Every week I check the list of companies that raise dividends. There are several reasons for that. The most of important reasons include checking whether companies I own keep raising distributions, as well as to identify companies which could be a potential addition to my portfolio at some point in time. The companies which announced increases in their dividend payments include:
Altria Group, Inc. (MO), through its subsidiaries, engages in the manufacture and sale of cigarettes, wine, and other tobacco products in the United States and internationally. The company announced an 8.60% increase in its quarterly dividend to 38 cents/share. This was the second dividend increase this year. The company announced that the increase reflects the company's intention to return a large amount of cash to shareholders in the form of dividends, and is consistent with the company's dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share. This is the 43rd consecutive dividend increase for Altria Group. The only reason why the company is not on the dividend aristocrat list is because its dividend payment is lower due to the spin-off of Phillip Morris International (PM) in 2008 and Kraft Foods (KFT) in 2007. The stock yields 6.70%. Check my analysis of the stock.
MGE Energy, Inc. (MGEE), through its subsidiaries, operates as a public utility holding company. It engages in generating, purchasing, transmitting, and distributing electricity. The company raised its quarterly dividend from $0.3684 to $0.3751 per share. The company has increased its dividend annually for the past 35 years and is part of the dividend achievers index. Yield: 4.10%
Bob Evans Farms, Inc. (BOBE), a full-service restaurant company, owns and operates Bob Evans Restaurants and Mimi’s Cafes in the United States. The company’s Board of Directors approved an 11.1% increase in the quarterly cash dividend from 18 cents/share to 20 cents/share. The company has consistently raised distributions since 2001. Yield: 3.10%
Westlake Chemical Corporation (WLK) manufactures and markets basic chemicals, vinyls, polymers, and fabricated products. It operates in two segments, Olefins and Vinyls. The company’s Board of Directors raised quarterly distributions by 10% to 6.35 cents/share. The company has consistently raised dividends every year since going public in 2004. Yield: 1%
G&K Services, Inc. (GKSR) provides branded identity apparel and facility services programs in North America. The company’s Board of Directors announced a 27% increase in its quarterly dividend to 9.5 cents/share. The company has raised distributions for five consecutive years.
Lorillard, Inc. (LO), through its subsidiaries, engages in the manufacture and sale of cigarettes in the United States. The company’s board of directors approved a 12.5% increase in the quarterly dividend on its common stock from $1.00 per share to $1.125 per share. This was the second consecutive dividend increase since the company began trading on NYSE in 2008. Yield: 6%
Todd Shipyards Corporation (TOD), a private shipyard operator, engages in the ship repair, construction, conversion, and maintenance work on commercial and federal government vessels that offers various maritime activities in the Pacific Northwest. The company’s Board of Directors declared an increase in its dividend of two and one-half cents per share, bringing its quarterly dividend to ten cents per share. While this is the second dividend increase this year, bringing the total dividend increase to 100%, the new dividend is still 33% lower than the distribution paid in 2008. The company has cut distributions in 2009. Yield: 2.70%
Stage Stores, Inc. (SSI) operates as a specialty department store retailer in the United States. The company’s Board of Directors raised the quarterly dividend by 50% to 7.5 cents/share. This was the first dividend increase since 2006. Yield: 2.70%
The companies, which seem worthy for further research include utility MGE Energy, Inc. (MGEE) and restaurant operator Bob Evans Farms, Inc. (BOBE). Both companies seem to have an adequately covered dividend, a price/earnings ratio that is below 20, a dividend yield that is higher than 2.50% and also have a history of raising dividends for 10 years or more. Westlake Chemical Corporation (WLK), G&K Services, Inc. (GKSR) and Lorillard, Inc. (LO) are a few years away from reaching a status of dividend achiever, which requires ten years of consecutive annual dividend increases. Nevertheless I would keep monitoring whether they keep rewarding shareholders with higher dividends.
