Tap into growth and income

Two of our Key stock ‘dividend aristocrats’ have raised their dividends over the latest month. Both remain buys for long-term share price gains as well as modest, but growing dividends. Both companies are geographically diversified, which makes them safer.


Tap into growth and income with these 2 dividend aristocrats

Over the month of July, two of our Key stocks have raised their dividends. Both are ’dividend aristocrats’. Buy them to tap into growing dividends and for long-term share price gains. In Canada, the term ‘dividend aristocrat’ refers to companies that have raised their dividend for at least five years in a row.

Stellarton, Nova Scotia-based Empire Co. (TSX—EMP.A) has increased its dividend by a healthy 10 per cent, to 66 cents a share. It shares yields are modest, under two per cent.

As the owner of supermarket chain Sobeys, Empire has now improved its dividend for 29 consecutive years. That’s enough to exceed even the stricter U.S. definition of a dividend aristocrat.

Food stocks are a defensive sector of the stock market. That’s because food is a necessity even in bad times, of course. This relative safety will attract conservative investors. So will growing dividends that can assist investors in beating inflation. Sobeys is geographically diversified with stores across Canada. This reduces its exposure to natural disasters such as fires and floods. This improves Sobeys safety. We expect Empire Company’s shares to climb over time.

U.S.-based Key stock PPG Industries Inc. (NYSE—PPG) increased its dividend by 5.1 per cent, to US$2.48 a share. Its yields are also modest, at under two per cent.

In the United States, the term ‘dividend aristocrat’ refers to companies that have raised their dividend for at least 25 years in a row. PPG exceeds this threshold after raising its dividend for 51 consecutive years.

PPG “is the world’s largest producer of coatings (paints)…PPG’s products are sold to a wide variety of end users, including the automotive, aerospace, construction, and industrial markets. The company has large footprints in many regions around the globe, with less than half of sales coming from North America”. This percentage is likely to go down as PPG seeks “expansion into emerging regions”. PPG is concentrating on its coatings and specialty products.

PPG has also grown through acquisitions. These include Akzo Nobel and Comex.

We expect income-seeking investors to bid up the share price of PPG Industries. That is, you stand to earn share price gains as well as tap into modest, but growing, dividends.

This is an edited version of an article that was originally published for subscribers in the August 5, 2022 issue of The Investment Reporter. You can profit from the award-winning advice subscribers receive regularly in The Investment Reporter.

The Investment Reporter, MPL Communications Inc.
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