What Stock Has the Record for Most Consecutive Dividend Increases?
By: Jonathan Wolfgram,
In a market where companies are heralded for increasing their dividend five years in a row and treasured for boosting it 25 years in a row, one utility company has hiked its dividend distribution for 67 consecutive years.
American States Water Co (NYSE:AWR) is a California-based utility company with the current record for most consecutive dividend increases. The stock has increased its annual distribution every year for the last 67 years.
This long run of increases is followed closely behind by several stocks that have increased their dividend distribution for 66 or 65 years. But with the strong financial base American States Water sits on, it is unlikely any of them will topple AWR anytime soon.
What Stock Has the Record for Most Consecutive Dividend Increases? American States
Long streaks of consecutive dividend increases are prized among income investors. Any company in the S&P 500 that has increased its dividend for 25 or more years in a row is granted access to an exclusive group called the Dividend Aristocrats, of which there are 65. Removing the S&P 500 constraint means we have 141 stocks with over 25 consecutive years of dividend increases, also referred to as the Dividend Champions.
Just 29 companies have increased their annual dividends for the last 50 years or more, making them members of the Dividend Kings. American States Water, with a streak of dividend increases numbering 67 years, is a member of all three.
American States Water Operates in Three Primary Segments
AWR divides its business into water, electric and contracted services. The majority of the firm’s revenue comes from its water division, also known as the Golden State Water Company, which conducts its operations across several counties in California and is regulated by the California Public Utilities Commission.
Although its residential and commercial customers are largely California-based, AWR is regularly contracted by the U.S. government to provide water services to various military institutions and bases.
The company has 841 employees and a market capitalization of $3.3 billion.
AWR’s Long Dividend Streak Has Increased With Steady Price Growth
For the last five years, AWR has grown its share price 131%. Although it has seen some volatility from the beginning of the COVID-19 pandemic in 2020 until now, its regular pace has been remarkably consistent.
Alongside its continuous share price growth, AWR has increased its dividend every year at a corresponding rate, as opposed to increasing its dividend by the minimum amount to maintain its record-breaking streak. Charted below are the dividend distributions from 2007 until the present overlaid on a chart of AWR’s share price growth.
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What Stock Has the Record for Most Consecutive Dividend Increases? A Top Performer
The company currently increases its quarterly dividend payout by an average of $0.02, hiking the annualized distribution by roughly $0.08 every year. AWR pays a quarterly dividend of $0.36 and just made its most recent dividend increase in August 2021, when the payout rose from the $0.34 it had maintained for the trailing 12 months.
While AWR has uninterrupted dividend growth for the last 67 years, the growth in stock price recently has outpaced the company’s increasing dividend distributions. Charted below is a ratio at any given time of the dividend per share over the price of AWR in the trailing five-year period.
Since the ratio is generally decreasing, we see that in the last five years the company’s dividend growth has slowed relative to its price. Yet, the dividend increases sharply rose around late 2019 and again in early 2020, potentially due to a dropping share price reacting to the COVID-19 pandemic.
The same data can be reflected by charting each of the metrics individually. Here are the dividend per share and share price of AWR charted independently.
A quick analysis of this chart shows the strong positive correlation between share price growth and dividend growth in the last five years. We already know AWR is consistent in dividend payments — any company that has increased its distribution for 67 consecutive years has weathered countless business storms and can be trusted to pay its investors going forward. What is powerful about these charts is the demonstration that AWR is increasing its dividend payout by a significant value, and we can expect that pace to continue accelerating as long as the company’s share price maintains its course just the same.
That standard dividend growth rate matches the company’s stock price growth rate very closely. In the trailing three, five and 10 years, AWR’s dividend has grown an average of 9.5%, 8.4% and 9.1%, respectively. Meanwhile, the company has grown its share price 13.6% in the last year and kept a similar pace in years prior.
AWR is in the 94th Percentile for Efficiency Among its Industry Peers
American States Water Co. maintains its reliable dividend and steady growth rate largely due to the underlying efficiency of its operations. The company ranks in the 94th percentile for the Utilities industry, placing 7th out of 169 companies.
With a return of equity of 13.9%, a return of assets of 5% and return on invested capital (ROIC) of 9.1%, AWR consistently turns a greater share of its cash inflow into profit when compared to its many peers. Charted below are the operating margin, net margin, return on equity and return on assets, with each number representing where AWR falls relative to its peers (i.e. AWR is in the 91st percentile of its industry for operating margin).
Data provided by Stock Rover.
The company’s strongest metrics, operating margin and net margin, are 27.3% and 18.4%, respectively. Where operating margin has stayed mostly level for the last 10 years, AWR’s net margin has been steadily increasing.
Data provided by Stock Rover.
This high level of efficiency makes the profit generated by American States Water reliable, provided it maintains its contracts and large customer base.
American States Water is a Long-Hold Stock That Will Pay Dividends Far Into the Future
With consistent share price growth alongside its best-in-class efficiency, American States Water likely will maintain its dividend far into the future. Already numbering 67 years, we expect the company’s streak of consecutive dividend increases to grow higher still, allowing AWR to keep its position as the stock that holds the record for most consecutive dividend increases.
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