Companies have several means through which they share their prosperity with shareholders. Dividends are the portion of corporate profits paid out to stockholders in the form of cash. Share buybacks on the other hand distributes cash to existing shareholders in exchange for a fraction of the company’s outstanding equity. While both methods have their pros and cons, when used carefully, they could strongly add to the total returns of long-term shareholders.
Several companies announced plans to return billions of dollars to shareholders either through stockbuybacks or dividend increases;
Wal-Mart Stores, Inc. (WMT), which operates retails store in various formats worldwide, approved a new share repurchase program that gives the company authorization to repurchase $15 billion of its shares. That’s after having repurchased $11.5 billion in stock over the past two years. If all the stock were bought at the current prices, the company would be able to retire about 7.5% of its outstanding common stock.
Wal-Mart Stores, Inc. is a dividend aristocrat, which has increased its quarterly dividend in each of the past thirty-five years. The company raised its quarterly dividend by 15% in early march to 0.273/share. The stock currently yields 2.10%.
Despite the fact that I am bullish on the stock, I would still need an initial yield of 3% before I could add to my position there. Wal-Mart has been flat for over a decade now, where any returns were achieved exclusively through dividend reinvestment. If the stock price remained where it’s at for another decade, I would like to at least get some decent return in the form of at least a somewhat decent dividend yield. Currently there are many other dividend growth stocks that yield more than 3%, which still have the same growth characteristics as the Bentonville, AR based retailer.
Cardinal Health (CAH), which provides products and services to the healthcare sector in the United States, announced a 25% increase in its quarterly dividend to $0.175/share. Cardinal Health is a dividend achiever, which has increased its quarterly dividend for twenty consecutive years. The dividend has increased over 11 times over the past decade. The company's focus on dividend expansion creates a predictable and disciplined use of cash to drive shareholder returns and signals confidence and strength in the cash generated by its businesses. The stock currently yields 2.30%. I would be interested in acquiring shares in this global healthcare provider on dips below $24.
Universal Health Realty Income Trust (UHT), which invests in health care and human service related facilities,, increased its quarterly dividend to 59.50 cents per share. Universal Health Realty Income Trust is a dividend achiever, which has increased its quarterly dividend in each of the past twenty-one years. The stock currently yields 7.00%.
As usual, scanning the wires for dividend increases or any dividend news whatsoever is only the beginning in the process of sifting through many stocks, before identifying the best dividend stocks to own for the long run.
Monday, June 8, 2009
Monday, May 25, 2009
Nine Dividend Stocks confident in raising dividends
Several notable companies raised their dividends last week. Dividend raises are not only getting more frequent, but they also seem to be spreading globally as well. A dividend raise in this tough environment indicates confidence in the business and the ability to generate free chas flow. A strong cash flow also enables companies to fund future growth internally, rather than relying exclusively on the capital markets for growth. The companies which decided to share their continued growth with shareholders by rewarding them with a dividend raise include:
Vodafone (VOD), a mobile telecommunications company with operations in Europe, the Middle East, Africa, the Asia Pacific, and the United States., raised its final dividend by 3.5% to 0.052 GBP per share. ADR holders are expected to receive a dividend payment of $0.80 for the second half of 2009 based off current forex rates. Vodafone is an international dividend achiever, which has rewarded its shareholders with an uninterrupted streak of increased dividends for over ten consecutive years. The stock currently yields 4.30%.
ACE Limited (ACE), which provides insurance and reinsurance services to commercial and individual customers worldwide, increased its regular cash dividend by 7% to 31 cents per share. ACE Limited is aninternational dividend achiever, which has increased its quarterly dividend in each of the last fifteen years, which it has more than doubled since 2001. The stock currently yields 2.80%.
Raven Industries, Inc. (RAVN), which manufactures various products for industrial, agricultural, construction, and military/aerospace markets in North America, increased its quarterly dividend by 8% to 14 cents per share. Raven Industries, Inc. is a dividend achiever, which has increased its quarterlydividend in each of the past thirteen years, which it has more than doubled since 2004. The stock currently yields 1.90%.
AAON, INC. (AAON), which engages in the manufacture and sale of air-conditioning and heating equipment, increased its semi-annual cash dividend by 13% to 18 cents per share. AAON, INC. has rewarded its shareholders with an uninterrupted streak of increased dividends since 2006. The stock currently yields 1.70%.
Northrop Grumman Corporation (NOC), which provides products, services, and solutions in information and services, aerospace, electronics, and shipbuilding in the United States, increased its regular cash dividend from 40 cents to 43 cents per share. Northrop Grumman Corporation has rewarded its shareholders with an uninterrupted streak of increased dividends for 5 consecutive years. The stock currently yields 3.60%.
Xcel Energy Inc. (XEL), which engages in the generation, purchase, transmission, distribution, and sale of electricity to residential, commercial, industrial, and public authorities in the United States, boosted its dividend by 3.2% to 24.50 cents per share. Xcel Energy Inc has rewarded shareholders with an uninterrupted streak of increased dividends since 2004. The stock currently yields 5.80%.
Airgas, Inc. (ARG), which is one of the largest U.S. distributor of industrial, medical, and specialty gases, and hardgoods, such as welding equipment and supplies, increased its regular cash dividend by 12.50% from 16 cents to 18 cents per share. Airgas, Inc. has rewarded its shareholders with an uninterrupted streak of increased dividends since 2004. The stock currently yields 1.70%.
Unum Group (UNM), which provides group and individual disability insurance products in the United States and the United Kingdom, raised its quarterly dividend by 10% to 8.25 cents per share. Unum Group lost its dividend achiever status in 2000 and has been unable to consistently increase dividends since then. The stock currently yields 1.80%.
AmerisourceBergen Corporation (NC), a pharmaceutical services company, which offers drug distribution and related services to healthcare providers and pharmaceutical manufacturers, announced its plans to raise quarterly dividends by 20% to $0.06/share after a 2:1 stock split. AmerisourceBergen Corporation has increased dividends for 4 consecutive years. The stock currently yields 1.10%.
I also expect several dividend aristocrats such as Clorox (CLX) and Lowe’s (LOW) to raise their distributions by the end of May, marking it one of the busiest month for dividend increases.
Lowe’s (LOW) has raised its dividend every May since 2004. This dividend growth stock has been raising dividends for 46 consecutive years and has a 5-year dividend growth rate of 46.70%.
Clorox (CLX) has raised its dividend every May over the past 2 years. Before that the board of directors of Clorox tended to announce dividend increases in November for the preceding three years. This dividend growth stock has been raising dividends for 31 consecutive years and has a 5-year dividend growth rate of 11.20%. (analysis)
Full Disclosure: Long CLX
Vodafone (VOD), a mobile telecommunications company with operations in Europe, the Middle East, Africa, the Asia Pacific, and the United States., raised its final dividend by 3.5% to 0.052 GBP per share. ADR holders are expected to receive a dividend payment of $0.80 for the second half of 2009 based off current forex rates. Vodafone is an international dividend achiever, which has rewarded its shareholders with an uninterrupted streak of increased dividends for over ten consecutive years. The stock currently yields 4.30%.
ACE Limited (ACE), which provides insurance and reinsurance services to commercial and individual customers worldwide, increased its regular cash dividend by 7% to 31 cents per share. ACE Limited is aninternational dividend achiever, which has increased its quarterly dividend in each of the last fifteen years, which it has more than doubled since 2001. The stock currently yields 2.80%.
Raven Industries, Inc. (RAVN), which manufactures various products for industrial, agricultural, construction, and military/aerospace markets in North America, increased its quarterly dividend by 8% to 14 cents per share. Raven Industries, Inc. is a dividend achiever, which has increased its quarterlydividend in each of the past thirteen years, which it has more than doubled since 2004. The stock currently yields 1.90%.
AAON, INC. (AAON), which engages in the manufacture and sale of air-conditioning and heating equipment, increased its semi-annual cash dividend by 13% to 18 cents per share. AAON, INC. has rewarded its shareholders with an uninterrupted streak of increased dividends since 2006. The stock currently yields 1.70%.
Northrop Grumman Corporation (NOC), which provides products, services, and solutions in information and services, aerospace, electronics, and shipbuilding in the United States, increased its regular cash dividend from 40 cents to 43 cents per share. Northrop Grumman Corporation has rewarded its shareholders with an uninterrupted streak of increased dividends for 5 consecutive years. The stock currently yields 3.60%.
Xcel Energy Inc. (XEL), which engages in the generation, purchase, transmission, distribution, and sale of electricity to residential, commercial, industrial, and public authorities in the United States, boosted its dividend by 3.2% to 24.50 cents per share. Xcel Energy Inc has rewarded shareholders with an uninterrupted streak of increased dividends since 2004. The stock currently yields 5.80%.
Airgas, Inc. (ARG), which is one of the largest U.S. distributor of industrial, medical, and specialty gases, and hardgoods, such as welding equipment and supplies, increased its regular cash dividend by 12.50% from 16 cents to 18 cents per share. Airgas, Inc. has rewarded its shareholders with an uninterrupted streak of increased dividends since 2004. The stock currently yields 1.70%.
Unum Group (UNM), which provides group and individual disability insurance products in the United States and the United Kingdom, raised its quarterly dividend by 10% to 8.25 cents per share. Unum Group lost its dividend achiever status in 2000 and has been unable to consistently increase dividends since then. The stock currently yields 1.80%.
AmerisourceBergen Corporation (NC), a pharmaceutical services company, which offers drug distribution and related services to healthcare providers and pharmaceutical manufacturers, announced its plans to raise quarterly dividends by 20% to $0.06/share after a 2:1 stock split. AmerisourceBergen Corporation has increased dividends for 4 consecutive years. The stock currently yields 1.10%.
I also expect several dividend aristocrats such as Clorox (CLX) and Lowe’s (LOW) to raise their distributions by the end of May, marking it one of the busiest month for dividend increases.
Lowe’s (LOW) has raised its dividend every May since 2004. This dividend growth stock has been raising dividends for 46 consecutive years and has a 5-year dividend growth rate of 46.70%.
Clorox (CLX) has raised its dividend every May over the past 2 years. Before that the board of directors of Clorox tended to announce dividend increases in November for the preceding three years. This dividend growth stock has been raising dividends for 31 consecutive years and has a 5-year dividend growth rate of 11.20%. (analysis)
Full Disclosure: Long CLX
Saturday, April 25, 2009
10 Weekend Links
Sometimes I get 10 interesting links to share with my readers. This weekend i am continuing my linkfest with the following articles:
The Kirk Report outlined a list of "The World's Most Ethical Companies, which have outperformed the stockmarket since 2002.Canadian Capitalist asked his readers about the books they love to read.
DividendsValue discussed the concept of International Income Investing. Make sure to check his analysis of McDonald's Corporation on Div-Net as well.
The Dividend Guy is analyzing the effect of Fixed Income on his Asset Allocation.
Dividend Tree analyzed Qualcomm.
Wide Moad Investing keeps analyzing Buffett's letters to shareholders. He is up to 1981 now. WMI has 28 more years to analyze.
It's not just Warren Buffett who likes the railways - The Money Gardener is bullish on canadian pacific.
Jae from Old School Value reminiscenses on his stock market experiences in How to Invest In the Stock Market-Background
Blogger Pinyo from Moolanomy has created a headlines aggregator called Great Nexus. Make sure to check it out.
Get Rich Slowly has an interesting post on Harry Browne’s Permanent Portfolio.
Saturday, March 21, 2009
Ten Links for March 21, 2009
As a new feature on the blog, I am adding the ten articles from around the blogosphere that I enjoyed. Check out the links below:
Barron's Electronic Investor has a nice overview of dividend investing resources available to investors inWhere to Find High, Safe Stock Yields. Yours truly was also featured in there.
Canadian Capitalist analyzed the Toronto Star article on Derek Foster, the self proclaimed "Canadian Youngest Retiree" and also gave us several reasons why Selling puts isn’t “money for nothing”.
Four-Pillars also analyzed the Derek Foster story in Is Dividend Investing Dead? The Derek Foster Story. He also hosted Edition #197 of Carnival of Personal Finance and included my post on master limited partnerships.
DividendsValue wrote about something that has been on my mind for months now -Should You Sell A Dividend Stock After A Dividend Freeze?. While I disagree with him on selling after a dividend freeze, since historic data does not support this decision, the article is showing how one could have cut their losses significantly.
Jason Kelly reviewed the most recent ebook from Dave Van Knapp of SensibleStocks.com titled "The Top 40 Dividend Stocks For 2009". Check out the book description from this page.
This article provides an opposing view to mine on dividend cuts and suspensions. Not Paying a Dividend is Now a Sign of Prudence.
Barron's Electronic Investor has a nice overview of dividend investing resources available to investors inWhere to Find High, Safe Stock Yields. Yours truly was also featured in there.
Canadian Capitalist analyzed the Toronto Star article on Derek Foster, the self proclaimed "Canadian Youngest Retiree" and also gave us several reasons why Selling puts isn’t “money for nothing”.
Four-Pillars also analyzed the Derek Foster story in Is Dividend Investing Dead? The Derek Foster Story. He also hosted Edition #197 of Carnival of Personal Finance and included my post on master limited partnerships.
DividendsValue wrote about something that has been on my mind for months now -Should You Sell A Dividend Stock After A Dividend Freeze?. While I disagree with him on selling after a dividend freeze, since historic data does not support this decision, the article is showing how one could have cut their losses significantly.
Jason Kelly reviewed the most recent ebook from Dave Van Knapp of SensibleStocks.com titled "The Top 40 Dividend Stocks For 2009". Check out the book description from this page.
This article provides an opposing view to mine on dividend cuts and suspensions. Not Paying a Dividend is Now a Sign of Prudence.
Cliff Wachtel wrote a post in 5 parts titled "The High Dividend Stock Investor's Collapsing Dollar Survival Guide".
StockerBlog made a list of Monthly Dividend Stocks. Dividend Growth Investor readers know however that one could create a portfolio for monthly income,even if dividends are paid out every quarter.
TJ Smith from Bullish Bankers provided a list with "Five Dividends to Count On".
Disciplined Approach to Investing gave us an overview of Oracle Corp: New Dividend and Currency Impact. Cash Rich tech companies are starting to pay out dividends to shareholders.
Saturday, February 28, 2009
As goes January so goes the year – Testing the January Barometer
Warren Buffett’s iconic letter to shareholders has been published on Berkshire Hathaway's website. The legendary chairman of Berkshire Hathaway has been writing this annual letter for more than 32 years. In it he summarizes the performance of the various businesses that make up the portfolio of his conglomerate. The Oracle of Omaha often gives insight on his decision making process, when making investments.
Of particular importance to me were his words on his reduction of stakes in Johnson and Johnson (JNJ),Procter and Gamble (PG) and Conoco Phillips (COP):
"On the plus side last year, we made purchases totaling $14.5 billion in fixed-income securities issued by Wrigley, Goldman Sachs and General Electric. We very much like these commitments, which carry high current yields that, in themselves, make the investments more than satisfactory. But in each of these three purchases, we also acquired a substantial equity participation as a bonus. To fund these large purchases, I had to sell portions of some holdings that I would have preferred to keep (primarily Johnson & Johnson, Procter & Gamble and ConocoPhillips). However, I have pledged – to you, the rating agencies and myself – to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits."
I speculated before that one reason why he might be selling solid dividend stocks such as Johnson & Johnson and Procter and Gamble could be that they haven’t fallen as much as the broader market, which makes them ideal for Buffett to deploy the funds in other beaten down sectors. Another reason could be that he needs to raise as much cash as possible, in order to participate in other preferred stock or fixed income deals, where he could earn a 10%-15% annual dividend yield, with very favorable terms for his company. Ordinary investors do not however have the purchasing power to participate in such favorable deals at this time.
Buffett also spend several pages discussing derivatives and shortcomings of the Black Scholes option-pricing model.
Of particular importance to me were his words on his reduction of stakes in Johnson and Johnson (JNJ),Procter and Gamble (PG) and Conoco Phillips (COP):
"On the plus side last year, we made purchases totaling $14.5 billion in fixed-income securities issued by Wrigley, Goldman Sachs and General Electric. We very much like these commitments, which carry high current yields that, in themselves, make the investments more than satisfactory. But in each of these three purchases, we also acquired a substantial equity participation as a bonus. To fund these large purchases, I had to sell portions of some holdings that I would have preferred to keep (primarily Johnson & Johnson, Procter & Gamble and ConocoPhillips). However, I have pledged – to you, the rating agencies and myself – to always run Berkshire with more than ample cash. We never want to count on the kindness of strangers in order to meet tomorrow’s obligations. When forced to choose, I will not trade even a night’s sleep for the chance of extra profits."
I speculated before that one reason why he might be selling solid dividend stocks such as Johnson & Johnson and Procter and Gamble could be that they haven’t fallen as much as the broader market, which makes them ideal for Buffett to deploy the funds in other beaten down sectors. Another reason could be that he needs to raise as much cash as possible, in order to participate in other preferred stock or fixed income deals, where he could earn a 10%-15% annual dividend yield, with very favorable terms for his company. Ordinary investors do not however have the purchasing power to participate in such favorable deals at this time.
Buffett also spend several pages discussing derivatives and shortcomings of the Black Scholes option-pricing model.
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