The 2021 Dividend Challengers List

Up to date on April nineteenth, 2021 by Bob Ciura

We keep a heavy give attention to high quality dividend shares. There are lots of was to measure the standard of a dividend inventory. A technique is the size of an organization’s dividend historical past. On the whole, shares which have raised their dividends for a number of years in a row have demonstrated that they’re dedicated to rewarding buyers with steadily rising dividends.

One lesser-known group of dividend progress shares is the listing of Dividend Challengers, which have raised their dividends for a minimum of 5 years in a row.

Whereas 5 years will not be the longest historical past of dividend progress, it does show 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 optimistic progress outlook.

With this in thoughts, we created a downloadable listing of 278 Dividend Challengers. You’ll be able to 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 probably conversant in the Dividend Aristocrats, a bunch of 65 shares within the S&P 500 Index with 25+ consecutive years of dividend will increase. Dividend progress buyers also needs to familiarize themselves with the Dividend Challengers, which might be Dividend Aristocrats within the making.

This text will talk about an summary of Dividend Challengers, and why buyers ought to contemplate high quality dividend progress shares. Further data relating to dividend shares in our protection universe might be discovered within the Certain Evaluation Analysis Database.

Desk of Contents

You’ll be able to immediately bounce to any particular part of the article by clicking on the hyperlinks under:

Overview of Dividend Challengers

The requirement to change into a Dividend Challenger is easy: 5-9 consecutive years of dividend progress. This isn’t precisely a excessive hurdle to clear, nevertheless it does separate dividend progress shares from the businesses which have held their dividends regular for a few years. It is a refined, however vital, distinction.

Corporations that don’t increase 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 purple flag is when a inventory freezes its dividend, notably if that inventory had beforehand held an extended monitor document of mountain climbing its dividend payout annually.

When enterprise circumstances deteriorate, firms typically 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 comparable to a geopolitical battle or pure catastrophe. In any occasion, an organization with falling income and earnings-per-share will probably not have the ability to increase its dividend.

Relying on how issues go from there, the corporate in query may have the ability to return to dividend progress if its fundamentals enhance. Alternatively, if circumstances worsen, the following step might be a dividend lower or suspension. The dividend freeze was step one on this course of, which is why buyers ought to concentrate if a dividend progress inventory goes longer than a yr with out elevating its payout.

Instance Of A Excessive-High quality Dividend Challenger: Intel Company (INTC)

Intel is the most important semiconductor firm within the U.S., with a market capitalization above $200 billion which makes it a mega-cap inventory. Intel has raised its dividend for 7 years in a row.

On 1/21/2021, Intel reported fourth-quarter and full-year earnings outcomes. Income declined 1% to $20 billion for the fourth quarter, whereas earnings-per-share declined 10% year-over-year.

Supply: Investor Presentation

The PC-centric enterprise completed off a robust 2020 with gross sales rising 9% to $10.9 billion within the fourth quarter. PC unit volumes grew 33%, which led to a document income for the enterprise. Intel’s Web of Issues phase gross sales fell 16%, however Mobileye income elevated 39% to a brand new quarterly document.

For the yr, income and earnings-per-share elevated 8% and 5%, respectively, making 2020 one other yr of progress regardless of the tough financial circumstances. The info–centric enterprise declined 11% for the quarter, however grew 9% for the yr. Free money flow for the yr grew 25% to $21.1 billion. Analysts anticipate EPS to say no 9.3% to $4.48 for 2021.

Intel has a present dividend yield of two.2%. That is considerably above the S&P 500 common yield of ~1.5%.

Last Ideas

The varied lists of shares by size of dividend historical past are a great useful resource for buyers who give attention to high-quality dividend shares. To ensure that an organization to lift its dividend for a minimum of 5 years, it will need to have sturdy aggressive benefits, the flexibility to generate constant income even throughout recessions, and shareholder-friendly administration group that’s devoted to returning money to buyers. Additionally they have long-term progress potential and the flexibility to lift their dividends sooner or later.

If you’re fascinated by discovering high-quality dividend progress shares appropriate for long-term funding, the next Certain Dividend databases can be helpful: