Global Courant
Dividend growth is often a key factor for investors looking for stable returns, and four global companies stand out for their consistent — and significant — payout increases. A screening of 100,000 stocks on FactSet by CNBC Pro identified only four major stocks from around the world that have increased their dividend per share (DPS) by more than 10% per year over the past 15 years. The companies are: US-listed Atrion Corporation, European firms TEXAF and Kerry Group, and Japan’s GMO Payment Gateway. The chart below illustrates shareholder payouts since 2007 for the four stocks: Brussels-based TEXAF, an investment holding company with interests in real estate and mining in Africa, has outpaced the broader market with steady gains in dividends since 2007. Of the stocks screened by CNBC Pro, the 98-year-old company offered the highest dividend yield at 3.3%. Dividend yield is calculated as the dividend per share divided by the share price. The dividend yield can increase if the share price falls, and conversely, the yield can decrease if the share price rises. Similarly, Atrion Corporation, a manufacturer of cardiovascular medical devices, has consistently increased its shareholder payouts by double digits for more than a decade. The 79-year-old company currently offers a dividend yield of 1.5%. Meanwhile, the Kerry Group, one of Europe’s largest food and beverage companies, is known for its dividends, paying out every year since going public in 1986. It has also consistently increased dividends by more than 10% since 1993. While the stock’s current dividend yield of 1.2% isn’t particularly high, analysts expect the stock price to rise an average of 27% over the next 12 months. The stock has risen 340% in price returns over the past 15 years, ruling out dividend payments. Finally, GMO Payment Gateway, a leading online payment company in Japan, stands out in an industry that is often characterized by reinvestment rather than dividend payments. In addition to consistently increasing dividends over the past 15 years, GMO Payment’s stock has also risen more than 4,000% in price returns over the same period. The stock currently offers a dividend yield of 0.7%, the lowest of the stocks screened by CNBC Pro. What is the meaning of a dividend growth stock? When a company increases its DPS by 10% each year, it indicates that not only is the company profitable, but management expects profitability to grow. For investors, this means their income from the investment grows each year, which can lead to substantial returns over time. For example, a notional $10,000 investment in a stock with a 3% dividend yield at the time of purchase would receive $300 in dividends at the end of the first year. However, if the company increases its DPS by 10% annually, dividends received in year two would increase to $330 (10% over $300) – and so on as long as dividends are increased. The example also does not take into account any changes in the stock price itself. If the share price also rises, the total return to the investor (capital gains plus dividends) would be even higher. Investors should be aware that equities involve a higher level of risk than, for example, investments in US government bonds. Even if a company pays dividends, it refrains from reinvesting in growth.
