Audit your investment decisions

 One of the best things you can do as an investor is to audit your investment decisions.

This is an underrated factor that can help improve as an investor.

Very few investment books ever mention this crucial aspect of investment. But all successful investors practice it.

Reviewing past decisions is helpful, because it can help you identify recurring patterns, misses and opportunities. By identifying problems and opportunities, and addressing them, the investor can improve over time.

It’s important to take a step back, and try to think clearly about what you are missing. It’s hard to take a look at yourself, and see issues. Growth is painful, but worth it.

Of course, in order to have something to evaluate, you have to have those decision points in handy.

In my case, I have a process I follow. But I also have a lot of write-ups, behind each decision.

I also have transaction histories as well. I also have write-ups and population data.

After doing some reviews and analysis over the years, I have found a few interesting tidbits.

Notably, when it comes to stock analyses, I’ve noticed that the best opportunities basically jumped at me. The data was so convincing, that it just spoke to me. However, if I had to spend a lot of time explaining away why an investment is great, despite the data, I was mostly justifying an average decision.

In addition, I had found that selling has been one of the worst decisions I could make. Early on, I was pretty active in my portfolio. I would buy a security at a good value, and then sell it at what I believed to be a high price. I would then re-deploy funds in what looked like a cheaper security. It’s also likely that I was subconsciously engaged in yield chasing as well. What ended up happening is that that “expensive company” I sold turned out to do very well, growing earnings, dividends and intrinsic value. The cheap company I bought turned out just okay, but nothing spectacular. Even worse, I ended up paying taxes on gains in the taxable account. I learned that once I buy a good quality company, I should pretty much sit tight on it, and do nothing. 

This has further been reinforced by studying my mistakes. A lot of times, compounding is not a straight line upwards. There could be times where a security may be going through some temporary bumps/slumps/noise. This is when everyone gets discouraged. Notably by share price going nowhere, which is when media articles start popping up saying that the stock is not working. That’s noise, but it does wear you out if you pay attention to it. It’s even worse for someone with followers online, because everyone asks you about it. It’s death by a thousand cuts. I have learned to ignore and just stick to it. It’s because long-term investing is simple, but not easy. But in most cases, these consolidation phases tend to wear out the weak hands that never make it in investing. By the time they capitulate, the stock is hot again and “works”. Selling because you are impatient is a mistake. 

In general, selling a stock has been a mistake for me. It has been compounded by the fact that the company I replaced it with tends to do worse than the company I sold. It happens all the time, at least 40% - 60% of the time. But the magnitude of missed economic opportunity is larger than the opportunity I replaced it with.

Being patient with a security provides the maximum opportunity to let compounding do the heavy lifting for me. That doesn’t mean sticking my head in the sand. But it also doesn’t mean just getting scared easily either. It also doesn’t mean never selling – but being extremely careful about why you sell.

These days I rarely sell. The main reasons are a dividend cut and because a company has been acquired. Any other reason to sell has largely been a mistake, on average of course. I would encourage you to review your transaction history, and determine if selling has been a mistake over your investing career.

14 Companies Showering Shareholders With More Cash

 As part of my monitoring process, I review the list of dividend increases every week. I usually focus on companies that have managed to boost dividends to shareholders for at least a decade (with one exception this week). 

There were 36 companies that raised dividends in the US last week. Fourteen of them have increased dividends for at least ten years in a row.

The companies that raised their dividends to shareholders are listed below:

This list is not a recommendation to buy or sell stocks. It is simply a list of companies that raised dividends last week. The companies listed have managed to grow dividends for at least ten years in a row.

The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.

This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.

Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.

Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.

Relevant Articles:

- Eleven Dividend Growth Companies Raising Dividends Last Week

- 14 Dividend Growth Stocks Raising Dividends Last Week

- Nine Companies Raising Dividends Last Week

- Eight Dividend Growth Stocks Raising Distributions Last Week

14 Dividend Growth Stocks Raising Dividends Last Week

I review the list of dividend increases each week, as part of my monitoring process. There were 27 companies that increased dividends over the past week.

I reviewed the list and included the companies that have both raised dividends last week and have managed to raise dividends for at least ten years in a row. There were 14 companies that fit this simple screen:

This list is not a recommendation to buy or sell stocks. It is simply a list of companies that raised dividends last week. The companies listed have managed to grow dividends for at least ten years in a row.

The next step in the process would be to review trends in earnings per share, in order to determine if the dividend growth is on strong ground. Rising earnings per share provide the fuel behind future dividend increases.

This should be followed by reviewing the trends in dividend payout ratios, in order to check the health of dividend payments. A rising payout ratio over time shows that future dividend growth may be in jeopardy. There is a natural limit to dividends increasing if earnings are stagnant or if dividends grow faster than earnings.

Obtaining an understanding behind the company’s business is helpful, in order to determine how defensible the dividend will be during the next recession. Certain companies are more immune to any downside, while others follow very closely the rise and fall in the economic cycle.

