A set of stable, quality companies with growing earnings is my idea of a great portfolio. Companies that pay dividends that grow over time are even better. The following three companies have done just that this year.
Coca Cola Amatil (ASX: CCL)
Ever reliable Coca Cola Amitil reported struggling sales in Australia for 2013, however still bottled an increase in revenue of 3.4% thanks to a huge 15% earnings growth out of Indonesia. Although CCL maintained its interim ordinary dividend of 24 cents per share (cps), it issued a special unfranked dividend of 2.5cps, which brought the dividend up to 26.5 cps, an increase of 10.4% over the prior period.
Since 2009 CCL has increased its dividend over 43%, and with the company looking to capitalize on its incredibly valuable distribution network and get into the market for alcoholic beverages, time will likely see this continue to grow.
NIB Insurance (ASX: NHF)
Medical insurance provider NIB Insurance has made good work of growing revenue and earnings steadily over the last five years with some regulatory challenges. The company has just completed the NIB rebrand of its New Zealand division after acquiring Tower Medical Insurance late last year and can begin its next phase of organic growth.
Despite a slight dip in gross margin in 2013, earnings per share were up 3.4%. This set NIB up for a fully franked final dividend of 5 cps. For the year, NIB’s total dividend was increased by 8.1% to 10 cps. NIB’s strategy is one set for continued, steady growth and should keep growing over time.
Kathmandu (ASX: KMD)
Eighteen months ago, outdoor goods retailer Kathmandu was desperately unloved by investors. Sales, which are particularly vulnerable to seasonal demand, were slow and shares could be picked up for just $1 each. Despite going through a period of tough sales and sluggish growth the company has picked up its game and shares have surged to close yesterday at $3.01.
Strong online sales growth helped Kathmandu’s earnings per share (EPS) increased from NZ$0.17 to NZ$0.22.1 in 2013 with the dividend being increased from 10 to 12 cps, or 20%.
Quality and growth are one side of the coin. The other side is a great price. Adding all three to your watch list for potential weakness in price could help you pick these companies up for a song.
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Motley Fool contributor Regan Pearson owns shares in NIB Insurance.