Universal Corporation: Evergreen in the Dividend Universe

Universal Corporation (NYSE:UVV) secures an impressive position on our list of Dividend Champions with 54 consecutive years of dividend increases. This list features companies that have demonstrated at least 25 consecutive years of steady dividend growth and offer dividend yields exceeding 4%. These so-called Dividend Champions differ from Dividend Aristocrats in that they are not necessarily part of the S&P Index. Both, however, share a long history of increasing dividends. Especially during turbulent periods like the recent pandemic, these companies have distinguished themselves by maintaining consistent payouts. Although dividend stocks have recently lagged behind the growth-intensive tech sector, the value of continuous income streams remains indisputable. Analysts like Subramanian from BofA are optimistic about the prospects for dividend stocks. Should the Fed lower interest rates or refrain from further hikes, companies could take out lower-cost loans to maintain their dividend payments. This robust strategy offers income investors a variety of options through mutual funds or ETFs. By the end of the fourth quarter of 2023, US companies held an impressive $3.61 trillion in liquid assets, facilitating significant dividend increases. Janus Henderson reports that US firms distributed $161.5 billion in dividends in the second quarter of 2024, an increase of 8.6%. This increased capital allocation underscores the extensive dividend capabilities of American companies. Universal Corporation, a global supplier of raw tobacco, recorded revenue of $597 million in the first quarter of fiscal year 2025, a 15.3% increase compared to the prior year. The strong results, driven by higher sales volumes and prices, reflect the sustained high demand from tobacco customers. The company is strategically well-positioned to meet this demand, particularly through accelerated tobacco purchases in dynamic markets. With a solid balance sheet and a cash balance of $102 million, Universal Corporation provides a quarterly dividend of $0.81 per share, which was increased by 1% in May this year. This financial stability makes UVV an attractive choice for dividend investors, even though some experts point to the greater potential of AI stocks. UVV ranks fifth on our Dividend Champions list, and while it remains an attractive investment, we believe certain AI stocks offer higher yield potential over shorter periods.