manufacturer on the list of Dividend Kings. Indeed, companies in the industrial sector are highly sensitive to the global economy. Industrial manufacturers tend to struggle more than many other sectors when the economy enters recession. But Dover has maintained an impressive streak of 64 years of annual dividend increases, one of the longest streaks of any U.S. company. One reason it has done this despite the inherent cyclicality of its business model is because of the company’s diversified portfolio.

Dover spun off its energy unit, which is especially vulnerable to recessions. Of its remaining segments, many service industries that see resilient demand, even during recessions, such as refrigeration and food equipment.

Dover expects to generate adjusted earnings-per-share in a range of $5.75 to $5.85. At the midpoint, Dover would earn $5.80 per share for 2019. With a current annual dividend payout of $1.96 per share, Dover is projected to have a 34% dividend payout ratio for 2019. This is a modest payout ratio which leaves more than enough room for continued dividend increases next year and beyond.

Dover has a current dividend yield of 2.1%, which is near the average yield of the broader S&P 500 Index. While the stock does not have an extremely high yield, it makes up for this with consistent dividend increases each year.

Final Thoughts

It is not easy to become a Dividend King, which is why there are only 27 of them. Of the ~5000 stocks that comprise the Wilshire 5000, the most widely-used index of the total stock market, only 27 have increased their dividends for at least 50 consecutive years.

Because of this, the Dividend Kings are a suitable group of stocks for income investors looking for high-quality dividend growth stocks. In particular, the three stocks on this list have competitive advantages, future growth potential, and high dividend yields that make them highly attractive for income investors.

Three Of Our Favorite Dividend Kings For Rising Income

This is a guest contribution by Bob Ciura with Sure Dividend.  Sure Dividend helps individual investors build and maintain their high quality dividend growth portfolios rising passive income over the long run.

Dividend growth stocks can offer strong shareholder returns over the long term. One place to look for high-quality dividend growth stocks is the list of Dividend Kings, which have increased their dividends for at least 50 consecutive years.

In order for a company to raise its dividend for over five decades, it must have durable competitive advantages and consistent growth. It must also have a shareholder-friendly management team dedicated to raising its dividend.

The Dividend Kings have raised their dividends each year, no matter the condition of the broader economy. They have outlasted recessions, wars, and a variety of other challenges, while continuing to increase their dividends every year.

With this in mind, these three Dividend Kings are attractive for rising dividend income over the long term.

Dividend King #1: Genuine Parts Company (GPC)

Genuine Parts Company is a diversified distributor of auto and industrial parts, as well as office products. Its biggest business is its auto parts group, which includes the NAPA brand. Genuine Parts has the world’s largest global auto parts network, with over 6,700 NAPA stores in North America and over 2,000 stores in Europe. Genuine Parts generated over $18 billion of revenue in 2018.

Genuine Parts is benefiting from changing consumer trends, which is that consumers are holding onto their cars longer. Rather than buy new cars frequently, consumers are increasingly choosing to make minor repairs. At the same time, repair costs increase as a car ages, which directly benefits Genuine Parts. For example, Genuine Parts stats that average annual spend for a vehicle aged six to 12 years is $855, compared with $555 for a vehicle aged one to five years.

Vehicles aged six years or older now represent over 70% of cars on the road, and Genuine Parts has fully capitalized on the market opportunity. The company has reported record sales and earnings per share in seven of the past 10 years. As the total U.S. vehicle fleet is growing, and the average age of the fleet is increasing, Genuine Parts has a positive growth outlook.

Acquisitions will also help pave the way for Genuine Parts’ future growth, particularly in the international markets. In 2017, it acquired Alliance Automotive Group, a European distributor of vehicle parts, tools, and workshop equipment. The $2 billion acquisition gave Genuine Parts an instant foothold in Europe, as Alliance Automotive holds a top 3 market share position in Europe’s largest automotive aftermarkets.

