Dividend Growth Stocks Raising The Bar

Best Buy Co Inc (NYSE:BBY) operates as a retailer of technology products, services, and solutions in the United States, Canada, and Mexico. The company raised its quarterly dividend by 21.40% to 34 cents/share. This marked the 13th consecutive annual dividend increase for this dividend achiever (1). In the past decade, Best Buy Co Inc (NYSE:BBY) has managed to raise its annual dividend at a rate of 12.10%/year. Earnings per share grew slightly from $3.12/share in 2008 to $3.74/share by 2017. Best Buy Co Inc (NYSE:BBY) is expected to earn $3.88/share in 2018. The stock is cheap at 11.90 times earnings and yields 3.20%. The stock is a cheap one in today’s overheated market.

The downside is that earnings per share have barely grown over the past decade, while revenues have not grown either. The retail space is incredibly competitive these days, as traditional retailers have to compete with other brick and mortar locations, as well as online retailers. I believe that having a retail and online presence is something that will help traditional retailers. Enterprising value investors may find the company interesting enough, provided they believe that the earnings power will not be eroded by the competition. Others, may find the company to be a value trap, which will be obsolete within a decade or less. Given the lack of significant profit growth over the past decade, and the increased competitive forces, I view the company as a hold.

McGrath RentCorp (NASDAQ:MGRC) is a business to business rental company, rents and sells relocatable modular buildings, electronic test equipment, and liquid and solid containment tanks and boxes in the United States and internationally. It operates through four segments: Mobile Modular, TRS-RenTelco, Adler Tanks, and Enviroplex. The company raised its quarterly dividend by 2% to 26 cents/share. This marked the 25th consecutive annual dividend increase for this dividend champion (2). Over the past decade, McGrath RentCorp (NASDAQ:MGRC) has managed to raise dividends at a rate of 5.10%/year. The company failed to grow income over the past decade – it earned $1.67/share in 2007 followed by a $1.60/share in 2016. McGrath RentCorp (NASDAQ:MGRC) is expected to earn $1.84/share in 2017. Currently, the stock is selling for 18.60 times earnings and yields 3%. Given the lack of earnings growth, I would give the stock a pass.

Silgan Holdings Inc. (NASDAQ:SLGN), together with its subsidiaries, manufactures and sells rigid packaging for shelf-stable food and other consumer goods products worldwide. It operates through three segments: Metal Containers, Closures, and Plastic Containers. Silgan Holdings Inc. (NASDAQ:SLGN) raised its quarterly dividend by 5.90% to 18 cents/share. Over the past decade, Silgan Holdings Inc. (NASDAQ:SLGN) has managed to boost its annual dividends at a rate of 11%/year. This was supported by strong earnings growth. Earnings per share rose from $1.61/share in 2007 to $2.55/share by 2016. Currently, the stock is overvalued at 23.70 times earnings and yields 1.20%. It may be worth researching further, if it dipped below $51/share.