Of course, valuation is important, but it is more art than science. P/E ratios are not created equal. A stock with a P/E of 10 may turn out to be more expensive than a stock with a P/E of 30, if the latter is growing earnings and the former isn’t. Plus, the low P/E stock may be in a cyclical industry whose earnings will decline during the next recession, increasing the odds of a dividend cut. The high P/E company may be in an industry where earnings are somewhat recession resistant, which means that the likelihood of dividend cuts during the next recession is lower.

Relevant Articles:

- Eleven Dividend Growth Companies Raising Dividends Last Week

- Nine Companies Raising Dividends Last Week

- Four Dividend Increases In a Time of Tariffs

- Two Recent Dividend Increases and Five Future Dividend Increases

Dividend Strategy with Quality Yields – The Dow Jones Dividend 100 Indices

I found an interesting paper from S&P Dow Jones on the Dow Jones Dividend 100 Indices. This is the index used behind the popular dividend ETF Schwab U.S. Dividend Equity ETF (SCHD).

I've previously discussed the Schwab US Dividend Equity ETF here. 

But let's dive into the paper:

They discuss the overall differentiating factors behind the success of these indices

- Sustainable dividends with financial quality

- Dividend growth against future rising rates

- Investability

They shared the construction methodology behind the Dow Jones 100 Dividend Indices

It's a good process to learn from, whether you are a DIY or ETF investor

S&P found that dividend stocks generate strong returns from dividends and capital gains

They calculated total returns between June 2001 and June 2023 for the Dow Jones U.S. Dividend 100 Index

They found that the dividend index generated a total return of 11.70% annualized, beating the 10.20% for the total market index

Why has that Dividend Index done well?

It's due to its focus on quality, financial stability, which makes it easier to endure tough economic times and thrive during the good times

Dividend Strategies tend to shine during major historical drawdowns

There are several of those listed since 1999:

They also listed the sector weightings:

Contrary to popular beliefs, this strategy has fair allocation accross multiple sectors. It's not the "utilities and financials only"

This is the part that triggers me - I dislike the high turnover of this index.

In my opinion they are losing out on returns by selling their companies too quickly

Next, they showed the spread in dividend yields between US and International overall. For the broader US market, this is due to the increased use of share buybacks in the US vs abroad

I found this chart on sector trends and characteristics informative

You can read the whole paper here:

Dividend Strategy with Quality Yields – The Dow Jones Dividend 100 Indices

Eleven Dividend Growth Companies Raising Dividends Last Week

I review the list of dividend increases every week, as part of my monitoring process. I usually focus my attention on the companies with a ten year streak of annual dividend increases, and then review each company using my criteria. I am always on the lookout for new ideas, and to determine if my existing holdings are working. I also want to be ready to act quickly, when the right time arrives.

This exercise helps me to evaluate companies I already own, and see how they are doing. This is a helpful piece of the puzzle, that would be helpful when/if I decide to add to these companies at the right price.

This exercise also helps me identify companies for further research. A large part of the time is spent reviewing companies, screening for companies, and trying to learn more about companies, their business, etc. 

It is not glamorous at all, but dull and boring. 

But it does pay dividends.

Over the past week, there were several companies raising dividends. The companies include:

Avery Dennison Corporation (AVY) operates as a materials science and digital identification solutions company in the United States, Europe, the Middle East, North Africa, Asia, Latin, America, and internationally. 

The company raised quarterly dividends by 6.80% to $0.94/share. This is the 15th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 9.92%.

The company has managed to grow earnings from $8.60/share in 2015 to $33.67/share in 2024.

The company is expected to earn $9.77/share in 2025.

The stock sells for 17.48 times forward earnings and yields 2.03%.

Ameriprise Financial, Inc. (AMP) operates as a diversified financial services company in the United States and internationally. The company offers financial planning and advice services to individual and institutional clients. 

The company raised quarterly dividends by 8.10% to $1.60/share. This is the 20th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 9.86%.

The company has managed to grow earnings from $8.60/share in 2015 to $33.67/share in 2024.

The company is expected to earn $36.81/share in 2025.

The stock sells for 12.66 times forward earnings and yields 1.25%.

Comfort Systems USA, Inc. (FIX) provides mechanical and electrical installation, renovation, maintenance, repair, and replacement services for the mechanical and electrical services industry in the United States. It operates through two segments: Mechanical and Electrical. 

The company increased quarterly dividends by 12.50% to $0.45/share. This is a 50% increase over the dividend paid during the same time last year. This is the 13th year of consecutive annual dividend increases for this dividend achiever. Over the past decade, the company has managed to raise dividends at an annualized rate of 18.20%.

The company has managed to grow earnings from $1.32/share in 2015 to $14.64/share in 2024.

The company is expected to earn $19.94/share in 2025.

The stock sells for 19.93 times forward earnings and yields 0.43%.

Home Bancshares, Inc. (HOMB) operates as the bank holding company for Centennial Bank that provides commercial and retail banking, and related financial services to businesses, real estate developers and investors, individuals, and municipalities in the United States. 

The company raised quarterly dividends by 2.60% over the prior quarterly dividend to $0.20/share.  This is also an 11.10% hike over the dividend paid during the same time last year. This is the 14th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 15.67%.

The company has managed to grow earnings from $1.01/share in 2015 to $2.01/share in 2024.

The company is expected to earn $2.27/share in 2025.

The stock sells for 12.18 times forward earnings and yields 2.80%.

Lithia Motors, Inc. (LAD) operates as an automotive retailer in the United States, the United Kingdom, and Canada. It operates in two segments, Vehicle Operations and Financing Operations.

The company raised quarterly dividends by 3.80% to $0.55/share. This is the 15th year of consecutive annual dividend increases for this dividend achiever. This raise is also much lower than the ten year average of 13.10%

The company has managed to grow earnings from $6.96/share in 2015 to $29.70/share in 2024.

The company is expected to earn $32.77share in 2025.

The stock sells for 8.94 times forward earnings and yields 0.75%.

MetLife, Inc. (MET) is a financial services company, which provides insurance, annuities, employee benefits, and asset management services worldwide. It operates in six segments: Group Benefits; Retirement and Income Solutions; Asia; Latin America; Europe, the Middle East and Africa; and MetLife Holdings. 

The company raised quarterly dividends by 4.10% to $0.5675/share. This is the 13th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 6.20%.

The company has managed to grow earnings from $4.67/share in 2015 to $5.98/share in 2024.

The company is expected to earn $9.20/share in 2025.

The stock sells for 8.18 times forward earnings and yields 3%.

Nasdaq, Inc. (NDAQ) operates as a technology company that serves capital markets and other industries worldwide. It operates in three segments: Capital Access Platforms, Financial Technology, and Market Services. 

The company raised quarterly dividends by 12.50% to $0.27/share. This is the 13th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 17.13%.

The company has managed to grow earnings from $0.85/share in 2015 to $1.94/share in 2024.

The company is expected to earn $3.19/share in 2025.

The stock sells for 23.59 times forward earnings and yields 1.28%.

Parker-Hannifin Corporation (PH) manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates through two segments: Diversified Industrial and Aerospace Systems.

The company raised quarterly dividends by 10.40% to $1.80/share. This is the 69th consecutive annual dividend increase for this dividend king. Over the past decade, it has managed to grow dividends at an annualized rate of 11.90%.

The company has managed to grow earnings from $7.08/share in 2015 to $22.13/share in 2024.

The company is expected to earn $26.73/share in 2025.

The stock sells for 22.37 times forward earnings and yields 1.09%.

Principal Financial Group, Inc. (PFG) provides retirement, asset management, and insurance products and services to businesses, individuals, and institutional clients worldwide. The company operates through Retirement and Income Solutions, Principal Asset Management, and Benefits and Protection segments.

The company raised quarterly dividends by 1.30% over the previous quarterly distribution to $0.76/share. This is a 7.04% raise over the dividend paid during Q2 2024. This is the 17th consecutive annual dividend increase for this dividend achiever. Over the past decade, it has managed to grow dividends at an annualized rate of 8%.

The company has managed to grow earnings from $4.11/share in 2015 to $6.77/share in 2024.

The company is expected to earn $8.15/share in 2025.

The stock sells for 9.01 times forward earnings and yields 3.88%.

Sysco Corporation (SYY) engages in the marketing and distribution of various food and related products to the foodservice or food-away-from-home industry in the United States, Canada, the United Kingdom, France, and internationally. The company operates through U.S. Foodservice Operations, International Foodservice Operations, SYGMA, and Other segments.

The company raised quarterly dividends by 5.90% to $0.54/share. This is the 49th consecutive annual dividend increase for this dividend aristocrat. Over the past decade, it has managed to grow dividends at an annualized rate of 5.70%.

The company has managed to grow earnings from $1.16/share in 2015 to $3.90/share in 2024.

The company is expected to earn $4.55/share in 2025.

The stock sells for 15.58 times forward earnings and yields 2.81%.

Westamerica Bancorporation (WABC) operates as a bank holding company for the Westamerica Bank that provides various banking products and services to individual and commercial customers in the United States.

The company raised quarterly dividends by 4.50% to $0.46/share. This is the 34th consecutive annual dividend increase for this dividend champion. Over the past decade, it has managed to grow dividends at an annualized rate of 1.48%.

The company has managed to grow earnings from $2.30/share in 2015 to $5.20/share in 2024.

The company is expected to earn $4.40/share in 2025.

The stock sells for 10.96 times forward earnings and yields 3.63%.

This of course is just a list, not a recommendation.

When I review companies, I look at ten year trends in:

1) Earnings per share

2) Dividend payout ratio

3) Dividends per share

4) Valuation

Since I have some experience evaluating dividend companies, I also modify my criteria based on the environment we are in and the availability of quality companies. If I see a company with a strong business model and certain characteristics that I like, I may require a dividend streak that is lower than a decade. I have also found success in looking beyond screening criteria by purchasing stocks a little above the borders contained in a screen.

It is important to be flexible, without being too lenient.

Relevant Articles:

- Eight Dividend Growth Stocks Raising Distributions Last Week

- Nine Companies Raising Dividends Last Week

- Four Dividend Increases In a Time of Tariffs

- Five Dividend Growth Stocks Raising Dividends Last Week