Over the past week twenty-two companies announced that they would be rewarding shareholders withhigher dividend payouts. Several solid blue chip companies such as IBM, Costco and Exxon Mobil raised their payouts as well.
In order to make it easier to read through the list, I have separated the number of companies into three lists: Dividend Achievers and Dividend Aristocrats; Master Limited Partnerships; and Dividend Growth Stocks.
Dividend Achievers and Dividend Aristocrats
Dividend Achievers are companies which have boosted payouts for at least ten consecutive years. Companies that are members of the elite Dividend Aristocrats index, are members of the S&P 500 and have raised distributions for over a quarter of a century.
International Business Machines Corporation (IBM) is an information technology (IT) company. The company increased its dividend by 18% to 55 cents/share. This is the 15th year in a row that IBM has increased its quarterly cash dividend. This dividend achiever yields 2%. (analysis)
W.W. Grainger, Inc. (GWW) and its subsidiaries distribute facilities maintenance and other related products and services in the United States, Canada, Japan, and Mexico. The company raised its quarterly dividend by 17% from $0.46 to $0.54 per share. This is the thirty-ninth dividend increase in a row for this dividend aristocrat. The stock yields 2%. (analysis)
Exxon Mobil Corporation (XOM) engages in the exploration, production, transportation, and sale of crude oil and natural gas. The company raised its quarterly dividends to 44 cents/share, up from 42 cents/share. This is the twenty-eight consecutive annual dividend increase for this dividend aristocrat. The stock yields 2.60%. (analysis)
Chevron Corporation (CVX) operates as an integrated energy company worldwide. The company raised its quarterly dividends by 5.90% 72 cents/share. This is the twenty-third consecutive annual dividend increase for this dividend achiever. The stock yields 3.50%. (analysis)
Cullen/Frost Bankers, Inc., (CFR) through its subsidiaries, provides various banking and financial products and services primarily in Texas. The company increased its quarterly dividend by 4.70% to 45cents/share. This is the seventeenth consecutive annual dividend increase for this dividend achiever. The stock yields 3%.
Community Bank System, Inc. (CBU) operates as the holding company for Community Bank, N.A. that provides various banking and financial services to the retail, commercial, and municipal customers. It offers loans and accepts deposits. The Company’s Board of Directors approved a $0.02, or 9.1%, increase in its quarterly dividend on its common stock, to $0.24 per share. This is the seventeenth consecutive annual distribution increase for this dividend achiever. The stock yields 3.70%.
Master Limited Partnerships
Williams Partners L.P. (WPZ) is a limited partnership formed that owns, operates and acquires a portfolio of energy assets. This master limited partnership announced that the distribution its unit holders receive has been increased to $0.6575 per unit, a 3.5% increase over the previous dividend of $0.635. The partnership has consistently raised annual distribution since 2006. The units yield 6.30%.
Inergy Holdings, L.P. (NRGP) is engaged in the investment in propane and other natural gas liquids companies. This master limited partnership announced an increase in its quarterly cash distribution to $0.975 per limited partner unit, which was a 3.7% increase over the previously declared quarterly distribution. Inergy has boosted distributions since 2006. The stock yields 5.40%.
Holly Energy Partners, L.P. (HEP) operates a system of petroleum product and crude oil pipelines, storage tanks, distribution terminals, and loading rack facilities. This master limited partnership declared an increase in its distribution to $0.815 per unit, up from $0.805 that was distributed last quarter. Holly Energy Partners, L.P. has consistently boosted distributions since 2005. The units yield 6.90%.
Sunoco Logistics Partners L.P. (SXL) engages in the transport, terminalling, and storage of refined products and crude oil, as well as the purchase and sale of crude oil in the United States. The company increased quarterly distribution to $1.11 per share, from $1.09 prior. This master limited partnership has consistently raised distributions almost every quarter since 2002. The units yield 6.60%.
Alliance Holdings GP, L.P., (AHGP) through its subsidiaries, produces and markets coal primarily to utilities and industrial users in the United States. The company announced a boost in its quarterly distribution to 46.5 cents/share which represents a 12.0% increase over the $0.415 per unit distribution (for the quarter ended March 31, and an increase of 2.8% over the fourth quarter 2009 distribution of $0.4525 per unit. This master limited partnership has consistently boosted distributions since 2007. The units yield 5.60%.
