Two Dividend Kings with 50+ Years of Dividend Raises

The art of finding a deal in this market has gotten significantly harder. I decided to highlight two dividend kings for you to consider if they fit your portfolio needs.

The stock market rally has been unbelievable as my portfolio is up 36% overall. Additionally, the stocks I have recommended on investlikedad.com and bought have yielded me 87% YTD. So keep reading as my picks have been performing quite well (past performance is not an indicator of future performance).

The downside of this rally is that it doesn’t make a whole lot of sense, and well individual investors are trying to become millionaires overnight through trading. While this is admirable, it is also insane. We had a tremendous rally last week, with 38.6 million unemployed.

Two Dividend Kings with 50+ Years of Dividend Raises

My example of how crazy the market is will be with Hertz(HTZ). Hertz, which had financial and management problems before COVID-19, defaulted on debt during COVID-19 and filed bankruptcy. The stock tanked, which is expected as shareholders will lose their entire investment if it does not come back from bankruptcy. The unexpected event happened after it bottomed. Hertz surged 825% since it filed for bankruptcy. If it can’t pay all its debts, these new investors will lose everything.

I recently saw another article that the investors using Robinhood trail the S&P500 index by 6.2%. My caution to those chasing the dream of getting rich quickly is that while a few people will get lucky and get rich overnight, the vast majority will lose their money. Real wealth is built over time by staying true to your investment strategy rather than hoping for a miracle.

I have two companies for your consideration that are strong performers, and both have increased their dividends over the past 50 years. While they might not be a buy right now, if the price changes a little, it may present an opportunity to open a position.

ABM Industries Incorporated (ABM)

ABM Industries is an industry leader of facility solutions, which includes janitorial, electrical & lighting, energy solutions, facilities engineering, HVAC & mechanical, landscape & turf, and parking.

Two Dividend Kings with 50+ Years of Dividend Raises

The company is pretty well-diversified but has not escaped the wrath of the COVID-19 crisis. I could show a chart that illustrates how 15% of revenue comes from airlines, and 50% comes from industry/business, but I think the client list is better.

Two Dividend Kings with 50+ Years of Dividend Raises

As you can see, the airline industry, which I mentioned above, is 15% of revenue, and that sector is struggling. Additionally, the colleges have been remote, which represents 13%. Another company I want to call out is Boeing, which is also struggling due to the decline in the airline industry as well as a few other companies with issues.

So if the company is impacted, why should we consider it? Well, cleaning services will continue to be essential, and this company is a full-service shop to manage all your building/company needs. The strategy is to provide one service to a company and then add more over time.

Two Dividend Kings with 50+ Years of Dividend Raises

Let’s dig into the financials. With the impacted industries above what happened to the revenue, well, it grew by .3%. It was able to increase net profit and maintain the same 4.3% margin as 2019.

ABM has created a lot of growth and value through acquisitions. Based on the buying and selling of businesses that ABM has done in the past 13 years, I feel confident that the company will continue to follow this trend. Maybe they will find an opportunity during the crisis.

Two Dividend Kings with 50+ Years of Dividend Raises

I like ABM from a company perspective, but at $36, it is a little overpriced to initiate a position here. I would look to purchase this company for around $30. Right now, it is yielding 2.15%, and if you wait till $30, then you would get a 2.5% yield.

H.B. Fuller Company (FUL)

H.B. Fuller Company is a company that you probably have not heard of, but it is a leader in the global adhesives market.  H.B. Fuller is in the engineering adhesives, construction adhesives & hygiene, health, and consumable adhesives. The chart below shows examples of industrial uses. This illustrates how diversified the company’s products are.

Two Dividend Kings with 50+ Years of Dividend Raises

COVID-19 has had an impact on the H.B. Fuller, just like the rest of the world. As a result of COVID-19, the HHC division will result in half the company’s sales which is actually good as this was supposed to be the division with the lowest growth division

Two Dividend Kings with 50+ Years of Dividend Raises

H.B. Fuller started paying down debt in 2018 and, in the past two years, has reduced its debt by $472 million to increase the company’s financial strength. This is different from a lot of the other companies I have written about that have been taking on more debt to stay afloat. Additionally, in April 2020, the company also raised its dividend for the 51st year in a row.

Two Dividend Kings with 50+ Years of Dividend Raises

From a value perspective, this company is reasonably priced at $42 as this company is a buy in the low 40s. If you can get it to lower, that is awesome. My estimate for FUL is 54.07, which represents a 26% possible upside opportunity while collecting a 1.5% dividend.

Personally, the dividend is a little low for me and my goals, but this is a stable company that I believe is worth researching further to decide if it fits your investment strategy.  

Conclusion

Hopefully, I was able to present two dividend kings that you might not have known about. It might be a good idea to add them to your watchlist for a possible future investment. I have decided that

I will provide at least a few investment ideas each week for you to consider and also expose you to reliable companies that you may have never heard of.

This post is my opinion, which is strictly for information & educational purposes only. The post is not intended to provide any investment advice. Please seek your own duly licensed professional for investment advice as they will be able to consider your situation. Please read my Terms & Conditions Page for a full disclaimer.

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