Is this the biggest dividend hike ever?
6 dividend increases this week + new superstar dividend grower (unknown!)
This week there were only 6 dividend increases in the United States, but they were all very interesting companies with a story behind them. We briefly discuss the largest and most interesting increases, with a leading role for egg producer Cal-Maine Foods, which announced perhaps the largest dividend increase ever. Read it all below and don't forget to get others excited about dividend hike on substack; Everyone can register for free!
Last week we looked at the biggest dividend hikes so far in 2024, led by Meritage Homes with a 177.8% increase. This dividend increase is completely blown away this week with an unprecedented increase from an egg producing company.
The biggest dividend hikes this week
Cal-Maine Foods +759.5% (second hike YTD)
Emcor Group +38.9%
Watsco +10.2%
Phillips 66 +9.5%
UMH Properties +4.9%
Bank OZK +2.6% (second hike YTD)
Cal-Maine Foods (CALM), engaged in the production and distribution of fresh shell eggs, announced another monster dividend hike on April 3, 2024 with a new quarterly payment of $0.997 per share. In Q1 CALM had paid a $0.116 per share quarterly dividend, up 1833% from the Q4 dividend of only $0.006 per share.
All together this results in a whopping 16516.7% dividend hike by Cal-Maine Foods in 2024, probably the biggest ever increase ever announced by a US listed company.
This huge dividend hike by CALM has a clear explanation: The dividend amount fluctuates based on the company's net income, with a policy of paying one-third of quarterly income, and is contingent upon the company's overall profitability since the last dividend payout. Following a quarter for which CALM does not report net income, the company will not pay a dividend with respect to that quarter or for a subsequent profitable quarter. The amount paid per share will vary based on the number of outstanding shares on the record date.
The result is that CALM pays a different dividend every quarter, depending on profit development. As a result, enormous dividend increases and decreases alternate. In May 2022, no less than $2.199 dividend per share was paid out in one quarter, while in 2020, for example, no dividends were paid at all.
At a stock price of $62.80 the dividend yield for CALM is 6.4%, only if this quarterly dividend of $1.00 will be paid in the next quarters also, but this is not realistic.
Little known Emcor Group (EME) is our ‘hidden gem’ of the week, despite the current market cap of $16.8 billion and the stock trading at an all time high. The stock is up a whopping 66% year-to-date. Emcor is a specialty contractor and provider of electrical and mechanical construction and facilities services, building services, and industrial services with an impressive growth record; the FY 2023 revenue was up 13.6% to $12.58 billion with Emcor now trading at a estimated p/e of 24.7 for 2024 based on analyst estimates.
Emcor Group annual dividend hikes
2024: +38.9%
2023: +20.0%
2022: +15.4%
2021: no hike
2020: +62.5%
Most impressive about Emcor is the dividend; the company just announced a 38.9% dividend hike to $0.25 quarterly per share. This is the biggest ever increase announced by Emcor and comes on the back of a 20% increase in 2023. The annual dividend payment of $1.00 per share compares to a free cash flow of $17.27 per share in 2023, leaving much upside for future dividend hikes by Emcor if the company can maintain its high cash flow and growth. This looks likely and also explains the small dividend yield of just 0.3% for Emcor, that has been buying back its own shares massively in the last decade.
Bank OZK (OZK) announced its second dividend hike this year with a 39 cent quarterly payment, up 2.6% from the previous quarterly payment of 38 cents. So far in 2024 Bank OZK has raised its dividend by 5.4% and 2024 marks the 26th consecutive year of increased dividends by the bank. The dividend yield for OZK, a regional bank that provides a range of financial solutions in states, including Arkansas, Georgia, Florida, North Carolina, Texas, New York, California, and Mississippi, is 3.6% at a stock price of $43.74.
Refiner Phillips 66 (PSX) did what just what was expected with a 9.5% dividend hike to $1.15 quarterly per share, marking the 12th consecutive year of increases. The $73 billion diversified and integrated downstream energy provider with midstream, chemicals, refining, and marketing and specialties businesses, trades near its all time high with a stock price of $170.68 and yields 2.7%. Phillips 66 now pays an estimated $1.97 billion in dividends annually and raised the payout by an average of 5.0% in the last five years.
The dividend yield for Watsco is 2.5% and that's actually quite high for a company that increases its dividend by double digits every year.
Another dividend growth machine is Watsco (WSO), the air conditioning, heating and refrigeration equipment distributor known for its double digit dividend hikes with now 11 consecutive years of increases. The 2024 dividend will be hiked by 10.2%, being the 11th straight year with a double digit increase by Watsco. It is no surprise that Watsco also trades near the all time high at at stock price of $432.
The smallest dividend hike this week was announced by manufactured home communities REIT UMH Properties (UMH). UMH announced a 1 cent increase to $0.215 quarterly per share, marking the 4th consecutive year of increases. The dividend yield is 5.4% at a stock price of $15.83. Just remember that UMH cut its dividend by 28% in 2008 and only announced another increase in 2021.
Disclaimer: The information provided here is for informational purposes only and should not be considered financial advice. Investors should conduct their own research or consult with a financial advisor before making any investment decisions.