The company has reported steady growth for decades. In fact, profits have increased in 75 years out of its 91-year history. This has allowed the company to raise its dividend every year since it went public in 1948, and for the past 63 consecutive years. The stock has a current dividend yield of 3.3%.

Dividend King #2: Altria Group (MO)

Altria is a tobacco giant with a wide variety of products including cigarettes, chewing tobacco, cigars, e-cigarettes and wine. The company also has a 10% equity stake in Anheuser Busch Inbev (BUD).

Altria is challenged by the continued decline in U.S. smoking rates. However, last quarter Altria still managed 5% revenue growth from the same quarter last year. Its core smokeable product segment reported 7.4% sales growth, as price increases more than offset volume declines. Adjusted earnings-per-share increased 9% for the quarter, and Altria expects 4%-7% growth in adjusted EPS for 2019.

This growth allowed Altria to raise its dividend by 5% in late August, marking its 50th consecutive year of dividend increases.

Altria has tremendous competitive advantages. It has the most valuable cigarette brand in the U.S., Marlboro, which commands greater than a 40% domestic retail share. This gives Altria the ability to raise prices to drive revenue growth, as it has done for many years.

Going forward, Altria is preparing for a continued decline in the U.S. smoking rate, primarily by investing in new product categories. In addition to its sizable investment stake in ABInbev, Altria invested nearly $13 billion in e-cigarette manufacturer Juul, as well as a nearly $2 billion investment in Canadian marijuana producer Cronos Group (CRON).

Altria also recently invested $372 million to acquire an 80% ownership stake in Swiss tobacco company, Burger Söhne Group, to commercialize its on! oral nicotine pouches. Lastly, Altria is preparing its own e-cigarette product IQOS, which is being readied for an imminent nationwide launch.

Like Coca-Cola, Altria is taking the necessary steps to respond to changing consumer preferences. This is how companies adapt, which is necessary to maintain such a long streak of annual dividend growth.

Dividend King #3: Dover Corporation (DOV)

Dover Corporation is a diversified global industrial manufacturer with annual revenues of ~$7 billion and a market capitalization of $14 billion. Dover has benefited from the steady growth of the global economy in the years following the Great Recession of 2008-2009. In the most recent quarter, Dover grew earnings-per-share by 20% excluding the spinoff of Dover’s energy business Apergy. Revenue from continuing operations increased 1%.

It may be a surprise to see an industrial manufacturer on the list of Dividend Kings. Indeed, companies in the industrial sector are highly sensitive to the global economy. Industrial manufacturers tend to struggle more than many other sectors when the economy enters recession. But Dover has maintained an impressive streak of 64 years of annual dividend increases, one of the longest streaks of any U.S. company. One reason it has done this despite the inherent cyclicality of its business model is because of the company’s diversified portfolio.

Dover spun off its energy unit, which is especially vulnerable to recessions. Of its remaining segments, many service industries that see resilient demand, even during recessions, such as refrigeration and food equipment.

Dover expects to generate adjusted earnings-per-share in a range of $5.75 to $5.85. At the midpoint, Dover would earn $5.80 per share for 2019. With a current annual dividend payout of $1.96 per share, Dover is projected to have a 34% dividend payout ratio for 2019. This is a modest payout ratio which leaves more than enough room for continued dividend increases next year and beyond.

Dover has a current dividend yield of 2.1%, which is near the average yield of the broader S&P 500 Index. While the stock does not have an extremely high yield, it makes up for this with consistent dividend increases each year.

Final Thoughts

It is not easy to become a Dividend King, which is why there are only 27 of them. Of the ~5000 stocks that comprise the Wilshire 5000, the most widely-used index of the total stock market, only 27 have increased their dividends for at least 50 consecutive years.

Because of this, the Dividend Kings are a suitable group of stocks for income investors looking for high-quality dividend growth stocks. In particular, the three stocks on this list have competitive advantages, future growth potential, and high dividend yields that make them highly attractive for income investors.