Up to date on November fifth, 2024 by Bob Ciura
There are lots of was to measure the standard of a dividend inventory. A method is the size of an organization’s dividend historical past.
Generally, shares which have raised their dividends for a number of years in a row have demonstrated that they’re dedicated to rewarding traders with steadily rising dividends.
One lesser-known group of dividend progress shares is the checklist of Dividend Challengers, which have raised their dividends for 5-9 years in a row.
Whereas 5 years just isn’t 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 constructive progress outlook.
With this in thoughts, we created a downloadable checklist of 270 Dividend Challengers.
You may obtain your free copy of the Dividend Challengers checklist, together with related monetary metrics like price-to-earnings ratios, dividend yields, and payout ratios, by clicking on the hyperlink beneath:
Traders are seemingly aware of the Dividend Aristocrats, a gaggle of 66 shares within the S&P 500 Index with 25+ consecutive years of dividend will increase.
Dividend progress traders also needs to familiarize themselves with the Dividend Challengers, which could possibly be Dividend Aristocrats within the making.
This text will focus on an summary of Dividend Challengers, and why traders ought to take into account high quality dividend progress shares.
Extra data concerning dividend shares in our protection universe may be discovered within the Certain Evaluation Analysis Database.
Desk of Contents
You may immediately soar to any particular part of the article by clicking on the hyperlinks beneath:
Overview of Dividend Challengers
The requirement to grow to be a Dividend Challenger is easy: 5-9 consecutive years of dividend progress.
This isn’t precisely a excessive hurdle to clear, but it surely does separate dividend progress shares from the businesses which have held their dividends regular for a few years.
Firms that don’t elevate their dividends every year 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 pink flag is when a inventory freezes its dividend, significantly if that inventory had beforehand held an extended monitor document of climbing its dividend payout every year.
When enterprise situations deteriorate, firms typically see their income and earnings-per-share decline. This might occur for a lot of causes, together with a recession, escalating competitors, or maybe an surprising occasion resembling a geopolitical battle or pure catastrophe.
In any occasion, an organization with falling income and earnings-per-share will seemingly not be capable of elevate its dividend.
Relying on how issues go from there, the corporate in query would possibly be capable of return to dividend progress if its fundamentals enhance.
Alternatively, if situations worsen, the subsequent step could possibly be a dividend lower or suspension. A dividend freeze is perhaps step one on this course of, which is why traders ought to listen if a dividend progress inventory goes longer than a yr with out elevating its payout.
Instance Of A Dividend Challenger: Equinix Inc. (EQIX)
Equinix is a Actual Property Funding Belief (REIT) which makes a speciality of information facilities. The belief operates 260 information facilities throughout 33 nations on 6 continents serving over 10,000 clients.
Greater than half of the info facilities are outright owned by Equinix, and these generate 66% of recurring revenues.
Supply: Investor Presentation
Prospects of EQIX are telecommunications carriers, cell and community service suppliers, cloud and IT service suppliers, digital media and content material suppliers, and monetary companies firms.
Equinix introduced on July twenty second, 2024, that it’s going to broaden into the Philippines by buying three information facilities from Whole Info Administration. The corporate goals to broaden its enterprise and capitalize on the quickly rising Southeast Asia market. The $180 million all-cash transaction is anticipated to shut within the fourth quarter of 2024.
Equinix reported second quarter 2024 outcomes on August seventh, 2024. For the quarter, the corporate introduced a 7% improve in income in comparison with Q2 2023 to $2.2 billion. It has thus achieved 86 consecutive quarters of income progress. And its AFFO per share elevated 15% in comparison with the earlier yr quarter to $9.22.
Click on right here to obtain our most up-to-date Certain Evaluation report on EQIX (preview of web page 1 of three proven beneath):
Closing Ideas
The assorted lists of shares by size of dividend historical past are a great useful resource for traders who concentrate on high-quality dividend shares.
To ensure that an organization to boost its dividend for not less than 5 years, it should have sturdy aggressive benefits, recession resistance, and a administration workforce that’s devoted to growing dividends.
In case you are focused on discovering high-quality dividend progress shares appropriate for long-term funding, the next Certain Dividend databases might be helpful:
The Dividend Aristocrats Checklist: a gaggle of elite S&P 500 shares with 25+ years of consecutive dividend will increase.
The Dividend Achievers Checklist is comprised of ~400 NASDAQ shares with 10+ years of consecutive dividend will increase.
The Dividend Kings Checklist is much more unique than the Dividend Aristocrats. It’s comprised of 53 shares with 50+ years of consecutive dividend will increase.
The Excessive Dividend Shares Checklist: shares that enchantment to traders within the highest yields of 5% or extra.
The Month-to-month Dividend Shares Checklist: shares that pay dividends each month, for 12 dividend funds per yr.
The Excessive Yield Month-to-month Dividend Shares Checklist: the 20 month-to-month dividend shares with the very best present yields.
The Dividend Champions Checklist: shares which have elevated their dividends for 25+ consecutive years.Be aware: Not all Dividend Champions are Dividend Aristocrats as a result of Dividend Aristocrats have further necessities like being in The S&P 500.
The key home inventory market indices are one other stable useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month:
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