2 Equities Pay Investors Rising Dividends for Seven Consecutive Years and Offer 3%-Plus Yields

By: NED PIPLOVIC

A Canadian bank and a U.S. industrial goods manufacturer have been paying rising dividends for at least the past seven consecutive years and offer dividend yields of 3.6% and 3%, respectively.

The industrial goods manufacturer started paying a dividend in 1991. However, those 26 years of dividend distributions pale in comparison to the bank’s history of paying a dividend for the past 147 years.

The ex-dividends dates for both companies are on July 24, 2017, with pay dates just one day apart in late August 2017.

Rising Dividends

Royal Bank of Canada (NYSE:RY)

Founded in 1864 and headquartered in Toronto, Canada, the Royal Bank of Canada (RBC) operates as a diversified financial service company worldwide. The bank’s Personal & Commercial Banking segment provides traditional banking services, such as demand deposit accounts, real estate loans, auto financing, personal loans and retail investment businesses through its branch offices, automated teller machines, online, mobile and telephone banking networks.

RBC’s Wealth Management segment offers a suite of investment, trust, banking, credit and other wealth management solutions to high net worth and institutional clients. The bank’s Insurance segment provides life, health, property and casualty and reinsurance products. The Investor & Treasury Services segment offers custody, payments and treasury services for financial and other institutional investors. Lastly, the bank’s Capital Markets segment provides corporate and investment banking, structuring and trading, as well as equity and debt origination and distribution.

The current quarterly dividend distribution of $0.68 (CA$0.87) is equivalent to a $2.72 annual payout and a 3.6% dividend yield. This yield is 13.33% higher than the 3.21% straight average yield for the financial sector.

In addition to an almost century-and-a-half-long history of paying a dividend, RBC has a considerable record of distributing rising dividends. The bank has not cut its annual dividend for more than two decades. While RBC did not raise its annual dividend between 2008 and 2010, it was not forced to cut its distribution, unlike many financially stressed banking institutions during the 2008-2009 financial crisis.

Since the bank resumed rising dividends in 2011, it boosted the annual dividend amount 75% because of an 8.2% average growth rate over the past seven years. Over the past two decades, the company boosted its annual dividend distribution nearly nine-fold by hiking the annual amount at an average rate of 11.6%.

The share price rose almost 27% between its 52-week low in mid-July 2016 and its 52-week high in mid-February 2017. After the mid-February peak, the share price reversed trend and dropped 11% by early March 2017. Since March, the price recovered most of the loss and closed on July 13, 2017 at $74.77, which is just 1.6% below the February peak and 23.4% higher than the price 12 months ago.

Fastenal Co. (NASDAQ:FAST)

Fastenal Company engages in wholesale distribution of industrial and construction supplies in the United States, Canada and 19 other countries. The company offers fasteners, such as bolts, nuts, screws, studs and related washers, as well as other industrial and construction supplies primarily under the Fastenal name. As of December 31, 2016, the company had almost 20,000 employees, distributed its products through a network of more than 2,500 company owned stores and generated $4 billion in net sales. Fastenal’s headquarters are in Winona, Minnesota, where the company was founded in 1967.

The share price experienced significant volatility over the last few years. Between mid-July 2016 and early October 2016, the share price first lost more than 10% and then reversed course to gain almost 40% and reach its new 52-week high by mid-January 2017. However, the share price dropped again and closed on July 14, 2017, at $43.17, which is about 18% less than the January peak and 2.5% above the price level from July 2016.

Contrary to the company’s share price, which struggled to show gains lately, company’s dividend performed significantly better. The current quarterly dividend distribution of $0.32 is equivalent to a 3% dividend yield and a $1.28 annualized payout per share. The company’s 3% yield is almost 140% higher than the 1.24% straight average yield for the industrial goods sector.

With just one 9% annual dividend cut in 2009, Fastenal enhanced its annual dividend distribution at an average rate of 21.7% every year for the past two decades. Over those 20 years, the annual dividend payout amount rose more than 51-fold. Since the most recent dividend cut in 2009, the company enlarged its annual dividend at an average annual rate of 17.2%, which more than tripled the annual dividend payout over the last eight years.


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Ned-Piplovic

 

Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.

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