女人喝什么红酒好即不贵的:Dividend Growth Above 15%: Two Of The Best

With short-term interest rates still sitting at near 0%, more and more investors have begun to seek out companies paying a reasonable dividend yield. But as many have pointed out on Seeking Alpha, including myself, it's not just about the yield. The consistency and growth rate of the dividend are of utmost importance as well. With that in mind, let's take a look at two solid companies with low debt, a relatively high dividend yield, and a very strong five year dividend growth rate of above 15%.
Owens and Minor Inc. (OMI)
Owens & Minor, Inc., together with its subsidiaries, provides distribution, third-party logistics, and other supply-chain management services to healthcare providers and suppliers of medical and surgical products, as well as distributes medical and surgical supplies to the acute-care market. Its services include logistics, supplier management, analytics inventory management, outsourced resource management, clinical supply management, and business process consulting.
Dividend Yield5 Year Annualized Div Growth Rate1 Year Div Growth RatePayout RatioDebt/Equity
OMI2.8%15.4%15.5%43.0%23.5%
Unlike many companies with a high five year dividend growth rate, OMI has maintained this growth rate through last year; its one year dividend growth is 15.4%. OMI also have a relatively low payout ratio, which means there is money left over for reinvestment in the company or to continue raising dividends further. Also, the debt to equity of this company is a very safe 23.5%. I always like to look at total return scenarios for companies such as OMI by plugging in some numbers into my calculator calledTotal Returns- Dividends vs. Price Appreciation.
Annual Return Over 10 Years
DividendGrowthRate
Annual % Change in Stock Price5%8%11%14%17%
0%3.5%3.9%4.4%5.0%5.7%
2%5.0%5.4%5.8%6.4%6.9%
4%6.5%6.9%7.3%7.8%8.3%
6%8.2%8.5%8.9%9.3%9.7%
The outputs in the middle show the annual total returns for a given annual dividend growth rate and change in stock price. I like to be conservative with my assumptions when projecting my own dividends. Using and 8% growth rate over the next ten years (half of the dividend growth rate today), OMI would still return nearly 4% per year even if the stock price doesn't budge.
Automatic Data Processing (ADP)
Automatic Data Processing, Inc. provides business outsourcing solutions. The company operates in three segments: Employer Services, Professional Employer Organization (PEO) Services, and Dealer Services. The Employer Services segment offers a range of human resource (HR) information, payroll processing, time and labor management, and tax and benefits administration solutions and services, including traditional and Web-based outsourcing solutions to employers in the United States, Canada, Europe, South America, Australia, and Asia. Its solutions assist employers in the staffing, management, payment, and retention of their employees.
Dividend Yield5 Year Annualized Div Growth Rate1 Year Div Growth RatePayout RatioDebt/Equity
ADP3.2%15.0%5.2%56.0%0.0%
ADP has been a solid dividend payer over the past five years. However, the slowing economy has clearly caught up with this company as its one year dividend growth rate has slipped to 5.2%. But in its favor, this company has a relatively low payout ratio of 56% and no debt at all. Let's look at some total return scenarios for ADP:
Annual Return Over 10 Years
DividendGrowthRate
Annual % Change in Stock Price2%5%8%11%14%
0%3.5%3.9%4.5%5.1%5.8%
2%5.0%5.4%5.9%6.4%7.0%
4%6.6%6.8%7.3%7.8%8.4%
6%8.2%8.4%8.6%9.3%9.7%
Notice that because of the higher starting dividend yield, ADP's total returns can equal or even exceed that of OMI even with a lower dividend growth rate.
It's important to understand how the dividend yield and growth rate interact to produce compounded returns over time. Running scenarios such as the ones I've shown above give users a feel for what they can expect over longer holding periods. It also shows the power of solid dividend paying stocks over time and why most people should have them in their portfolio.