Income investors value reliability and consistency, as well as high dividend yields. Some stocks provide a combination of these factors, such as the Dividend Champions — stocks that have raised their payouts for at least 25 years in a row.
These companies have proven that they can manage through recessions, while continuing to pay dividends each year, and raise their dividends on an annual basis.
These 3 Dividend Champions have long histories of dividend growth, market-beating yields, and the ability to raise their dividends each year going forward.
Medtronic plc (MDT)
Medtronic is the largest manufacturer of biomedical devices and implantable technologies in the world. It serves physicians, hospitals, and patients in more than 150 countries and has over 90,000 employees. Medtronic has four operating segments: Cardiovascular, Medical Surgical, Neuroscience and Diabetes. Medtronic has raised its dividend for 45 consecutive years. The company generated $32 billion in revenue in its last fiscal year.
In late February, Medtronic reported (2/21/23) results for the third quarter of fiscal year 2023. Organic revenue grew 4% over last year’s quarter but revenue remained flat due to a strong dollar and earnings-per-share fell -4% due to high inflation of costs. On the bright side, product availability and business conditions somewhat improved. As a result, Medtronic slightly improved its guidance for annual earnings-per-share from $5.25-$5.30 to $5.28-$5.30.
Medtronic’s most compelling competitive advantage is its intellectual leadership in a complicated industry within the healthcare sector. Medtronic also has a strong product pipeline that should drive its growth for the foreseeable future. The stock has a current dividend yield of 3.5%.
Carlisle Companies (CSL)
Carlisle Companies is a diversified company that is active in a wide array of niche markets. The segments in which the company produces and sells products include construction materials (roofing, waterproofing, etc.), interconnecting technologies (wires, cables, etc.), fluid technologies, and brake & friction
Carlisle Companies reported its fourth quarter earnings results on February 7. The company reported revenues of $1.45 billion for the quarter, which was up 4% compared to the revenues that Carlisle Companies generated during the previous year’s quarter. Carlisle’s revenues were higher than the analyst consensus estimate. Carlisle’s revenue performance was weaker than during the previous quarter, when the year-over-year growth rate totaled more than 30%. The comparison to the fourth quarter of 2021 was more difficult than during the previous quarter, however.
Carlisle Companies generated earnings-per-share of $3.92 during the fourth quarter, beating the consensus analyst estimate by $0.29. Carlisle Companies’ earnings-per-share were up 34% from the previous year’s level, thanks to higher margins and the higher revenues.
Carlisle is a company that is highly active when it comes to M&A. Carlisle has been divesting lower-growth business units such as its food division in order to focus on higher-growth businesses such as Brake & Friction. Optimizing the portfolio via tuck-in acquisitions to bolster these segments further, is an opportune move that should be beneficial for Carlisle’s growth going forward.
The stock has increased its dividend for 46 consecutive years and currently yields 1.2%.
Sysco Corp. (SYY)
Sysco Corporation (SYY) is the largest wholesale food distributor in the United States and is expanding internationally. The company was founded in Houston, Texas, in 1969 and now serves 600,000 locations with food delivery, including restaurants, hospitals, schools, hotels, and other facilities. According to estimates, the company has a 16% market share of total food delivery within the United States.
On January 31st, 2023, Sysco reported second-quarter and six months results for Fiscal Year (FY)2023. The company ends its fiscal year at the end of June. Sales for the quarter were $18.6 billion, an increase of 13.9% versus the same period in the fiscal year 2022. Gross profit increased 15.9% to $3.3 billion, as compared to the same quarter last year. Gross margin increased 29 basis points to 18.0% and adjusted gross margin is now 18.0% compared to 2Q2022.
Adjusted Earnings per share (EPS) increased to $0.80 compared to $0.57 for the quarter compared to the second quarter of FY2022, which is an increase of 40.4% year-over-year. The company was able to grow both top and bottom line because they have effectively managed inflation, increased case volume and grew market share.
Overall, the company delivered strong financial results, growing volumes and sales, and improving profitability. At the same time, the company was able to increase free cash flow to $219.3 million for the first six months of the fiscal year, which was an increase of $18.2 million over the prior year period. We expect Sysco to make $4.03 per share for the FY2023.
Sysco has an economic moat due to its large-scale and entrenched distribution infrastructure, which gives it a cost advantage over most competitors.
The company has increased its dividend for 52 consecutive years, and the stock currently yields 2.7%.
Bob Ciura has worked at Sure Dividend since October 2016. He oversees all content for Sure Dividend and its partner sites. Bob received a Bachelor’s degree in Finance from DePaul University, and an MBA with a concentration in Investments from the University of Notre Dame.
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