The 2021 Dividend Contenders List

Up to date on July twentieth, 2021 by Bob Ciura

Earnings traders could be tempted to purchase shares with the very best dividend yields. However that is usually a mistake, as excessive high-yielding shares are sometimes in doubtful monetary situation. Whereas excessive yields are vital, we imagine it’s equally vital to deal with high quality.

One strategy to measure the standard of a dividend inventory is by its dividend historical past. We imagine shares with established histories of dividend progress, usually tend to proceed rising their dividends shifting ahead. For this reason we deal with teams of shares with lengthy histories of accelerating their dividends, such because the Dividend Aristocrats.

In the meantime, traders also needs to look over the checklist of Dividend Contenders, which have raised their dividends for a minimum of 10 years in a row.

With this in thoughts, we created a downloadable checklist of 312 Dividend Contenders. You’ll be able to obtain your free copy of the Dividend Contenders checklist, together with related monetary metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the hyperlink under:

This text will focus on an summary of Dividend Contenders, and why traders ought to take into account high quality dividend progress shares. Extra info relating to dividend shares in our protection universe may be discovered within the Certain Evaluation Analysis Database.

Desk of Contents

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

Overview of Dividend Contenders

The requirement to turn out to be a Dividend Contender is pretty simple: 10-24 consecutive years of dividend progress. Whereas 10-24 years could not seem to be longest observe report, and certainly there are shares with for much longer streaks of annual dividend hikes, it’s nonetheless a optimistic indicator. In any case, there are a variety of firms which have by no means paid a dividend. Or, even amongst firms that do pay dividends, many haven’t been in a position to elevate their dividends constantly because of an absence of underlying enterprise progress.

Many firms can not pay dividends, or elevate dividend payouts from 12 months to 12 months, as a result of their enterprise fashions don’t generate sufficient earnings or money movement. Cyclical firms even have hassle becoming a member of lists of long-running dividend progress shares, as a result of their earnings collapse throughout recessions. Automakers and oil shares are good examples of extremely cyclical firms that may usually freeze or lower their dividends throughout recessions.

In recessions, company earnings sometimes decline, notably inside industries which can be carefully tied to client spending. The previous 12 months has seen firms throughout a number of industries droop or get rid of their dividend payouts because of the unfold of the coronavirus pandemic, and its impression on the worldwide financial system.

That stated, there have been many firms that maintained their dividends over the previous 12 months, and even continued to lift them, regardless of the pandemic. The best-quality dividend progress shares that continued to extend their dividends in 2020, as soon as once more proved the endurance and sturdy aggressive benefits of their enterprise fashions.

For this reason revenue traders searching for secure dividends and dependable dividend progress, ought to deal with firms with established histories of efficiently rising their dividends, even throughout recessions.

Instance Of A Excessive-High quality Dividend Contender: Amgen Inc. (AMGN)

Amgen is on the Dividend Contenders checklist, and a chief instance of a high-quality dividend progress inventory that has rewarded traders over time.

Amgen is the biggest unbiased biotech firm on the planet. Amgen discovers, develops, manufactures, and sells medicines that deal with critical sicknesses. The corporate focuses on six therapeutic areas: heart problems, oncology, bone well being, neuroscience, nephrology, and irritation.

Amgen reported first-quarter earnings outcomes on April twenty seventh. Income fell 4.2% to $5.9 billion and missed estimates by $360 million. Adjusted web revenue of $2.2 billion, or $3.70 per share, declined 12% from adjusted web revenue of $2.5 billion, or $4.22 per share, within the earlier 12 months.

Product income fell 5%, as a 7% drag from decrease realized costs greater than offset a 4% acquire in volumes. The prior 12 months additionally noticed a profit from larger gross sales deductions that didn’t happen in the latest quarter.

Prolia continues to be a significant progress driver for Amgen.

Supply: Investor Presentation

For 2021, Amgen reiterated expectations for income of $25.8 billion to $26.6 billion, whereas adjusted earnings-per-share are nonetheless anticipated in a variety of $16.00 to $17.00.

Amgen’s aggressive benefits embody its sturdy pharmaceutical property in addition to its sturdy pipeline. Amgen spent 17% of its 2020 gross sales on analysis and improvement. The corporate additionally expects capital expenditures of $900 million for 2021, up from $600 million in 2020. Because of this, it has a well-stocked pipeline to gas its future progress.

The corporate has additionally demonstrated resilience throughout recessions, as folks will search therapy for his or her well being points no matter financial situations. The corporate additionally has a fairly low payout ratio of 43% anticipated for 2021, which is able to permit it to proceed to lift its dividend going ahead, even in a protracted recession.

We anticipate 9% annual earnings-per-share progress over the subsequent 5 years for Amgen. This earnings-per-share progress will likely be achieved via a mix of rising income in addition to share repurchases. We additionally anticipate the corporate to extend its dividend by 9% per 12 months over the subsequent 5 years, in-line with its earnings-per-share progress charge

Amgen inventory at present has a dividend yield of two.8%. This isn’t the very best yield round, however it’s greater than double the common yield of the S&P 500 Index, at present at simply 1.3%. Plus, Amgen inventory presents a excessive stage of dividend security and dividend progress, that are equally vital concerns for long-term dividend progress traders.

Remaining Ideas

Traders on the hunt for shares with a excessive probability of accelerating their dividends annually reliably, ought to deal with shares with the longest histories of dividend progress. For an organization to lift its dividend for a minimum of 10 years, it will need to have sturdy aggressive benefits, regular profitability even throughout instances of financial downturns, and a optimistic future progress outlook. This can present them with the power to lift their dividends going ahead.

In case you are thinking about discovering high-quality dividend progress shares appropriate for long-term funding, the next Certain Dividend databases will likely be helpful: