As I looked over the companies increasing dividends in January 2014, there were 4 companies that caught my attention.  I haven’t reviewed these companies before but I have heard of them and wanted to do a quick review to see if I may potentially want to add them to my watch list for further review in the future.

The four companies for quick review are Williams Companies (WMB), Dominion Resources (D), Tupperware Brands (TUP) and Consolidated Edison (ED).

Usually, how my process works, is that I hear about a possible dividend growth company that I haven’t looked into previously.  So my next step is to do a quick review of some key metrics and characteristics.  Upon this quick review, I will either place this company in the “not for me” pile or in the “further review” pile.  If the company gets placed in the “further review” pile then eventually I will get around to doing a much more detailed analysis before actually investing in the company.

Let’s get started!

Williams Companies, Inc. (WMB)

The Williams Companies gathers, processes and transports natural gas throughout the United States.

Williams Companies operates in the oil and gas pipelines industry.  They have a strong energy transport infrastructure in place which I would believe to have strong demand in the future.  I am interested in looking more closely at this company because it could have a nice diversification benefit for my portfolio.

However, most important is always operating performance of a company.  Let’s see if I like what I see when reviewing Williams Companies historical EPS and dividends.

When quickly reviewing a company, the main things I look at are earnings per share (EPS) and Dividends over the past decade.  For me, those two metrics give me an idea of whether I want to look further into the company with a more detailed analysis at a later date.  EPS must be trending higher over the past decade with very few down years.  Dividends must be growing.

Let’s take a look at WMB’s EPS trend and dividend trend the past 10 years.

WMB

I’ve charted the EPS and dividend payment of the last 10 years (2013 is an estimate due to 4th quarter results not yet announced).

At first glance, I am turned off by looking over these figures because you can see the EPS is fairly erratic from year to year.  Also, I usually don’t like owning companies that show a higher dividend payment than income earned per share.  That could be a one year fluke but if the trend continues, WMB would most likely be forced to cut their dividend rate at some point rather than continue growing it.

Williams Companies has an 11 year dividend growth streak going.  There may be reason for the fluctuating earnings and the high dividend payout ratio that I don’t know about just by taking a quick glance.  However, I am not interested enough in the company to dig any deeper and spend more time doing further analysis.  For me, WMB goes in my “not interested” pile and I will move on to other companies that I would feel more comfortable investing in.

It is important to remember that you are investing your money.  Never invest in a company you aren’t 100% comfortable with.  If anything gives you doubt, find a different company that you would prefer to invest in.  Peace of mind is invaluable.  You want to be able to sleep well at night knowing you own companies that you can be confident in.

Dominion Resources (D)

Dominion Resources is a holding copmany for Virginia Power & North Carolina Power.  They serve 2.5 million electric customers in Virginia and North Carolina.

I don’t own any power utility companies, therefore Dominion Resources caught my attention as it would add diversification to my portfolio if I owned it.

Let’s review D’s earnings per share and dividend trend over the past decade:

Dominion Resources

When looking over that chart, I kind of have mixed feelings about Dominion Resources.

While the EPS trend has been up over the past decade, it hasn’t been a smooth ride.  It seems to go up one year and down the next before going up slightly higher the year after.  Definitely a bumpy ride for investors.

However, dividends have a nice up trend and in fact Dominion Resources has an 11 year dividend growth streak.

Dominion Resources is an electric utilities company with some exposure to natural gas energy as well.  Utility companies can be solid steady long term performers.  Due to this fact, I would probably put Dominion Resources in my “further review” pile.  I’d like to review the growth figures of the company along with current valuation.

Possibly, if Dominion Resources is trading at a good valuation then it could be worth grabbing a few shares.  However, I’d like to review the company in relation to some of their utility industry peers.

Consolidated Edison (ED)

One utility industry peer of Dominion Resources is Consolidated Edison.  At quick glance, Consolidated Edison has a lower P/E valuation, a higher current dividend yield and a much longer dividend streak of 40 years.

Let’s do a quick review of ED’s earnings and dividend trends to see if they would be a better utility option for my dividend growth portfolio.

ED

While the trend is up, it certainly doesn’t leave much to be desired.  At quick glance, growth seems fairly slow for this New York utility company.

I like the long dividend growth streak of Consolidated Edison, however, the most recent dividend increase was only 2.44% and looking over the past 10 years worth of dividend growth it appears this may be as good as it gets.  This growth is below the rate of inflation and as a dividend growth investor that is a negative in my book.

While I wanted to like Consolidated Edison, I think I’ll put it in my “not for me” pile.  The company just doesn’t get my blood boiling like some other dividend growth beauties.

Tupperware Brands (TUP)

Tupperware Brands manufactures high quality consumer products for beauty and personal care as well as kitchen and home storage containers.  Tupperware products are distributed through direct selling demonstrations, the Internet and television.  Tupperware is an international company with 31% of 2012 sales coming from Europe and 30% from Asia Pacific region.

I like the Tupperware products and like seeing that they are a global company with sales across the world.

Let’s take a quick look at TUP’s past 10 years of EPS and dividend payments:

Tupperware

Of all the charts, TUP’s gets me the most excited.  While I personally don’t own any Tupperware, it is clear that other people are purchasing plenty of their products.  The EPS has an uptrend with just a couple down years.

Tupperware just started growing their dividend rate over the past 5 years and has been quick to ramp up their payout.  As a dividend growth investor, I like seeing that the company has started growing their dividend rate and shown a commitment to paying out a larger portion of profits to shareholders.

Tupperware definately goes in my “further review” pile.  I would like to dig deeper into Tupperware and hopefully add it to my watch list if I like what I see.

At a quick initial review I like what I see for these reasons:

  1. Tupperware is a global company with sales and profits coming throughout the world.
  2. Tupperware has an upward trending EPS over the past 10 years.
  3. Tupperware has a the start of a dividend growth streak that management will hopefully continue to grow in the future right along with EPS.

I like TUP from this initial review.  It gets me excited.  I’m ready to jump in and do a more thorough analysis and hopefully will be adding TUP to my watch list soon.

Conclusion

From the above examples, I can easily put aside Williams Companies and Consolidated Edison and probably never waste any more time looking at those companies.  I will definitely be looking more into Tupperware Brands soon.  I’ll most likely also do a further review of Dominion Resources although they don’t get me too excited.

Once I do a more in depth review of Tupperware Brands and Dominion Resources, they will either get added to my watch list or put aside in the “not for me” pile.  If they get added to my watch list of 35 Top Dividend Growth Stocks (which just might soon become 36 or 37!), they will be considered for investment when I have capital available.

When I have capital ready for investment, I usually scan through my watch list to determine a few companies that I believe may offer decent value.  Then I will look more into that smaller group of companies to decide what to buy at that given time.

What do you think?  Are you an owner of any of these dividend growth companies?  Do any of them catch your interest?

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8 Responses to Quick Review of 4 Dividend Growing Companies

  1. Fast Weekly says:

    Tupperware looks like one of those staid brands that may have some value in it. I’ll go take a look. Thanks.

    Also, Dan please email me. I couldn’t find a contact email on your blog. Thanks.
    -Bryan

    • Dan Mac says:

      Bryan, I agree Tupperware has strong brand recognition. I’m planning on looking more into them next week. While I personally don’t use their products (that I know of) apparently there are quite a few people buying the Tupperware as the profit numbers don’t lie. I’ll be curious to dig more into this company as well.

  2. Of these, I follow D. Not thrilled about their balance sheet. But they are in a growing electricity market. I am looking for a good natural gas play to, maybe its WMB. Need to do some work on it. That chart isn’t pretty.
    -RBD

    • Dan Mac says:

      I’m interested in looking into Dominion Resources more. I like the industry and the chart looks fairly decent. Other then that I’m also interested in TUP but I’ll be passing on ED and WMB.

  3. I also don’t have much utility exposure so I’m looking for opportunities to get in when the values are right. Not sure if that time is now though as they are more interest rate sensitive. I think it’s important to look at the energy source mix for any utility as one that’s heavily tied to coal will most likely be having large capex to retrofit/convert their plants to nat gas or other methods of cleaning the exhaust to produce the energy. TUP seems interesting to me and I’ll be looking forward to your further analysis.

    • Dan Mac says:

      Thanks JC. Do you have any utility companies that you are interested in? I really don’t know much about the utility sector. To me Dominion looks alright but need to look at their mix of energy source (which I didn’t even think of thanks for the tip) but Consolidated Edison seems like too low growth for me to be interested in.

      Just curious what are some of the good utility companies out there?

  4. Marvin says:

    I am familiar with Dominion Resources, they have an abundance of natural gas and are really stirring things up in the West Virginia area. I can’t wait until we start to export natural gas, that’s when I believe you’ll see a lot of these companies go through the roof.

    • Dan Mac says:

      Thanks Marvin, Dominion looks like an interesting company. I’ll have to get a copy of their Annual Report so I can learn a bit more about them.

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