Altria Group on the other hand also seems like an interesting play on tobacco. Some readers however might have something against the type of product the company is selling. In addition to that the high payout ratio is a little troubling, despite the assurance that management intends to share 80% of the profits with shareholders. Analysts do expect FY 2010 EPS to be $1.90 and then to increase to $2 by FY 2011. This means that future dividend increases will be more exposed to earnings fluctuations. As always, tread cautiously.
Full Disclosure: Long KFT, MO and PM
Relevant Articles
- Altria (MO) - a recession proof high yield dividend stock
- Six Notable Dividend Increases for the week
- Six Significant Dividend Increases
- Six Dividend Stocks for current income
Monday, August 30, 2010
Friday, August 27, 2010
Aflac (AFL) Dividend Stock Analysis
Aflac Incorporated (AFL), through its subsidiary, American Family Life Assurance Company of Columbus (Aflac), provides supplemental health and life insurance. The company offers cancer plans, general medical indemnity plans, medical/sickness riders, care plans, living benefit life plans, ordinary life insurance plans, and annuities in Japan. This dividend aristocrat has raised dividends for 46 years in a row. The company most recently announced a 9.70% dividend increase to 34 cents/share.
Over the past decade, this dividend stock has delivered an annual total return of 8.10%.
At the same time the company has managed to increase earnings per share by 10.90% per year. In 2009, earnings per share increased by 21.70% to $3.19. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $5.46 and $5.99 respectively. The company’s Japanese Operations, which contributed 75% of its revenues, are expected to post strong near term revenue increases due to distribution agreements with Japan Post. Introduction of new products should also add to increased revenues. The expectations for US revenues are for a slowdown in the near term due to challenging economic situation. The company’s investment portfolio is riskier than peers, as it includes bank hybrid bonds and sovereign debt issued by European companies and countries. The company’s strong cash position and ability to grow sales and earnings should be a stabilizing factor however, which could fuel future dividend growth.
Return on Equity has increased from 16% in 2000 to 20% in 2009. In addition to that this indicator has remained between 16 and 20 since 2004.
The annual dividend per share has increased by 23.30% annually over the past decade. A 23% increase in dividends translates into the dividend payment doubling every 3 years on average. Sicne 1984 the company has managed to double dividends every four years on average.
The dividend payout ratio has almost tripled over the past decade, from 13.50% in 2000 to 35% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
Currently Aflac trades at a P/E of 12.60, yields 2.50% and has an adequately covered dividend payment. I would be adding to my position on dips below $48.
Full Disclosure: Long AFL
- Dividend Investing Works in All Markets
- A dividend portfolio for the long-term
- Three Dividend Strategies to pick from
- Financial Stocks for Dividend Investors
Wednesday, August 25, 2010
1991 Dividend Achievers additions- Where are they now?
The Dividend Achievers index includes companies that have increased annual dividends for at least 10 consecutive years and have met specific liquidity screening criteria. Companies that are included in the Dividend Achievers index typically generate strong cash flows, have solid balance sheets and a proven record of consistent earnings growth. These characteristics typically make these companies attractive takeover targets.
I was recently able to find the 1991 Dividend Achiever’s list. I checked the new additions for 1991 in order to investigate what happened to the companies after they have been added to the index. There were some limitations to the research, since companies changed their names, or were acquired, which made it difficult to track them down since current stock databases might not have freely available information on them. The companies which were added to the index in 1991 include:
First Empire State Corp later changed its name to M&T Bank (MTB). M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. The company stopped raising dividends in 2008 and was deleted from the index in 2009. The yield on cost today of a December 1990 investment in the stock would be 51.10%. One dollar invested in 1991 would be worth 13.30 dollars today. (analysis)
American General (AGC), which was acquired by American International Group (AIG) in 2001. The company had increased dividends up until the merger was finalized.
Rouse Co (ROUS) was acquired by General Growth Properties in 2004. The company had increased dividends up until the merger was finalized.
Bank South Corp (BKSO) was acquired by Bank of America (BAC) in 1996. The company suspended its dividends July 1991, after suffering from large losses. The dividend was reinstated in 1993.
