These 3 Dividend Aristocrats Are Flying Under The Radar

Investors looking for long-term opportunities should take a closer look at dividend growth stocks. Companies that have durable competitive advantages can raise their dividends each year, even during periods of economic recessions.

This article will take a look at three "Dividend Aristocrats" that have increased their dividends for at least 25 years, and can be held for the long run.

1. C.H. Robinson Worldwide (CHRW)

Charles Henry Robinson founded C.H. Robinson Worldwide CHRW in the early 1900s. The company is now an American Fortune 500 provider of multimodal transportation services and third-party logistics. 

The company's services are freight transportation, transportation management, brokerage and warehousing. CHRW also offers truckload, air freight, intermodal and ocean transportation.

On July 31, 2024, C.H. Robinson Worldwide reported results for the second quarter for FY2024. The company's truckload business expanded market share for the fourth consecutive quarter, focusing on margin improvement.

Adjusted income from operations rose by 32% year over year. Key second-quarter metrics include a 3.0% year-over-year increase in gross profits to $676.5 million and a 34.3% rise in income from operations to $178.1 million. Additionally, the adjusted operating margin increased by 600 basis points to 25.9%, and diluted earnings per share (EPS) grew by 29.6% to $1.05.

The company’s strategy involves growing market share and expanding operating income margins. This includes leveraging vertical-centric solutions, reclaiming targeted market segments and expanding the addressable market through value-added services. 

We expect annual earnings growth to be 4% for the next five years with the newly-purchased Prime Distribution Services' help. The company has been increasing dividends for 25 consecutive years, with a five-year dividend growth rate of 4.0%.

C. H. Robinson has a wide economic moat because it would be very capital intensive to have new or small competitors to grow a network as effective and efficient as CHRW. 

CHRW sports a BBB+ credit rating from S&P, which is investment-grade quality. The company has a strong balance sheet with more assets than debt, a total debt/equity ratio of 1.3, and an interest coverage ratio of 5.2.

2. Cincinnati Financial (CINF)

Cincinnati Financial Corp. CINF is an insurance company that was founded in 1950. It offers business, home, auto insurance and financial products, including life insurance, annuities, property and casualty insurance. 

As an insurance company, Cincinnati Financial makes money in two ways. It earns income from premiums on policies written and by investing its float, or the large sum of money consisting of the time value between the premium income and insurance claims.

On July 25, 2024, Cincinnati Financial reported the second quarter results for FY2024. The company reported net income of $312 million, or $1.98 per share, marking a significant decrease from $534 million, or $3.38 per share, in the second quarter of 2023.

Despite this, the company saw a 7% increase in non-GAAP operating income, rising to $204 million, or $1.29 per share, compared to $191 million, or $1.21 per share, in the same period last year. 

The company's insurance operations experienced a 14% growth in second-quarter net written premiums, driven by price increases, premium growth initiatives and higher insured exposures. The property casualty combined ratio increased slightly to 98.5% from 97.6% in the second quarter of 2023.

Cincinnati Financial has grown earnings by 9.5% per year over the past nine years and 9.4% over the past five years. Consensus analysts expect earnings to grow by 6% for the next five years. Book value, a significant metric for insurance companies, has increased by 6.1% over the past nine years and 7.6% over the past five years.

Cincinnati Financial has a strong dividend growth track record. With a BBB+ investment-grade credit rating, and Cincinnati Financial having 62 consecutive years of annual dividend increases, we believe that the risk of a dividend cut is low with this company.

3. Federal Realty Investment Trust (FRT)

Federal Realty FRT is one of the larger real estate investment trusts (REITs) in the United States. The trust was founded in 1962 and concentrates in high-income, densely populated coastal markets in the U.S., allowing it to charge more per square foot than its competition.

Federal Realty Investment Trust (FRT) announced its financial results for the second quarter ended June 30, 2024, showcasing strong performance across various metrics. 

The company reported a net income available for common shareholders of $1.32 per diluted share, a significant increase from $0.72 per diluted share in the same period of 2023. Operating income for the quarter also rose to $157.0 million, up from $101.8 million in the prior year quarter.

Key highlights for the second quarter included a 5.1% increase in funds from operations (FFO) per diluted share to $1.69, compared to $1.67 in the second quarter of 2023. 

The company achieved record leasing activity, signing 122 leases for 594,361 square feet of comparable retail space, with a cash basis rollover growth of 10% and 23% on a straight-line basis. Comparable property operating income (POI) growth was 2.9% for the quarter, excluding lease termination fees and prior period rents collected.

The company's portfolio occupancy stood at 93.1%, with a leased rate of 95.3% at quarter-end, representing increases of 110 and 100 basis points quarter over quarter, respectively. Small shop leasing was particularly strong, with a leased rate of 92.5%, up 110 basis points quarter-over-quarter and 230 basis points year over year.

While growth numbers have not always been impressive, the simple fact that it has such a consistent track record of safety and stability when it comes to funds from operations and dividends per share makes it one of the most desirable REITs in the market.

Federal Realty’s growth moving forward will be comprised of a continuation of higher rent rates on new leases and its impressive development pipeline fueling asset base expansion. Margins are expected to continue to rise slightly as it redevelops pieces of its portfolio and same-center revenue continues to move higher.

FRT has increased its dividend for 57 consecutive years.

At the time of publication, Ciura had no positions in any securities mentioned.