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Dividend Aristocrats are an elite group of companies that has increased their dividend payout for over 25 years. While the future is never certain, once a company earns Aristocrat status, they typically work hard to try and keep this status. When it comes to the dividend itself there are four key dates that are part of the dividend issuing process.
- Declaration Date – This is the day that the company announces to the public that they are issuing a dividend
- Ex-Dividend Date – Once the record date is set by the board of directors the stock market will automatically set the ex-dividend date. This will ensure that you buy the shares in enough time to be included on the companies records.
- Record Date – This is the date set by a companies board of directors once they decide to issue a dividend. An investor must be included on the companies record to receive the dividend. Usually, this date is set for one or two days after the ex-Dividend Date.
- Payment Date – Probably the best day of the lot. This is the date when the dividend payments are distributed to shareholders.
Now we know the basics, lets take a look at 4 Dividend Aristocrats that are going ex dividend in December 2020.
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McDonalds Corporation (NYSE:MCD)
McDonald’s is probably one of the most recognizable companies in the world but they are also a major player in the dividend world. They have a 44 history of increasing dividends which means they are just 6 years from being a dividend king. The 5-year dividend growth rate is at 7.60% which is slightly below the S&P500. It is also nice to see that the EPS growth rate over the same period is 10.5% which is higher than DGR. While I put more weight on free cash flow, it is nice to see that the earnings are growing faster than the dividend is growing giving more potential to further increases.
The last increase came in October where they increased the dividend by 3% with a dividend of $5.16, they have a dividend yield of 2.35%. The payout ratio is currently at 82.95% and the FCF payout ratio is 87.64%. It is also worth pointing out that back in march they suspended their buyback program and instead made dividends a priority.
- Declaration date – 8th Oct 2020
- Ex-Dividend Date – 30th Nov 2020
- Record Date – 1st Dec 2020
- Payout Date – 15th Dec 2020
Kimberly-Clark Corporation (NYSE:KMB)
Kimberly-Clark Corporation is a multinational personal care corporation that produces mostly paper-based consumer products. Popular brands include Huggies and Kleenex.
They have a 48 history of increasing dividends which means they are just 2 years from being a dividend king. The 5-year dividend growth rate is at 4.67% which is below the S&P500 DGR of 7.9%. Both earnings and Free cash flow have grown over the last 5 years which is a positive sign. I also like it when the earnings and FCF grow faster than the dividend Growth rate.
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The TTM payout ratio from earnings stands at 61%. This is lower than the 5 year average of just above 74%. The TTM FCF payout ratio is at 56% which again is lower than the 5 year average of 71%
The last increase came in August where they increased the dividend by just over 3%. The new dividend of $1.07 per share is up from $1.03. They currently have a dividend yield of 3.07%.
- Declaration date – 19th Oct 2020
- Ex-Dividend Date – 3rd Dec 2020
- Record Date – 4th Dec 2020
- Payout Date – 5th Jan 2021
EP #221 | 4 European Dividend Aristocrats that are not talked about enough | & Siemens Dividend Hike, Managing your own Pension – Dividend Talk
In this episode, we examine four under-the-radar European dividend aristocrats. We also discuss the impact of investment trust discounts, BDCs as high-yield opportunities, and the moral dilemmas of investing in defence stocks. Plus, hear our take on Bitcoin and AI tools in financial analysis.
Chapters:
[00:00] Introduction and Work-Travel Realities
[03:10] ASML Investor Day & Market Reactions
[07:20] Siemens: Dividend Hikes, Electrification, and Automation
[15:00] Spirax-Sarco: Steam Solutions and Cyclical Opportunities
[21:12] Total Energies: Balancing Oil, Renewables, and Long-Term Strategy
[32:30] BAE Systems: Defense Stocks, Morality, and Market Position
[42:00] Sage Group: Small Business ERP Solutions & Cloud Transition
[50:00] Listener Questions: Bitcoin, AI for Analysts, Pensions, and BDCs
Companies Mentioned: ASML, Siemens, Spirax-Sarco, Total Energies, BAE Systems, Burberry, BP, Sage Group, and UK Wind.
Follow Us:
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🐦 Twitter – @European_DGI
👥 Join our Facebook Community – https://www.facebook.com/groups/dividendtalk
✉️ Sign up for our Premium Newsletter – https://europeandgi.com/sign-up/
PepsiCo, Inc. (NASDAQ:PEP)
Pepsi doesn’t need much introduction as they are one of the two most recognizable beverage brands in the world. Pepsi also has an enviable snack segment with brands such as Lays and Doritos.
They have a 48 history of increasing dividends which means they are just 2 years from being a dividend king. The 5-year dividend growth rate is at 9.02% which is above the S&P500 DGR of 7.9%. Earnings have grown over the last 5 years but worryingly free cash flow has decreased every year in the last 5 years.
The TTM payout ratio from earnings stands at 74%. The TTM FCF payout ratio is at 85%. These are both over my limit of 70% and it limits potential future dividend growth.
The Annual dividend per share is $4.09 which gives a current dividend yield of 2.84%. While it is nice that the dividend growth rate is in the high single-digit figures, I am not overly impressed that the dividend is growing faster than earnings and free cash flow.
- Declaration date – 19th Nov 2020
- Ex-Dividend Date – 3rd Dec 2020
- Record Date – 4th Dec 2020
- Payout Date – 7th Jan 2021
Automatic Data Processing (NASDAQ:ADP)
ADP specializes in cloud-based human capital management. You can read my review of them here!
They have a 44 history of increasing dividends and currently the only company I own on this list. The 5-year dividend growth rate is at 13.39% which is well above the S&P500 DGR of 7.9%. Earnings have grown substantially over the last 5 years at 15.30%. Free cash flow has grown from $1.47 Billion in 2016 to $2.41 Billion.
The TTM payout ratio from earnings stands at 66.42%. The TTM FCF payout ratio is at 52%. These are both below my limit of 70% whihc shows potential for future dividend growth.
The Annual dividend per share is $3.72 which gives a current dividend yield of 2.12%. With an impressive dividend growth that is matched with the growth of earnings and cash flow, I have high hopes that ADP will reach dividend King status. At the current price of $174, I believe that ADP is fairly valued.
- Declaration date – 11th Nov 2020
- Ex-Dividend Date – 10th Dec 2020
- Record Date – 11th Dec 2020
- Payout Date – 1st Jan 2021
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