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Next DRIP Candidate: Raven Industries, Inc. (RAVN)

19 May 2011 11 Comments

If you follow my blog, you know I have two DRIPs (Dividend Reinvestment Plans) which are active and which I invest money on a monthly basis.  The dividends reinvest and the result is a nice position in specific stocks over time.  The two plans I currently have active are Wal-Mart Stores, Inc. (WMT) and McDonald’s Corp (MCD).  Now, it’s time to consider a third plan and it’s much different than these other two companies.

The company is Raven Industries, Inc. (RAVN).  As you’ll see, it has all the makings of a great long-term dividend investment.

Some Background…. Raven is headquartered in Sioux Falls, South Dakota.  The company started off as a scientific balloon company with clients like the Air Force and some Universities.  Now, the company has four primary divisions as follows:

  1. Applied Technology – A booming division that supplies precision agricultural products to the ag industry
  2. Engineered Films – Industrial plastics
  3. Electronic Systems – Electronics manufacturing services and products
  4. Aerostar – the balloon division still performing very well

In the quarterly results just posted this week, the company knocked it out of the park with double digit revenue growth in each of the four divisions.  Overall sales increased 19% to $101.5 million from $85 million in the quarter a year ago.

As you can see these aren’t huge numbers like Walmart and McDonalds.  This is a smaller company.  In fact, the market cap is just under a billion.

With that said, this company has a long history of incredible growth and value.  The company has had a dividend for 39 consecutive years and has increased it annually for 25 straight years.  Oh yeah, and whenever they have excess cash, they do special dividends like the one in September last year for $1.25 a share (over and above the regular quarterly dividend).  One other thing… they have no debt either.

It’s an incredible well-run company, sort of off the radar of most investors.  Exactly what we’re looking for.

Now, the stock has had a bit of a run (like most stocks) so it’s not in an ideal buying range.  With the recent quarter announcement, the stock shot up a little bit more.  It’s not at it’s 52-week highs, but it’s not far off either.  Ideally, I’d rather be buying this stock closer to $45/share, but as I’m initiating a DRIP, I’m not too concerned about the price on my first few shares I buy.

Take a look at this company, and see if it might make sense in your portfolio.  I think it’s a great company that relentlessly pays investors with a growing dividend.

11 Comments »

  • Jon said:

    Anything with ag and farming could be huge. I just want to be the one buying the equipment to farm…in Iowa!

  • Brandy said:

    Dividend.com says, "Based on our rating criteria, this stock has achieved a "Neutral" rating. Stocks with a neutral rating are considered mediocre investments in terms of expected price growth and dividend payments." I am not an expert on DRIPs and have just started investing in them this year. I have been using Dividend.com's Best Dividend Stock List to choose which stocks I invest in and both MCD and WMT are on the list. I wonder why you suggest this stock and they don't. Is their formula wrong in some way or do you know something they don't?

  • 20smoney said:

    Not sure, but I don't pay much attention to the ratings on various websites. I'd recommend reading the CEO's letter to shareholders and looking at some of their recent filings.

  • 20smoney said:

    I'm not a premium dividend.com member, if you want to email me the entire analysis they provide on RAVN, I'll let you know what I think about it.

    Thx

  • Brandy said:

    I am not sure how to email you?

  • ratesConverter said:

    I will keep the board posted on what they plan to do. The piece seems super cheap.

  • John Barker said:

    ratesConverter, the price is insane. Im not sure how you can say it seems super cheap. in fact, it is extremely expensive.
    I believe you could have it under $30 on the next downturn which would probably come within 2 years (3-4 years to reach bottom/ S&P500 below 40% off the high then).

    It does look good but probably I would get an entry at $30 and buy more on the dip. It will be a bargain below $18 (it might not get there though).

  • Penny said:

    Hi, how do you set up a DRIP account?

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  • Dion Takacs said:

    There are some interesting deadlines in this article however I don?t know if I see all of them middle to heart. There may be some validity however I will take hold opinion till I look into it further. Good article , thanks and we wish extra! Added to FeedBurner as effectively

  • JPo said:

    RAVN's dividend is not great at ~1%. Furthermore, it is expensive. I wouldn't buy just for the DRIP.

    However, the fundamentals of the company are excellent… I bought some shares back in late 2010 at $44. I intend to hold it for quite a few years (and yes, I have it DRIPping).