In past articles we have discussed why the strongest dividend stocks often boast years of dividend growth. Investors just getting acclimated to the market should look to target these kind of income-yielding equities as they get their feet wet. The low interest rate environment over the past decade has made stocks like these even more attractive.
Today we are going to look at two stocks that qualify as dividend aristocrats. That is a stock that has achieved at least 25 consecutive years of dividend growth. New investors who are seeking income should consider these two stocks in May.
Fortis owns and operates utility transmission and distribution assets in Canada and the United States. Shares had climbed 10% in 2019 as of close on May 13. The stock was up 18% from the prior year. Fortis is a stellar option for new and old investors.
Never mind its status as a dividend aristocrat: Fortis is well on its way to snatching up a dividend crown. Dividend kings are stocks that have achieved at least 50 consecutive years of dividend growth. Fortis has currently achieved 45 consecutive years of dividend growth.
The company had a solid first quarter as adjusted earnings per share rose to $0.74 compared to $0.70 in Q1 2018. Fortis boasts a wide economic moat, with 99% of its businesses now regulated. Its $17.3 billion five-year capital plan is expected to increase its rate base from $26.1 billion in 2018 to $35.5 billion in 2023, which will support its planned annual dividend growth of approximately 6% through 2023.
Fortis last paid out a quarterly dividend of $0.45 per share, representing a 3.5% yield.
Toromont Industries (TSX:TIH)
Toromont Industries is an Ontario-based industrial company that operates through its Equipment Group segment and CIMCO segment. The Equipment Group segment boasts a Caterpillar dealership and a rental operation of construction equipment. Shares of Toromont had climbed 10.5% in 2019 as of close on May 13. The stock was up 5% from the prior year.
Toromont has achieved 29 consecutive years of dividend growth. In the first quarter of 2019, Toromont saw revenues climb 3% from the prior year to $700 million. Net earnings increased 28% year-over-year to $39.3 million and earnings per share rose 27% to $0.48. The board of directors announced a quarterly dividend of $0.27 per share. In the prior quarter, Toromont hiked its dividend by 17%, and the company now boasts a 1.8% yield.
Toromont stock has dipped sharply after its first-quarter earnings report. Trade tensions between the United States and China have rattled markets, and Toromont has suffered from the fallout. The stock had an RSI of 16 as of close on May 13, putting shares well into technically oversold territory.
The buy signal should pique investor interest, but continued trade drama has the potential to produce even more attractive entry points in the late spring and early summer.
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Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.