Future Dividend Growth Stocks
EarthLink, Inc. (ELNK) is an Internet service provider (ISP), providing nationwide Internet access and related value-added services to individual and business customers. The company's Board of Directors has increased the amount of its quarterly cash dividend on its common stock from $0.14 per share to $0.16 per share. This is the first dividend increase since EarthLink initiated a dividend policy in 2009. The stock yields 7.40%.
Ameriprise Financial, Inc. (AMP) provides financial planning, products and services that are designed to be utilized as solutions for its clients' cash and liquidity, asset accumulation, income, protection, and estate and wealth transfer needs. The company raised its quarterly dividend from $0.17 to $0.18. The company has had higher annual dividend payments for four years in a row. The stock yields 1.50%.
Costco Wholesale Corporation (COST) operates membership warehouses that offer a selection of branded and private label products in a range of merchandise categories in no-frills, self-service warehouse facilities. The company approved a quarterly increase from $0.18 to $0.205 per share. This is the sixth consecutive dividend increase since the company initiated a dividend policy in 2004. The stock yields 1.40%.
Kellogg Company (K), together with its subsidiaries, engages in the manufacture and marketing of ready-to-eat cereal and convenience foods. The Company's Board of Directors announced plans to increase the quarterly dividend by 8% to $0.405 per share beginning with the third quarter of 2010. This would have been the sixth consecutive dividend increase for the company. The stock yields 2.90%.
International Paper Company (IP) operates as a paper and packaging company with operations in North America, Europe, Latin America, Russia, Asia, and North Africa. The company approved an increase in its quarterly common stock dividend from $0.025 per share to $0.125 per share. This is the first dividend increase since the company slashed distributions by 90% in 2009. The stock yields 1.70%.
Celanese Corporation (CE) is an integrated producer of chemicals and advanced materials. The company approved a 25% increase in the company’s quarterly dividend to $0.05 per share. The stock yields 0.60%.
Legg Mason, Inc., (LM) through its subsidiaries, operates as a diversified group of global asset management firm serving individual and institutional investors worldwide. The company’s Board of Directors has declared a quarterly cash dividend on its common stock in the amount of $0.04 per share which is a 33.33% increase over the previous dividend of $0.03. This is the first dividend increase for the company since it slashed dividends by 87.50 % in 2009 and lost its status as a dividend aristocrat after just one year in the elite index. The stock yields 0.50%.
Valmont Industries, Inc. (VMI) produces fabricated metal products; pole and tower structures; and mechanized irrigation systems in the United States and internationally. The board of directors increased the Company's quarterly cash dividend by 10% from $0.15 to $0.165 per share. This is the ninth consecutive annual dividend increase for the company. The stock yields 0.80%
Sturm, Ruger & Company, Inc. (RGR) engages in the design, manufacture, and sale of firearms in the United States. The company increased its quarterly dividend by 55% to 9.3 cents/share. The stock yields 2.10%.
TransAlta Corporation (TAC) operates as a non-regulated electricity generation and energy marketing company. The company raised its quarterly dividends by 6.40% to 29 cents/share. This is the third consecutive annual dividend increase for the company.The stock yields 5.60%.
Duff & Phelps Corporation (DUF), through its subsidiaries, provides independent financial advisory and investment banking services worldwide. The company increased quarterly dividend by 20% to $0.06 per share. This is the first dividend increase for the company since its started paying dividends in 2009. The stock yields 1.50%.
The list of dividend increases should not be viewed as a buy recommendation. Readers are advised to use it only as a starting reference point for further research, provided that any of those companies interest you.
Friday, April 30, 2010
Wednesday, March 31, 2010
Four Percent Rule for Dividend Investing in Retirement
The four percent rule is commonly used by financial planners in order to estimate the optimum amount of money to withdraw from client portfolios each year. The goal is to ensure longevity of client portfolios in retirement. Retirees are typically expected to sell a portion of their portfolios each year and adjust their withdrawals for inflation.
The possible reason for selecting 4% as a “safe” withdrawal strategy could be the fact that dividend yields have typically been around 4% on average for the decades covering the study.
In contrast, dividend investors tend to create portfolios which are concentrated around generating asustainable income stream each year. By owning a diverse mix of income producing assets, dividend investors would ensure that a hiccup in one sector of the economy would not have lasting effects on their lifestyles in retirement.
Another positive of dividend portfolios is that investors tend to live off solely from the income that the basket of stocks produces each year. In contrast, the four percent rule contains an inherent risk because of the possibility of selling off portions of ones portfolio during a flat or down market, which could deplete the portfolios much faster, leaving retirees to rely solely on social security. By concentrating only on spending a portion of the income that the portfolio produces, investors are leaving their invested capital intact and letting it grow overtime. This is similar to having your cake and eating it too as well.
The research behind the four percent rule is still sound however, especially since index funds tended to yield approximately four percent on average over the study period. Thus I believe that a portfolio which yields between three and four percent would provide investors with adequate income for a lifetime. Even if ones income portfolio generates a starter yield which is higher than four percent, it would still be wise not to spend more than 4%. This would leave some room for maneuvering in case the income generating assets in the higher yielding portfolio cut distributions.
If I were starting an income portfolio today, I would break it down to four equally weighted basic components.
The first component would be fixed income securities such as 30 year Treasury Bonds. Having some stability in the principal and income would provide at least some cushion in certain catastrophic events such as reliving the Great Depression of 1929-1932 in US or the lost two decades in Japan between 1989 to 2009. In both scenarios stocks lost 80% of their values.
The second component would consist of higher yielding stocks with low dividend growth. Likely inclusions in this list include Master Limited Partnerships such as Kinder Morgan Partners (KMP), Enbridge Energy Partners (EEP) or Energy Transfer Partners (ETP). These companies have stable revenues from transporting natural gas and petroleum products through their pipelines. Another sector could include Real Estate Investment trusts such as Realty Income (O) or National Retail Properties (NNN). These companies also tend to generate stable cash flows from their long-term property leases. A third high yielding sector for current income could be utilities such as Con Edison (ED) or Dominion Resources (D).Utilities are natural monopolies in their specific geographic area, supplying electricity, water or natural gas to consumers.
The third component of the portfolio would include mature companies which offer yields similar to average market yields, but which have enjoyed solid dividend growth. Examples of such companies include consumer products giant Johnson & Johnson (JNJ), fast food giant McDonald’s (MCD) or Kimberly-Clark(KMB).
The last component will include companies with low current yields, which have the ability to generate double digit earnings increases. This could generate solid dividend growth in the future. Companies that fit this criteria include Walgreens (WAG), Becton Dickinson (BDX) and Medtronic (MDT).
The last two portions of the portfolio might only end up yielding between 3% and 4%, although they would provide the growth factor that would insulate the dividend income from inflation.
The possible reason for selecting 4% as a “safe” withdrawal strategy could be the fact that dividend yields have typically been around 4% on average for the decades covering the study.
In contrast, dividend investors tend to create portfolios which are concentrated around generating asustainable income stream each year. By owning a diverse mix of income producing assets, dividend investors would ensure that a hiccup in one sector of the economy would not have lasting effects on their lifestyles in retirement.
Another positive of dividend portfolios is that investors tend to live off solely from the income that the basket of stocks produces each year. In contrast, the four percent rule contains an inherent risk because of the possibility of selling off portions of ones portfolio during a flat or down market, which could deplete the portfolios much faster, leaving retirees to rely solely on social security. By concentrating only on spending a portion of the income that the portfolio produces, investors are leaving their invested capital intact and letting it grow overtime. This is similar to having your cake and eating it too as well.
The research behind the four percent rule is still sound however, especially since index funds tended to yield approximately four percent on average over the study period. Thus I believe that a portfolio which yields between three and four percent would provide investors with adequate income for a lifetime. Even if ones income portfolio generates a starter yield which is higher than four percent, it would still be wise not to spend more than 4%. This would leave some room for maneuvering in case the income generating assets in the higher yielding portfolio cut distributions.
If I were starting an income portfolio today, I would break it down to four equally weighted basic components.
The first component would be fixed income securities such as 30 year Treasury Bonds. Having some stability in the principal and income would provide at least some cushion in certain catastrophic events such as reliving the Great Depression of 1929-1932 in US or the lost two decades in Japan between 1989 to 2009. In both scenarios stocks lost 80% of their values.
The second component would consist of higher yielding stocks with low dividend growth. Likely inclusions in this list include Master Limited Partnerships such as Kinder Morgan Partners (KMP), Enbridge Energy Partners (EEP) or Energy Transfer Partners (ETP). These companies have stable revenues from transporting natural gas and petroleum products through their pipelines. Another sector could include Real Estate Investment trusts such as Realty Income (O) or National Retail Properties (NNN). These companies also tend to generate stable cash flows from their long-term property leases. A third high yielding sector for current income could be utilities such as Con Edison (ED) or Dominion Resources (D).Utilities are natural monopolies in their specific geographic area, supplying electricity, water or natural gas to consumers.
The third component of the portfolio would include mature companies which offer yields similar to average market yields, but which have enjoyed solid dividend growth. Examples of such companies include consumer products giant Johnson & Johnson (JNJ), fast food giant McDonald’s (MCD) or Kimberly-Clark(KMB).
The last component will include companies with low current yields, which have the ability to generate double digit earnings increases. This could generate solid dividend growth in the future. Companies that fit this criteria include Walgreens (WAG), Becton Dickinson (BDX) and Medtronic (MDT).
The last two portions of the portfolio might only end up yielding between 3% and 4%, although they would provide the growth factor that would insulate the dividend income from inflation.
Friday, February 26, 2010
Colgate-Palmolive (CL) Dividend Stock Analysis
Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. It operates in two segments, Oral, Personal, and Home Care; and Pet Nutrition. The company recently increased its quarterly dividend by 20.40% to 53 cents/share. This is the forty-seventh consecutive dividend increase for Colgate-Palmolive, which is a dividend champion.
Over the past decade this dividend stock has returned 4.30% per annum.
Earnings per share have increased by 11.10% on average since 2000. Since 2000 the number of shares outstanding has decreased from 625 million to 525 million, or an average decrease of 1.90% annually. Analysts estimate that EPS would grow by 9.80% to $4.80 in FY 2010. FY 2011 EPS are expected to increase by 11.40% from there to $5.35.
Sales outside North America accounted for two-thirds of the company’srevenues. The company’s strong competitive advantages in the oral healthcare field plus the low capital requirements have enabled it to generate high returns on capital.
Returns on Equity have been truly phenomenal, having never fallen below 80% since 2000.
Annual dividends have increased by 11.80% on average over the past decade, which is slightly higher than the growth in earnings.
A 12 % growth in dividends translates into the dividend payment doubling every six years on average. If we look at historical data, going as far back as 1976, Colgate Palmolive has actually managed to double its dividend payment every eight and a half years on average.
The dividend payout ratio has consistently remained below 50%, with the exception of a brief spike to 50.80% in 2006. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
The company trades at a P/E of 18.80 times earnings and has an adequately covered dividend payment. The current yield of 2.60% is below my 3% entry threshold. If we look at the yield from the past decade however, CL has yielded more than 3% only during the lows in early 2009. Because of this I initiated a position in Colgate recently. I would look forward to add to this position on dips below $71, which would be my ideal entry price.
Over the past decade this dividend stock has returned 4.30% per annum.
Earnings per share have increased by 11.10% on average since 2000. Since 2000 the number of shares outstanding has decreased from 625 million to 525 million, or an average decrease of 1.90% annually. Analysts estimate that EPS would grow by 9.80% to $4.80 in FY 2010. FY 2011 EPS are expected to increase by 11.40% from there to $5.35.
Sales outside North America accounted for two-thirds of the company’srevenues. The company’s strong competitive advantages in the oral healthcare field plus the low capital requirements have enabled it to generate high returns on capital.
Returns on Equity have been truly phenomenal, having never fallen below 80% since 2000.
Annual dividends have increased by 11.80% on average over the past decade, which is slightly higher than the growth in earnings.
A 12 % growth in dividends translates into the dividend payment doubling every six years on average. If we look at historical data, going as far back as 1976, Colgate Palmolive has actually managed to double its dividend payment every eight and a half years on average.
The dividend payout ratio has consistently remained below 50%, with the exception of a brief spike to 50.80% in 2006. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
The company trades at a P/E of 18.80 times earnings and has an adequately covered dividend payment. The current yield of 2.60% is below my 3% entry threshold. If we look at the yield from the past decade however, CL has yielded more than 3% only during the lows in early 2009. Because of this I initiated a position in Colgate recently. I would look forward to add to this position on dips below $71, which would be my ideal entry price.
Friday, January 29, 2010
Universal Corporation (UVV) Dividend Stock Analysis
Universal Corporation (UVV), together with its subsidiaries, operates as the leaf tobacco merchants and processors worldwide. It engages in selecting, procuring, buying, processing, packing, storing, supplying, shipping, and financing leaf tobacco for sale to, or for the account of, manufacturers of consumer tobacco products. This dividend champion has raised dividends for 39 consecutive years.
Over the past decade, Universal has delivered a total return of 11.60% to shareholders.
At the same time earnings per share have grown by 1.50% on average since 2000. Analysts expect UVV to earn $5.25/share in 2010 and $5.63/share in 2011. This is an increase over the $4.32/share Universal earned in 2009. The slow growth in tobacco consumption worldwide and risk of increased taxation and regulation in the sector represent one of the major risks for the company going forward.
The annual dividend has increased by 4% annually over the past decade. A 4% growth in dividends translates into the distribution doubling every 18 years. The current quarterly dividend of $0.46/share is double what it was in 1993-1994. The latest dividend increase was for 2.20% in November 2009.
Over the past decade, Universal has delivered a total return of 11.60% to shareholders.
At the same time earnings per share have grown by 1.50% on average since 2000. Analysts expect UVV to earn $5.25/share in 2010 and $5.63/share in 2011. This is an increase over the $4.32/share Universal earned in 2009. The slow growth in tobacco consumption worldwide and risk of increased taxation and regulation in the sector represent one of the major risks for the company going forward.
The annual dividend has increased by 4% annually over the past decade. A 4% growth in dividends translates into the distribution doubling every 18 years. The current quarterly dividend of $0.46/share is double what it was in 1993-1994. The latest dividend increase was for 2.20% in November 2009.
The return on equity has generally decreased from a high of 22% in 2000 down to 15.30% in 2009. I generally like to see a stable value of this indicator over time.
The dividend payout ratio has generally remained below 50%, with the exception of 2006 and 2007, which struck as outliers.
Overall Universal Corporation does appear to be attractively valued, trading at a P/E of 9, yielding 3.90% and having an adequately covered dividend. The main problem for the company is the slow earnings growth, and concentration in the tobacco industry, which comes with its own inherent risks. I already have exposure to the tobacco sector through my position of already, Altria (MO) and Philip Morris International(PM). However I would consider initiating a position in UVV on dips whenever I have extra cash on hand.
Wednesday, December 9, 2009
When to break your rules
As a dividend growth investor, my strategy is picking the right stocks that provide a decent balance between dividend yield and distribution growth. Thus I have maintained a rigid requirement for a 3% initial yield before investing in a dividend growth company’s securities.
Most dividend investors look for yield when purchasing income securities. Most dividend growth investors purchase securities so that they could enjoy a rising stream of dividend payments over time. Thus, maintaining a proper balance could be a challenge that could make or break your portfolio.
I realize that using a strict yield criteria I could miss out on potential dividend growth stories such as Wal-Mart (WMT) for example. Wal-Mart has never yielded 3% since it went public in the 1970s. The 29.1% annual dividend growth since 1975 has been truly spectacular however. This means that Wal-Mart’s dividend has doubled every 2.5 years for 34 consecutive years. Wal-Mart has delivered a 23.40% dividend growth since 1985 and a 20.20% dividend growth since 1995. Check my analysis of Wal-Mart.
My rationale behind selecting a minimum yield is to provide me with an adequate margin of safety should the stock stop raising dividends and should the stock price fall or remain flat for a large period of time. In the case of Wal-Mart, the stock has been trading in a range over the past decade. Back in 1999 the stock fluctuated between $70.25 and $38.68 and closed at $69.12. The stock wasn’t yielding much back then – about 0.30%. Even if the dividend were doubling every 2.5 years, it would take a retiree almost 13 years in order to reach a yield on cost of 10%. At the current dividend rate, the stock is actually yielding 1.60% on cost, assuming that you purchased it on the last day of 1999. The actual dividend growth over the past decade comes down to 20.80% per annum, which translates into the dividend payment actually doubling every three and a half years.
Now the down side to my having a strict initial yield requirement for entry is that I would miss out on some huge gains, which could lead to early financial freedom. If one had purchased Wal-Mart stock at the end of 1984, the tenth year in a row in which it increased its dividends, their entry price would have been $1.18 (adjusted for five stock splits) and their initial yield would have been only 0.55% at the time. Fast-forward 25 years and the yield on cost comes out to almost 100%.
Many dividend growth investors tend to project past dividend growth rates into infinity, which seems unsustainable to me. If a company with $1 billion in profits enjoyed a 15% annual growth forever, it would double its net income almost every five years. In reality, as the companies grow larger they would find less opportunities that could sustainably earn them higher incremental returns on investment. For example, with a company like McDonald’s (MCD) people could only eat so much burgers and fries. After a company hits a plateau, EPS growth could largely be sustained by increasing efficiencies, raising prices, repurchasingshares or buying other competitors.
This analysis is not meant to be used as a weapon against Wal-Mart or McDonald’s, which are fine companies. It just goes to show that once shouldn’t solely rely on past data in their investment decisions. Furthermore, projecting past data into the future, without adding a what if analysis of your common sense could prove costly in the long run. In addition, purchasing stocks solely for the dividend growth is as dangerous as chasing high yielding stocks blindly.
As far as my strategy is concerned, I am considering lowering the entry yield criteria to 2% for stocks, which appear to have a sustainable above average dividend growth ahead of them. My target allocation for such stocks would be half of what I would normally allocate to such dividend growth champions such asJohnson & Johnson (JNJ) or Procter & Gamble (PG) however.
Most dividend investors look for yield when purchasing income securities. Most dividend growth investors purchase securities so that they could enjoy a rising stream of dividend payments over time. Thus, maintaining a proper balance could be a challenge that could make or break your portfolio.
I realize that using a strict yield criteria I could miss out on potential dividend growth stories such as Wal-Mart (WMT) for example. Wal-Mart has never yielded 3% since it went public in the 1970s. The 29.1% annual dividend growth since 1975 has been truly spectacular however. This means that Wal-Mart’s dividend has doubled every 2.5 years for 34 consecutive years. Wal-Mart has delivered a 23.40% dividend growth since 1985 and a 20.20% dividend growth since 1995. Check my analysis of Wal-Mart.
My rationale behind selecting a minimum yield is to provide me with an adequate margin of safety should the stock stop raising dividends and should the stock price fall or remain flat for a large period of time. In the case of Wal-Mart, the stock has been trading in a range over the past decade. Back in 1999 the stock fluctuated between $70.25 and $38.68 and closed at $69.12. The stock wasn’t yielding much back then – about 0.30%. Even if the dividend were doubling every 2.5 years, it would take a retiree almost 13 years in order to reach a yield on cost of 10%. At the current dividend rate, the stock is actually yielding 1.60% on cost, assuming that you purchased it on the last day of 1999. The actual dividend growth over the past decade comes down to 20.80% per annum, which translates into the dividend payment actually doubling every three and a half years.
Now the down side to my having a strict initial yield requirement for entry is that I would miss out on some huge gains, which could lead to early financial freedom. If one had purchased Wal-Mart stock at the end of 1984, the tenth year in a row in which it increased its dividends, their entry price would have been $1.18 (adjusted for five stock splits) and their initial yield would have been only 0.55% at the time. Fast-forward 25 years and the yield on cost comes out to almost 100%.
Many dividend growth investors tend to project past dividend growth rates into infinity, which seems unsustainable to me. If a company with $1 billion in profits enjoyed a 15% annual growth forever, it would double its net income almost every five years. In reality, as the companies grow larger they would find less opportunities that could sustainably earn them higher incremental returns on investment. For example, with a company like McDonald’s (MCD) people could only eat so much burgers and fries. After a company hits a plateau, EPS growth could largely be sustained by increasing efficiencies, raising prices, repurchasingshares or buying other competitors.
This analysis is not meant to be used as a weapon against Wal-Mart or McDonald’s, which are fine companies. It just goes to show that once shouldn’t solely rely on past data in their investment decisions. Furthermore, projecting past data into the future, without adding a what if analysis of your common sense could prove costly in the long run. In addition, purchasing stocks solely for the dividend growth is as dangerous as chasing high yielding stocks blindly.
As far as my strategy is concerned, I am considering lowering the entry yield criteria to 2% for stocks, which appear to have a sustainable above average dividend growth ahead of them. My target allocation for such stocks would be half of what I would normally allocate to such dividend growth champions such asJohnson & Johnson (JNJ) or Procter & Gamble (PG) however.
Friday, November 27, 2009
Eight stocks with positive dividend momentum
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.
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.
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