Pall Corporation (PLL) manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. Pall Corp (PLL) stopped raising dividends in 2002 and then cut distributions by almost 50%. The yield on cost today of an early 1991 investment in the stock would be 4%. One dollar invested in December 1990 would be worth 3.29 dollars today.
State Street Corporation (STT), through its subsidiaries, provides various products and services for the institutional investors worldwide. The company cut its dividend payment in 2009 to 1 cent/share, from 24 cents/share. The yield on cost had reached 24.70% by 2008; after the cut it went down to 1%. One dollar invested in December 1990 would be worth 12.68 dollars today. (analysis)
Crawford & Company (CRD-B) provides claims management solutions to insurance companies and self-insured entities worldwide. The company cut dividends in 2002 and eliminated the dividend payment in 2006. One dollar invested in December 1990 would be worth 64.40 cents today.
Wrigley Wm Jr (WWY) was acquired in 2008. The company had increased dividends up until the merger was finalized. Berkshire Hathaway (BRK.B) provided financing for the acquition.
Black Hills Corporation (BKH), together with its subsidiaries, operates as a diversified energy company. It operates through two groups, Utilities and Non-regulated Energy. The company is still a member of the dividend achievers index. The yield on cost today of a December 1990 investment in the stock would be 17.10%. One dollar invested in December 1990 would be worth 10.92 dollars today.
Central Fidelity Banks (CFBS) was acquired by Wachovia (WB) in 1997. The company had increased dividends up until the merger was finalized.
American Precision Industries (APR) was acquired by Danaher (DHR) in 2001. The company was deleted from the index in 1997 after it failed to increase dividends.
The Laclede Group, Inc. (LG) operates as a public utility holding company providing natural gas service to approximately 630,000 users in St. Louis. The company failed to increase its dividend in 1992, just one year after being admitted in the index. The yield on cost today of a December 1990 investment in the stock would be 10.50%. One dollar invested in December 1990 would be worth 6.48 dollars today.
KeyCorp (KEY) operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company cut dividends in 2008, amidst the worst financial crisis since the Great Depression. The yield on cost had reached 27.10% by 2008; after the cut it went down to 0.70%. One dollar invested in December 1990 would be worth 3.32 dollars today.
Boatmen’s Bancshares (BOAT) was acquired in 1996 by Bank of America (BAC). The company had increased dividends up to the merger was finalized.
St. Joseph Light & Power (SAJ) was acquired by Utilicorp (UCU) in 1999. The company had increased dividends up to the merger was finalized.
CLARCOR Inc. (CLC) provides filtration products and services to customers worldwide. It operates in three segments, including Engine/Mobile Filtration, Industrial/Environmental Filtration, and Packaging. The yield on cost today of a December 1990 investment in the stock would be 10.80%. One dollar invested in December 1990 would be worth 15.70 dollars today.
OGE Energy Corp.(OGE) , together with its subsidiaries, operates as an energy and energy services provider offering physical delivery and related services for electricity and natural gas primarily in the south central United States. The company failed to increase distributions in 1992, just one year after being admitted in the dividend achievers index. The Oklahoma Gas & Electric utility didn’t start raising dividends again until 2007. The yield on cost today of a December 1990 investment in the stock would be 13.50%. One dollar invested in December 1990 would be worth 15.00 dollars today.
Source Capital, Inc. (SOR) is a close-ended equity fund launched and managed by First Pacific Advisors, LLC. The fund invests in the public equity markets of the United States. The yield on cost today of a December 1990 investment in the stock would be 6.60%. One dollar invested in December 1990 would be worth 6.50 dollars today. The company failed to increase dividends in 1991.
IE Industries was acquired in 1997 by WPL. The company had increased dividends up until the merger was finalized.
Colonial Gas was acquired in 1999. The company had increased dividends up until the merger was finalized.
The results of the 1991 additions are really stunning. Out of 20 companies that were added to the dividend achievers index only 2 are still its members - CLARCOR Inc. (CLC) and Black Hills Corporation (BKH). However, half of those additions became takeover targets. Of those ten acquired companies, only two stopped paying distributions before they were acquired. Five companies eventually cut distributions – State Street (STT), Key Corp (KEY), Source Capital, Inc. (SOR), Crawford & Company (CRD-B) and Pall Corporation (PLL). The remaining companies either maintained distributions or raised them sporadically over the next 19 years. Stay tuned for my article next week, when I will discuss how to profitably exploit the findings of this research.
Full Disclosure: Long MTB
Relevant Articles:
- Dividend growth stocks are attractive buyout targets
- Where are the original Dividend Aristocrats now?
- Buy and hold dividend investing is not dead
- Strong Brands Grow Dividends
I was recently able to find the 1991 Dividend Achiever’s list. I checked the new additions for 1991 in order to investigate what happened to the companies after they have been added to the index. There were some limitations to the research, since companies changed their names, or were acquired, which made it difficult to track them down since current stock databases might not have freely available information on them. The companies which were added to the index in 1991 include:
First Empire State Corp later changed its name to M&T Bank (MTB). M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. The company stopped raising dividends in 2008 and was deleted from the index in 2009. The yield on cost today of a December 1990 investment in the stock would be 51.10%. One dollar invested in 1991 would be worth 13.30 dollars today. (analysis)
American General (AGC), which was acquired by American International Group (AIG) in 2001. The company had increased dividends up until the merger was finalized.
Rouse Co (ROUS) was acquired by General Growth Properties in 2004. The company had increased dividends up until the merger was finalized.
Bank South Corp (BKSO) was acquired by Bank of America (BAC) in 1996. The company suspended its dividends July 1991, after suffering from large losses. The dividend was reinstated in 1993.
Pall Corporation (PLL) manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. Pall Corp (PLL) stopped raising dividends in 2002 and then cut distributions by almost 50%. The yield on cost today of an early 1991 investment in the stock would be 4%. One dollar invested in December 1990 would be worth 3.29 dollars today.
State Street Corporation (STT), through its subsidiaries, provides various products and services for the institutional investors worldwide. The company cut its dividend payment in 2009 to 1 cent/share, from 24 cents/share. The yield on cost had reached 24.70% by 2008; after the cut it went down to 1%. One dollar invested in December 1990 would be worth 12.68 dollars today. (analysis)
Crawford & Company (CRD-B) provides claims management solutions to insurance companies and self-insured entities worldwide. The company cut dividends in 2002 and eliminated the dividend payment in 2006. One dollar invested in December 1990 would be worth 64.40 cents today.
Wrigley Wm Jr (WWY) was acquired in 2008. The company had increased dividends up until the merger was finalized. Berkshire Hathaway (BRK.B) provided financing for the acquition.
Black Hills Corporation (BKH), together with its subsidiaries, operates as a diversified energy company. It operates through two groups, Utilities and Non-regulated Energy. The company is still a member of the dividend achievers index. The yield on cost today of a December 1990 investment in the stock would be 17.10%. One dollar invested in December 1990 would be worth 10.92 dollars today.
Central Fidelity Banks (CFBS) was acquired by Wachovia (WB) in 1997. The company had increased dividends up until the merger was finalized.
American Precision Industries (APR) was acquired by Danaher (DHR) in 2001. The company was deleted from the index in 1997 after it failed to increase dividends.
The Laclede Group, Inc. (LG) operates as a public utility holding company providing natural gas service to approximately 630,000 users in St. Louis. The company failed to increase its dividend in 1992, just one year after being admitted in the index. The yield on cost today of a December 1990 investment in the stock would be 10.50%. One dollar invested in December 1990 would be worth 6.48 dollars today.
KeyCorp (KEY) operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company cut dividends in 2008, amidst the worst financial crisis since the Great Depression. The yield on cost had reached 27.10% by 2008; after the cut it went down to 0.70%. One dollar invested in December 1990 would be worth 3.32 dollars today.
Boatmen’s Bancshares (BOAT) was acquired in 1996 by Bank of America (BAC). The company had increased dividends up to the merger was finalized.
