Up to date on December 4th, 2024 by Bob Ciura
There are numerous was to measure the standard of a dividend inventory. A method is the size of an organization’s dividend historical past.
Usually, shares which have raised their dividends for a number of years in a row have demonstrated that they’re dedicated to rewarding traders with steadily rising dividends.
One lesser-known group of dividend development shares is the listing of Dividend Challengers, which have raised their dividends for 5-9 years in a row.
Whereas 5 years shouldn’t be the longest historical past of dividend development, it does exhibit a historical past of returning money to shareholders with dividends.
It additionally represents an organization with a worthwhile enterprise mannequin, sturdy aggressive benefits, and a constructive development outlook.
With this in thoughts, we created a downloadable listing of 189 Dividend Challengers.
You possibly can obtain your free copy of the Dividend Challengers listing, together with related monetary metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the hyperlink under:
Buyers are doubtless aware of the Dividend Aristocrats, a gaggle of 66 shares within the S&P 500 Index with 25+ consecutive years of dividend will increase.
Dividend development traders must also familiarize themselves with the Dividend Challengers, which might be Dividend Aristocrats within the making.
This text will focus on an summary of Dividend Challengers, and why traders ought to contemplate high quality dividend development shares.
Further data relating to dividend shares in our protection universe could be discovered within the Certain Evaluation Analysis Database.
Desk of Contents
You possibly can immediately soar to any particular part of the article by clicking on the hyperlinks under:
Overview of Dividend Challengers
The requirement to develop into a Dividend Challenger is easy: 5-9 consecutive years of dividend development.
This isn’t precisely a excessive hurdle to clear, however it does separate dividend development shares from the businesses which have held their dividends regular for a few years.
Corporations that don’t elevate their dividends annually are sometimes unable to take action as a result of the underlying enterprise is struggling.
Whereas there are not any confirmed precursors to a dividend lower, one potential pink flag is when a inventory freezes its dividend, notably if that inventory had beforehand held a protracted observe report of climbing its dividend payout annually.
When enterprise circumstances deteriorate, firms usually see their income and earnings-per-share decline. This might occur for a variety of causes, together with a recession, escalating competitors, or maybe an sudden occasion reminiscent of a geopolitical battle or pure catastrophe.
In any occasion, an organization with falling income and earnings-per-share will doubtless not be capable of elevate its dividend.
Relying on how issues go from there, the corporate in query may be capable of return to dividend development if its fundamentals enhance.
Then again, if circumstances worsen, the following step might be a dividend lower or suspension. A dividend freeze is likely to be step one on this course of.
Because of this, traders ought to listen if a dividend development inventory goes longer than a 12 months with out elevating its payout.
Instance Of A Dividend Challenger: Constellation Manufacturers (STZ)
Constellation Manufacturers was based in 1945, and at this time, it produces and distributes beer, wine, and spirits. It has over 100 manufacturers in its portfolio, together with beer manufacturers reminiscent of Corona.
As well as, Constellation’s wine manufacturers embody Robert Mondavi and Clos du Bois. Its liquor manufacturers embody SVEDKA Vodka, Casa Noble Tequila, and Excessive West Whiskey.
One of many greatest causes for Constellation Manufacturers’ spectacular development in recent times, is its concentrate on the premium phase, which continues to develop.
On October third, 2024, Constellation Manufacturers reported second quarter fiscal 2025 outcomes for the interval ending August thirty first, 2024. (Constellation Manufacturers’ fiscal 12 months ends on the final day of February).
Supply: Investor Presentation
For the quarter, the corporate recorded $2.92 billion in web gross sales, a 3% enhance in comparison with the identical prior 12 months interval.
Beer gross sales improved by 6% year-over-year, whereas wine and spirits gross sales declined by -12%. Comparable earnings-per share equaled $4.32 for the quarter, which was a 14% enhance in comparison with Q2 2024, and 25 cents forward of analyst estimates.
Click on right here to obtain our most up-to-date Certain Evaluation report on STZ (preview of web page 1 of three proven under):
Ultimate Ideas
The assorted lists of shares by size of dividend historical past are a very good useful resource for traders who concentrate on high-quality dividend shares.
To ensure that an organization to lift its dividend for at the least 5 years, it will need to have sturdy aggressive benefits, recession resistance, and a administration staff that’s devoted to rising dividends.
If you’re all in favour of discovering high-quality dividend development shares appropriate for long-term funding, the next Certain Dividend databases will probably be helpful:
The Dividend Aristocrats Listing: a gaggle of elite S&P 500 shares with 25+ years of consecutive dividend will increase.
The Dividend Achievers Listing is comprised of ~400 NASDAQ shares with 10+ years of consecutive dividend will increase.
The Dividend Kings Listing is much more unique than the Dividend Aristocrats. It’s comprised of 54 shares with 50+ years of consecutive dividend will increase.
The Excessive Dividend Shares Listing: shares that enchantment to traders within the highest yields of 5% or extra.
The Month-to-month Dividend Shares Listing: shares that pay dividends each month, for 12 dividend funds per 12 months.
The Excessive Yield Month-to-month Dividend Shares Listing: the 20 month-to-month dividend shares with the best present yields.
The Dividend Champions Listing: shares which have elevated their dividends for 25+ consecutive years.Notice: Not all Dividend Champions are Dividend Aristocrats as a result of Dividend Aristocrats have further necessities like being in The S&P 500.
The key home inventory market indices are one other strong useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month:
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