A body in motion tends to stay in motion unless acted on by an outside force. The following dividendpayers kept the dividend momentum coming, by raising distributions to shareholders. What is particularly interesting is the fact that most of them have raised distributions consistently for more than one or two decades each. This is essentially what successful dividend growth investing is all about – finding a dividend grower in the early stages that keeps paying increasing amounts of dividends each and every year for years to come.
The companies which raised distributions include:
McCormick & Company (MKC), which engages in the manufacture, marketing, and distribution of flavor products and other specialty food products to the food industry worldwide, increased its quarterly dividend by 8.30% to 26 cents per share. McCormick & Company is a dividend achiever, which has increased its quarterly dividend in each of the past twenty three years. The stock currently yields 2.60%.
The York Water Company (YORW), which engages in impounding, purifying, and distributing drinking water in Pennsylvania, increased its quarterly dividend by 1.60% to 12.80 cents per share. This marked the thirteenth consecutive year that this dividend achiever has raised its distributions. The stock currently yields 3.40%.
Hormel Foods Corp. (HRL), which engages in the production and marketing of various meat and food products in the United States and internationally, increased its quarterly dividend by 15% to 21 cents per share. Hormel Foods Corp. is a dividend champion, which has increased its quarterly dividend in each of the past forty-four years. The stock currently yields 2.00%.
Becton, Dickinson and Company (BDX), a medical technology company, which develops, manufactures, and sells medical supplies, devices, laboratory equipment, and diagnostic products worldwide, increased its quarterly dividend by 12.10% to 37 cents per share. Becton, Dickinson and Company is a dividend aristocrat, which has increased its quarterly dividend in each of the past thirty-seven years. The stock currently yields 1.70%.
United Bankshares, Inc. (UBSI), which provides commercial and retail banking services and products, increased its quarterly dividend by 3.4% to 30 cents per share. This marked the 36th consecutive year of dividend increases to United shareholders. The stock currently yields 6.70%.
Roper Industries, Inc. (ROP), which engages in designing, manufacturing, and distributing energy systems and controls, scientific and industrial imaging products and software, industrial technology products, and radio frequency products and services, raised its quarterly dividend by 15% to 9.5 cents per share. This is the seventeenth consecutive year of dividend increases for this dividend achiever. The stock currently yields 0.60%.
Oritani Financial Corp. (ORIT), which provides banking services to individual and business customers in New Jersey, increased its quarterly dividend by 50% to 7.5 cents per share. The stock currently yields 2.30%.
RGC Resources, Inc. (RGCO), which operates as an energy services company, increased its quarterly dividend by 3% to 33 cents per share. RGC Resources, Inc. has increased its quarterly dividend in each of the past five years. The stock currently yields 4.70%.
This list is only a starting point in the process of weeding out companies in the pursuit of identifying promising candidates however. As the market has gone ahead of itself in recent months, a wise move might be to wait for weakness in the broad averages before initiating a position in any of the above names, after researching them thoroughly.
Friday, November 27, 2009
Thursday, October 1, 2009
$50 Tradeking Promotion
Tradeking, which is one of the best rated online discount brokers in the US, is offering a $50 bonus to new customers who open an account with them by October 31. In order to be eligible for the bonus, you have to do the following things:
1) Use this link to access the special promotion, which would land you to a special page:Open a TradeKing account today and get a $50 signing bonus!
2) When you open and fund your account with at least $2,500 and make your first trade within 180 days of account opening, you will receive a $50 bonus deposited into your account.
3) You have to be a new client to participate in this offer.
Open a TradeKing account today and get a $50 signing bonus!
Here's what the offer page says:
"To qualify for this offer, new accounts must be opened and funded with $2,500 or more. Account fundingmust occur within 30 days of account opening, and one trade must be executed within 180 days of account opening, for account to qualify. Offer is not transferable or valid in conjunction with any other offer. Open to US residents only. One offer per household. TradeKing can modify or discontinue this offer at anytime without notice. The minimum funds of $2,500 must remain in the account (minus any tradinglosses) for a minimum of 6 months or the credit may be surrendered. Other restriction may apply."
1) Use this link to access the special promotion, which would land you to a special page:Open a TradeKing account today and get a $50 signing bonus!
2) When you open and fund your account with at least $2,500 and make your first trade within 180 days of account opening, you will receive a $50 bonus deposited into your account.
3) You have to be a new client to participate in this offer.
Open a TradeKing account today and get a $50 signing bonus!
Here's what the offer page says:
"To qualify for this offer, new accounts must be opened and funded with $2,500 or more. Account fundingmust occur within 30 days of account opening, and one trade must be executed within 180 days of account opening, for account to qualify. Offer is not transferable or valid in conjunction with any other offer. Open to US residents only. One offer per household. TradeKing can modify or discontinue this offer at anytime without notice. The minimum funds of $2,500 must remain in the account (minus any tradinglosses) for a minimum of 6 months or the credit may be surrendered. Other restriction may apply."
Friday, September 4, 2009
Sherwin-Williams (SHW) Dividend Stock Analysis
The Sherwin-Williams Company engages in the development, manufacture, distribution, and sale of paints, coatings, and related products. It operates in three segments: Paint Stores Group, Consumer Group, and Global Finishes Group. The company, which has raised dividends for 31 consecutive years, is a member of the S&P Dividend Aristocrats index. Back in February 2009 Sherwin-Williams announced a 1.40% dividend increase.
Over the past decade this dividend growth stock has delivered an average total return of 5.70% annually. Sherwin-Williams’ stock price is currently trading almost 20% lower from its all-time highs set in 2007.
The company has managed to deliver a 9.30% average annual increase in its EPS between 1999 and 2008. Sherwin-Williams is expected to earn $3.60 share in FY 2009, followed by $4.10/share in FY 2010. Despite the housing crisis, and expectations of 10% declines in sales for Sherwin-Williams, homeowners would still need to use paint in order to freshen the look of their houses. Home renovation and remodelingprojects could be a driver for growth even in a slow economy. Residences are typically the largest investment for homeowners, who tend to spend regularly on maintenance and improvement projects in order to increase their values.
I believe that the company has a strong cash flow generation ability, which should serve it well in the longer term. Strategic acquisitions could add to growth, as could new store openings abroad.
The Return on Equity has generally trended upwards, and has stayed above 20% over the past 7 years. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
Annual dividends have increased by an average of 12.60% annually since 1999, which is higher than the growth in EPS. The company has also managed to decrease the number of dillluted shares outstanding from 168 million in 1999 to 117 million in 2008 through share repurchases. In 2008, the Sherwin-Williams purchased 7.25 million shares of its common stock in the open market, and continued its policy of paying out approximately 30% of the previous year’s diluted net income per share in the form of a cash dividend.
A 12 % growth in dividends translates into the dividend payment doubling every six years. If we look at historical data, going as far back as 1989, Sherwin-Williams has actually managed to double its dividendpayment every seven years on average.
The dividend payout ratio has largely remained under 40% over the past decade, with the exception of 2000. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Sherwin-Williams is trading at 16.70 times earnings, yields 2.40% and has an adequately covered dividend payment. I would be looking forward to adding to my position in Sherwin-Williams (SHW) on dips below $48.
Over the past decade this dividend growth stock has delivered an average total return of 5.70% annually. Sherwin-Williams’ stock price is currently trading almost 20% lower from its all-time highs set in 2007.
The company has managed to deliver a 9.30% average annual increase in its EPS between 1999 and 2008. Sherwin-Williams is expected to earn $3.60 share in FY 2009, followed by $4.10/share in FY 2010. Despite the housing crisis, and expectations of 10% declines in sales for Sherwin-Williams, homeowners would still need to use paint in order to freshen the look of their houses. Home renovation and remodelingprojects could be a driver for growth even in a slow economy. Residences are typically the largest investment for homeowners, who tend to spend regularly on maintenance and improvement projects in order to increase their values.
I believe that the company has a strong cash flow generation ability, which should serve it well in the longer term. Strategic acquisitions could add to growth, as could new store openings abroad.
The Return on Equity has generally trended upwards, and has stayed above 20% over the past 7 years. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
Annual dividends have increased by an average of 12.60% annually since 1999, which is higher than the growth in EPS. The company has also managed to decrease the number of dillluted shares outstanding from 168 million in 1999 to 117 million in 2008 through share repurchases. In 2008, the Sherwin-Williams purchased 7.25 million shares of its common stock in the open market, and continued its policy of paying out approximately 30% of the previous year’s diluted net income per share in the form of a cash dividend.
A 12 % growth in dividends translates into the dividend payment doubling every six years. If we look at historical data, going as far back as 1989, Sherwin-Williams has actually managed to double its dividendpayment every seven years on average.
The dividend payout ratio has largely remained under 40% over the past decade, with the exception of 2000. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Sherwin-Williams is trading at 16.70 times earnings, yields 2.40% and has an adequately covered dividend payment. I would be looking forward to adding to my position in Sherwin-Williams (SHW) on dips below $48.
Monday, August 31, 2009
Altria Group's 6% Dividend Hike
When companies decide to share a portion of their earnings with their shareholders, it is a sign of prudent fiscal discipline. Shareholders who are rewarded on a timely basis in the form of dividend payments are less likely to sell their holdings, even during a steep market correction. However, when companies decide to raise their distributions they exert strong confidence in their near-term performance. This dividend increase is a strong bullish signal especially if it comes after a long string of consecutive dividend increases.
Several companies announced that their boards of directors have approved dividend increases. The companies include:
Altria Group, Inc. (MO), which engages in the manufacture and sale of cigarettes and other tobacco products in the United States, increased its quarterly dividend by 6.3% to 34 cents per share. The stock currently yields 7.50%. Check my analysis of the stock.
MGE Energy, Inc. (MGEE), which engages in generating, purchasing, transmitting, and distributing electricity, increased its quarterly dividend by 8% to 14 cents per share. MGE Energy, Inc. is a dividend achiever, which has increased its quarterly dividend for 34 consecutive years. The stock currently yields 3.90%.
HCC Insurance Holdings, Inc. (HCC), which provides property and casualty, surety, group life, accident, and health insurance coverage, as well as related agency and reinsurance brokerage services to commercial customers and individuals., increased its quarterly dividend by 8% to 13.50 cents per share. HCC Insurance Holdings, Inc. is a dividend achiever, which has increased its quarterly dividend in each of the past thirteen years. The stock currently yields 1.90%.
Delta Natural Gas Company, Inc. (DGAS), which sells and distributes or transports natural gas to customers in central and southeastern Kentucky., increased its quarterly dividend by 1.6% to 32.50 cents per share. The company has raised dividends consistently since 2005. The stock currently yields 5.20%.
G&K Services, Inc. (GKSR), which provides branded identity apparel and facility services programs in North America., increased its quarterly dividend by 7% to 7.5 cents per share The stock currently yields only 1.30%.
Alliance Financial Corporation (ALNC), which which provides various banking products and services to commercial, retail, government, and investment management customers, increased its quarterly dividend by 7.7% to 28 cents per share. The stock currently yields 4.00%.
Guess?, Inc. (GES), which designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children., increased its quarterly dividend by 25% to 12.5 cents per share. The stock currently yields 1.40%.
ESSA Bancorp, Inc. (ESSA), which provides financial services to individuals, families, and businesses in Pennsylvania, increased its quarterly dividend by 25% to 5 cents per share. The stock currently yields only 1.20%.
Harris Corporation (HRS), which operates as a communications and information technology company that serves government and commercial markets worldwide, increased its quarterly dividend by 10% to 22 cents per share. The stock currently yields 1.90%.
Several companies announced that their boards of directors have approved dividend increases. The companies include:
Altria Group, Inc. (MO), which engages in the manufacture and sale of cigarettes and other tobacco products in the United States, increased its quarterly dividend by 6.3% to 34 cents per share. The stock currently yields 7.50%. Check my analysis of the stock.
MGE Energy, Inc. (MGEE), which engages in generating, purchasing, transmitting, and distributing electricity, increased its quarterly dividend by 8% to 14 cents per share. MGE Energy, Inc. is a dividend achiever, which has increased its quarterly dividend for 34 consecutive years. The stock currently yields 3.90%.
HCC Insurance Holdings, Inc. (HCC), which provides property and casualty, surety, group life, accident, and health insurance coverage, as well as related agency and reinsurance brokerage services to commercial customers and individuals., increased its quarterly dividend by 8% to 13.50 cents per share. HCC Insurance Holdings, Inc. is a dividend achiever, which has increased its quarterly dividend in each of the past thirteen years. The stock currently yields 1.90%.
Delta Natural Gas Company, Inc. (DGAS), which sells and distributes or transports natural gas to customers in central and southeastern Kentucky., increased its quarterly dividend by 1.6% to 32.50 cents per share. The company has raised dividends consistently since 2005. The stock currently yields 5.20%.
G&K Services, Inc. (GKSR), which provides branded identity apparel and facility services programs in North America., increased its quarterly dividend by 7% to 7.5 cents per share The stock currently yields only 1.30%.
Alliance Financial Corporation (ALNC), which which provides various banking products and services to commercial, retail, government, and investment management customers, increased its quarterly dividend by 7.7% to 28 cents per share. The stock currently yields 4.00%.
Guess?, Inc. (GES), which designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children., increased its quarterly dividend by 25% to 12.5 cents per share. The stock currently yields 1.40%.
ESSA Bancorp, Inc. (ESSA), which provides financial services to individuals, families, and businesses in Pennsylvania, increased its quarterly dividend by 25% to 5 cents per share. The stock currently yields only 1.20%.
Harris Corporation (HRS), which operates as a communications and information technology company that serves government and commercial markets worldwide, increased its quarterly dividend by 10% to 22 cents per share. The stock currently yields 1.90%.
In summary I view Altria's dividend increase as a bullish sign for the company stock. The company seems to be following its policy of consistent dividend increases that it used to follow before the spin-offs of Philip Morris International (PM) and Kraft Foods (KFT) I do however also own some Philip Morris Internationalin order to benefit from international exposure to the tobacco sector.
Tuesday, July 28, 2009
AT&T/ Centennial Communications Merger Arbitrage Opportunity
Reader Saku tipped me on an interesting merger arbitrage opportunity, which has a large spread for arbitrageurs. In essence, AT&T (T) is acquiring Centennial Communications (CYCL) for $8.50/share, which was announced back in November 2008. The acquisition has been approved by Centennial's stockholders in February 2009 and remains subject to approval by the Department of Justice and Federal Communications Commission and other customary closing conditions. Once the transaction is complete AT&T would sell some assets in Louisiana and Mississippi to Verizon (VZ) for $240 million. If the merger between CYCL and AT&T occurs as planned, the sale of the assets to Verizon would close by 4Q 2009. The deal was expected to enhance AT&T's (T) coverage in Puerto Rico, the US Virgin Islands in addition to the rural Midwest.
Centennial Communications Corp. (Centennial) is a regional wireless and broadband telecommunications service provider serving over 1.1 million wireless customers and approximately 582,200 access line equivalents in markets covering approximately 13 million Net Pops in the United States and Puerto Rico. In the United States, it is a regional wireless service provider in small cities and rural areas in two geographic clusters covering parts of six states in the Midwest and Southeast.
Up until July 13, in 2009 Centennial Communication (CYCL) traded at a small discount of 1% to 5% to the $8.50 offer price. In February 2009, John Paulson showed a 5,000,000-share position in Centennial (CYCL) in his funds 13-F filing with the SEC.
Back on July 8, AT&T announced that it expects to close the deal by the third quarter, because of added regulatory scrutiny. On July 14 however, the stock dropped 9.50% on above average volumes. Currently the stock is trading at $7.38, which is a 13.1% discount to the offer price. What might have been the reasons for this drop?
I found an interesting article from Bloomberg, explaining the reason for the drop: (source)
“Stifel Nicolaus & Co. said the carriers may have to review the terms of the deal. The U.S. Justice Department and the Federal Communications Commission are scrutinizing the transaction. The combined company would control 40 percent of Puerto Rico’s wireless market, which may prompt regulators to force AT&T to divest some assets, Stifel analyst Christopher King said today in an interview. Selling the Puerto Rican wireless business, which accounts for about a third of Centennial’s revenue, may causeAT&T to cut its offer, he said. “We’re clearly in a different antitrust environment,” said King, who is based in Baltimore. “This is certainly the first significant opportunity that the Obama administration will have had in the telecom sector to lay down the law.”
AT&T hasn’t been asked to divest assets in Puerto Rico, said McCall Butler, a spokeswoman. Steve Kunszabo, director of investor relations for Centennial, didn’t immediately return a call seeking comment.
AT&T, the second-biggest U.S. wireless carrier, and Verizon Communications Inc., its larger rival, swapped assets in May to appease concerns that AT&T’s Centennial purchase would hurt competition.”