St. Joseph Light & Power (SAJ) was acquired by Utilicorp (UCU) in 1999. The company had increased dividends up to the merger was finalized.
CLARCOR Inc. (CLC) provides filtration products and services to customers worldwide. It operates in three segments, including Engine/Mobile Filtration, Industrial/Environmental Filtration, and Packaging. The yield on cost today of a December 1990 investment in the stock would be 10.80%. One dollar invested in December 1990 would be worth 15.70 dollars today.
OGE Energy Corp.(OGE) , together with its subsidiaries, operates as an energy and energy services provider offering physical delivery and related services for electricity and natural gas primarily in the south central United States. The company failed to increase distributions in 1992, just one year after being admitted in the dividend achievers index. The Oklahoma Gas & Electric utility didn’t start raising dividends again until 2007. The yield on cost today of a December 1990 investment in the stock would be 13.50%. One dollar invested in December 1990 would be worth 15.00 dollars today.
Source Capital, Inc. (SOR) is a close-ended equity fund launched and managed by First Pacific Advisors, LLC. The fund invests in the public equity markets of the United States. The yield on cost today of a December 1990 investment in the stock would be 6.60%. One dollar invested in December 1990 would be worth 6.50 dollars today. The company failed to increase dividends in 1991.
IE Industries was acquired in 1997 by WPL. The company had increased dividends up until the merger was finalized.
Colonial Gas was acquired in 1999. The company had increased dividends up until the merger was finalized.
The results of the 1991 additions are really stunning. Out of 20 companies that were added to the dividend achievers index only 2 are still its members - CLARCOR Inc. (CLC) and Black Hills Corporation (BKH). However, half of those additions became takeover targets. Of those ten acquired companies, only two stopped paying distributions before they were acquired. Five companies eventually cut distributions – State Street (STT), Key Corp (KEY), Source Capital, Inc. (SOR), Crawford & Company (CRD-B) and Pall Corporation (PLL). The remaining companies either maintained distributions or raised them sporadically over the next 19 years. Stay tuned for my article next week, when I will discuss how to profitably exploit the findings of this research.
Full Disclosure: Long MTB
Relevant Articles:
- Dividend growth stocks are attractive buyout targets
- Where are the original Dividend Aristocrats now?
- Buy and hold dividend investing is not dead
- Strong Brands Grow Dividends
Monday, August 23, 2010
Exxon Mobil’s Stingy Dividend Payout
Exxon Mobil (XOM) is one of the largest oil companies in the world. Its roots could be traced to Standard Oil, which was broken into several separate companies in 1911. Eventually two of those companies merged in 1999 to form Exxon Mobil. The company has benefited tremendously over the past decade, as the price of oil has increased over 8 times since 1999. This dividend aristocrat has paid dividends since 1911 and has consistently raised them for 28 years in a row. Despite the fact that many believe so called alternative energy sources would replace fossil fuels in the future, oil and gas would still be around at least for the next few decades. As a result investing in oil companies makes sense for income investors. Check my analysis of the stock.
The largest oil companies in the world include Exxon Mobil (XOM), Royal Dutch (RDS-B), Chevron (CVX), Total (TOT), Conoco Phillips( COP), and British Petroleum (BP).
(Source: Yahoo Finance from Aug 16, 2010)
Of all oil companies, Exxon Mobil has the lowest yield and one of the lowest dividend payouts. BP had a higher dividend payout and a higher dividend yield before it cut dividends this year. Exxon seems to be plowing most of its earnings into stock buybacks. Historically share buybacks have not been one of the smartest ways for management to allocate cash, as most buybacks occur when the price of the underlying is at its highest.
For example General Electric (GE) repurchased stock worth billions of dollars when the price was above $30, only to sell it back at $22 during the global financial crisis of 2007-2009. Exxon has been raising dividends, but the disproportionate amount of share buybacks to dividends suggests that management is not certain about the future profitability of the company. If they believed that oil prices would stay higher over the next few decades, this would mean that earnings per share could only go higher from here. This would support a higher dividend than the one we have today. Of course if oil prices plunge below $50 and stay there, then profitability would suffer and if dividends are too high, they might be cut. This could lead to angry shareholders and depressed stock price for some time. With buybacks however this could all be avoided, since they could be canceled at any time, without much publicity.
