BB&T (BBT) and Legg Mason(LM) are the latest financial stock to drastically cut dividends . This didn’t shock anyone, as the financial sector has received a pretty bad reputation for its enormous losses and massive dividend cuts. The careful income investor who is looking for ways to generate some income from their investments should definitely look past dividend yield and instead focus on the sustainability of the payout, the dividend policy of the company and management’s desire to keep raising dividends. Some companies, whose sales are somewhat recession resistant keep generating enough cash flow to justify sharing their wealth with shareowners while also financing their operations efficiently. The bullish momentum after last weeks dividend increases from Exxon Mobil (XOM) and IBM is holding up quite well. Some solid companies such as PepsiCo and Alcon rewarded shareholders with increases in dividend income.
PepsiCo (PEP), which manufactures, markets, and sells various snacks, carbonated and non-carbonated beverages, and foods worldwide, raised its quarterly dividend by 6% to $0.45 per share. PepsiCo is a dividend aristocrat, which has rewarded its shareholders with an uninterrupted streak of increased dividends for 37 consecutive years. The stock currently yields 3.60%. Check my analysis of PepsiCo.
PepsiCo’s chairman and CEO commented on the dividend increase, which was a major confident boost for shareholders: "We are pleased to announce our thirty-seventh annual dividend increase, reflecting the strength of our cash flow and balance sheet. Even in this difficult economy, we are committed to return cash to our shareholders while continuing to invest in the long-term growth of our business."
Alcon (ACL), which engages in the development, manufacture, and marketing of pharmaceuticals, surgical equipment and devices and consumer eye care products, raised its annual dividend by 50% to $3.49 per share. Alcon is an international dividend achiever which has rewarded its shareholders with an uninterrupted streak of increased dividends for 7 consecutive years. The stock currently yields 3.60%.
Spectra Energy Partners, LP (SEP), a master limited partnership which engages in the transportation of natural gas through interstate pipeline systems as wells as the storage of natural gas in underground facilities in the United States, raised its quarterly distributions from $0.36 to $0.37 per unit. Spectra Energy Partners, LP has rewarded unitholders with increased distributions for 7 consecutive quarters. The partnership currently yields 6.50%.
Tower Group Inc. (TWGP), which provides a range of specialized property and casualty insurance products and services to small to mid-sized businesses and individuals, raised its quarterly dividend by 40% to $0.07 per share. This has been the third time that Tower Group Inc. has increased dividends since 2007. The stock currently yields only 1.00%.
Avista Corp. (AVA), which engages in the generation, transmission, and distribution of energy and energy-related businesses in the United States and Canada, raised its quarterly dividend by 5% to $0.42 per share. Avista Corp has rewarded its shareholders with an uninterrupted streak of increased dividends since 2003. The stock currently yields 5.30%.
RLI Corp. (RLI), which underwrites property and casualty insurance primarily in the United States, raised its quarterly dividend by 3.80% to $0.27 per share. RLI Corp. is a dividend champion, which has rewarded its shareholders with an uninterrupted streak of increased dividends for 34 consecutive years. The stock currently yields only 2.20%.
Expeditors International of Washington, Inc. (EXPD), which engages in the exploration, production, transportation, and sale of crude oil and natural gas, boosted its semi-annual dividend by 19% to $0.19 per share. Expeditors International of Washington, Inc. is a dividend achiever which has rewarded its shareholders with an uninterrupted streak of increased dividends for 16 consecutive years. The stock currently yields only 1.10%.
Bunge Limited (BG), which engages in the agriculture and food business worldwide, raised its annual dividend by 10.50% to $0.21 per share. Bunge Limited has rewarded its shareholders with an uninterrupted streak of increased dividends since 2002. The stock currently yields only 1.50%.
Chesapeake Utilities Corporation (CPK), which engages in the distribution, transmission, and marketing of natural gas, raised its annual dividend from $0.305 to $0.315 per share. Chesapeake Utilities Corporation has rewarded its shareholders with an uninterrupted streak of dividends raises since 2004. The stock currently yields 4.00%.
National HealthCare Corporation (NHC), which operates and manages long-term health care centers and associated assisted living centers, retirement centers, home health care programs in the United States, raised its annual dividend by 8.30% to $0.26 per share. National HealthCare Corporation has rewarded its shareholders with an uninterrupted streak of dividends raises since 2004. The stock currently yields 4.00%.
Medical Products maker Steris Corp. (STE) raised its annual dividend by 38% to $0.11 per share. Steris Corp. has rewarded its shareholders with an uninterrupted streak of dividends raises since 2006. The stock currently yields 1.70%.
In this market it is essential for dividend investors to select only best dividend stocks whose business model could deliver a sustainable increase in earnings, which could unleash the dividend growth potential of corporations.
Full Disclosure: Long PEP
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