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Address
304 North Cardinal St.
Dorchester Center, MA 02124
Work Hours
Monday to Friday: 7AM - 7PM
Weekend: 10AM - 5PM
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.
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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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.
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.
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%.
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.
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.
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