While I agree that regulatory challenges are tough to predict, I believe that the small size of Centennial Communications (CYCL) could allow the merger to go through and close by the end of 2009. The problem with Puerto Rico is that it is viewed as a separate US territory, which is considered by regulators as somewhat between a colony and an independent state. Thus, Centennials 33%-40% share of the market there, in addition to AT&T’s market share could require more flexibility for the two carriers when dealing with regulators. The Puerto Rico wireless market is highly competitive however. In Puerto Rico, Centennial competes with five other wireless carriers: America Movil, AT&T Mobility, Open Mobile, Sprint Nextel, and T-Mobile. Thus, AT&T might have to sell other assets in order to appeal to regulators, in order for the deal to go through. I doubt that this would affect the offer price for Centennial Communications (CYCL).
I do believe that AT&T (T) would eventually acquire Centennial Communications (CYCL) at the price, agreed upon in 2008. At current levels of $7.38, the upside is 15.2%. If the deal falls through however,shares of the acquired company would most likely drop to $4. I would put a limit order for a small position in CYCL. It is important not to bet the farm on merger arbitrage opportunities. One of the reasons for the decline in the stock price could also be quick-tempered overleveraged arbitrageurs closing their positions in order to avoid margin calls, which happened with Anheuser Busch and Constellation Energy (CEG) deals.
Centennial Communications Corp. (Centennial) is a regional wireless and broadband telecommunications service provider serving over 1.1 million wireless customers and approximately 582,200 access line equivalents in markets covering approximately 13 million Net Pops in the United States and Puerto Rico. In the United States, it is a regional wireless service provider in small cities and rural areas in two geographic clusters covering parts of six states in the Midwest and Southeast.
Up until July 13, in 2009 Centennial Communication (CYCL) traded at a small discount of 1% to 5% to the $8.50 offer price. In February 2009, John Paulson showed a 5,000,000-share position in Centennial (CYCL) in his funds 13-F filing with the SEC.
Back on July 8, AT&T announced that it expects to close the deal by the third quarter, because of added regulatory scrutiny. On July 14 however, the stock dropped 9.50% on above average volumes. Currently the stock is trading at $7.38, which is a 13.1% discount to the offer price. What might have been the reasons for this drop?
I found an interesting article from Bloomberg, explaining the reason for the drop: (source)
“Stifel Nicolaus & Co. said the carriers may have to review the terms of the deal. The U.S. Justice Department and the Federal Communications Commission are scrutinizing the transaction. The combined company would control 40 percent of Puerto Rico’s wireless market, which may prompt regulators to force AT&T to divest some assets, Stifel analyst Christopher King said today in an interview. Selling the Puerto Rican wireless business, which accounts for about a third of Centennial’s revenue, may causeAT&T to cut its offer, he said. “We’re clearly in a different antitrust environment,” said King, who is based in Baltimore. “This is certainly the first significant opportunity that the Obama administration will have had in the telecom sector to lay down the law.”
AT&T hasn’t been asked to divest assets in Puerto Rico, said McCall Butler, a spokeswoman. Steve Kunszabo, director of investor relations for Centennial, didn’t immediately return a call seeking comment.
AT&T, the second-biggest U.S. wireless carrier, and Verizon Communications Inc., its larger rival, swapped assets in May to appease concerns that AT&T’s Centennial purchase would hurt competition.”
While I agree that regulatory challenges are tough to predict, I believe that the small size of Centennial Communications (CYCL) could allow the merger to go through and close by the end of 2009. The problem with Puerto Rico is that it is viewed as a separate US territory, which is considered by regulators as somewhat between a colony and an independent state. Thus, Centennials 33%-40% share of the market there, in addition to AT&T’s market share could require more flexibility for the two carriers when dealing with regulators. The Puerto Rico wireless market is highly competitive however. In Puerto Rico, Centennial competes with five other wireless carriers: America Movil, AT&T Mobility, Open Mobile, Sprint Nextel, and T-Mobile. Thus, AT&T might have to sell other assets in order to appeal to regulators, in order for the deal to go through. I doubt that this would affect the offer price for Centennial Communications (CYCL).
I do believe that AT&T (T) would eventually acquire Centennial Communications (CYCL) at the price, agreed upon in 2008. At current levels of $7.38, the upside is 15.2%. If the deal falls through however,shares of the acquired company would most likely drop to $4. I would put a limit order for a small position in CYCL. It is important not to bet the farm on merger arbitrage opportunities. One of the reasons for the decline in the stock price could also be quick-tempered overleveraged arbitrageurs closing their positions in order to avoid margin calls, which happened with Anheuser Busch and Constellation Energy (CEG) deals.
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