Twelve companies raised distributions last week. I have highlighted each company below with brief information as a starting point for further research. Stocks that raise distributions have managed to outperform the S&P 500 over the past four decades, which is one of the many reasons to consider them for my dividend portfolio.
Walgreen Co. (WAG), together with its subsidiaries, operates a chain of drugstores in the United States. The company increased the quarterly dividend 27.3% to $0.175 per share, for the 35th consecutive year. Walgreen is a dividend aristocrat and yields 2.40%. (analysis)
PPG Industries, Inc. (PPG) manufactures and supplies protective and decorative coatings. The company’s board of directors approved an increase in the company’s dividend, declaring a regular quarterly dividend of $0.55 per share. This dividend aristocrat has raised distributions for 39 consecutive years. The stock yields 3.30%.
Stanley Black & Decker, Inc. (SWK) manufactures tools and engineered security solutions worldwide. Stanley Black & Decker raised its quarterly dividend by 3% from $0.33 to $0.34 per common share, This dividend aristocrat has consistently increased distributions for 43 consecutive years. The stock yields 2.50%.
National Retail Properties, Inc. (NNN) is a publicly owned equity real estate investment trust. The firm acquires, owns, manages, and develops retail properties in the United States. The company increased quarterly distributions 1.30% to 38 cents/share. This was the 21st consecutive annual dividend increase for this dividend achiever. Without this increase the company would have lost its status of a dividend growth stock. National Retail Properties yields 6.60%. (analysis)
Enterprise Products Partners L.P. (EPD) provides a range of services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals in the continental United States, Canada, and Gulf of Mexico. The board of directors of the company’s general partner declared an increase in the quarterly cash distribution rate paid to partners to $0.575 per common unit. This master limited partnership has raised distributions for over a decade, and is a member of the dividend achievers index. The units yield 6.20%.
ONEOK Partners, L.P. (OKS) engages in the gathering, processing, storage, and transportation of natural gas in the United States. The partnership's quarterly cash distribution increased to $1.12 per unit from $1.11 per unit, or $4.48 annualized. The partnership has consistently raised distributions since 2006. The units yield 6.50%.
ONEOK, Inc. (OKE), a diversified energy company, operates as a natural gas distributor primarily in the United States. The company is the general partner of ONEOK Partners, L.P. (OKS). The company increased the quarterly dividend to $0.46 per share of common stock from $0.44 per share. The company has raised distributions for eight consecutive years. The stock yields 3.80%.
Omega Healthcare Investors, Inc. (OHI) operates as a real estate investment trust (REIT) in the United States. The Company’s Board of Directors declared a common stock dividend of $0.36 per share, increasing the quarterly common dividend by $0.04, or 12.5%, per share over the prior quarter. The company has raised distributions since 2003. This REIT yields 6.10%.
Duncan Energy Partners L.P. (DEP) engages in gathering, transporting, marketing, and storing natural gas, as well as in transporting and storing natural gas liquids (NGLs) and petrochemicals in the United States. The board of directors of its general partner declared an increase in the quarterly cash distribution rate paid to partners by 3.40% to $0.45 per common unit. This master limited partnership has raised distributions for three consecutive years. The units yield 6.20%.
Genesis Energy, L.P. (GEL), together with its subsidiaries, operates in the midstream segment of the oil and gas industry in the Gulf Coast area of the United States. This master limited partnership increased distributions by approximately 8.7% over the second quarter 2009 quarterly distribution of 34.50 cents/unit to 37.5 cents/unit. While distributions have been increased each year since 2003, the current distribution is still below the highest distribution paid in 2000. The company’s units yield 7.30%.
National Semiconductor Corporation (NSM) designs, develops, manufactures, and markets analog and mixed-signal integrated circuits and sub-systems. The company increased its quarterly dividend by 25% to 10 cents/share. This was the first dividend increase since 2008. The stock yields 2.80%.
Healthcare Services Group, Inc. (HCSG), through its subsidiaries, provides housekeeping, laundry, linen, facility maintenance, and food services to nursing homes, retirement complexes, rehabilitation centers, and hospitals in the United States. The company raised its regular quarterly cash dividend by 4.50% to $0.23 per share. The company has raised distributions every quarter since initiating a dividend policy in 2003. The stock yields 4.20%
Cummins Inc. (CMI) designs, manufactures, distributes, and services diesel and natural gas engines, electric power generation systems, and engine-related component products worldwide. raises its quarterly dividend by 50% from $0.175 to $0.2625 per share. This was the first distribution increase since 2008. The stock yields 1.40%.
Not every stock on this list is attractively valued to be purchased at current prices. Investors should focus on fundamentals first, which the key to finding a company with a sustainable distribution which has a low risk of being cut or eliminated. Investors should also try and understand the difference between corporations such as Walgreens (WAG) and pass-through entities such as Master Limited Partnerships like Enterprise Products Partners L.P. (EPD) or Real Estate Investment Trusts such as National Retail Properties, Inc. (NNN), in order to make the best investment decision. Just because Enterprise Products Partners L.P. (EPD) yields more than Walgreen Co. (WAG), that doesn’t mean anything without a thorough fundamental analysis of both companies.
Full Disclosure: Long NNN and WAG
Relevant Articles:
- Four High Yield REITs for current income
- Master Limited Partnerships (MLPs) – an island of opportunity for dividend investors
- Benchmarking Dividend income
- Dividend Aristocrats List for 2010