Other than that, Exxon Mobil (XOM) could afford to be more generous with shareholders, and raise dividends at a pace that is higher than the 5% annual dividend growth it has delivered over the past decade. That being said, Exxon Mobil (XOM) does appear to be attractively valued, as it could deliver not only decent dividend growth but solid price returns as well. Other oil companies which have stable and growing dividend payments include:
Chevron Corporation (CVX) operates as an integrated energy company worldwide. Chevron Corporation is a component of the S&P 500 and Dow Jones Industrials Indexes. The company is also a dividend achiever, which has consistently raised its dividends for 23 years in a row. Chevron trades at a P/E of 9.30, yields 3.70% and has an adequately covered dividend payment. (analysis)
Royal Dutch Shell Plc (RDS.B) operates as an oil and gas company worldwide. The company explores for, and extracts crude oil and natural gas. Royal Dutch Shell has managed to boost distributions at least since 1993. Currently the company is trading at a P/E of 11.10 and yields 6.30%. (analysis)
ConocoPhillips operates as an integrated energy company worldwide. It operates through six segments: Exploration and Production (E&P), Midstream, Refining and Marketing (R&M), LUKOIL Investment, Chemicals, and Emerging Businesses. ConocoPhillips has raised dividends for ten years in a row. Currently the company is trading at a P/E of 8.90 and yields 4%.
Full Disclosure: Long CVX RDS.B and XOM
Relevant Articles:
- Three Dividend Stocks to Capitalize on BP’s weakness
- Chevron Corporation (CVX) Dividend Stock Analysis
- Exxon Mobil (XOM) Dividend Stock Analysis
- Dividends versus Share Buybacks/Stock repurchases
The largest oil companies in the world include Exxon Mobil (XOM), Royal Dutch (RDS-B), Chevron (CVX), Total (TOT), Conoco Phillips( COP), and British Petroleum (BP).
(Source: Yahoo Finance from Aug 16, 2010)
Of all oil companies, Exxon Mobil has the lowest yield and one of the lowest dividend payouts. BP had a higher dividend payout and a higher dividend yield before it cut dividends this year. Exxon seems to be plowing most of its earnings into stock buybacks. Historically share buybacks have not been one of the smartest ways for management to allocate cash, as most buybacks occur when the price of the underlying is at its highest.
For example General Electric (GE) repurchased stock worth billions of dollars when the price was above $30, only to sell it back at $22 during the global financial crisis of 2007-2009. Exxon has been raising dividends, but the disproportionate amount of share buybacks to dividends suggests that management is not certain about the future profitability of the company. If they believed that oil prices would stay higher over the next few decades, this would mean that earnings per share could only go higher from here. This would support a higher dividend than the one we have today. Of course if oil prices plunge below $50 and stay there, then profitability would suffer and if dividends are too high, they might be cut. This could lead to angry shareholders and depressed stock price for some time. With buybacks however this could all be avoided, since they could be canceled at any time, without much publicity.
Other than that, Exxon Mobil (XOM) could afford to be more generous with shareholders, and raise dividends at a pace that is higher than the 5% annual dividend growth it has delivered over the past decade. That being said, Exxon Mobil (XOM) does appear to be attractively valued, as it could deliver not only decent dividend growth but solid price returns as well. Other oil companies which have stable and growing dividend payments include:
Chevron Corporation (CVX) operates as an integrated energy company worldwide. Chevron Corporation is a component of the S&P 500 and Dow Jones Industrials Indexes. The company is also a dividend achiever, which has consistently raised its dividends for 23 years in a row. Chevron trades at a P/E of 9.30, yields 3.70% and has an adequately covered dividend payment. (analysis)
Royal Dutch Shell Plc (RDS.B) operates as an oil and gas company worldwide. The company explores for, and extracts crude oil and natural gas. Royal Dutch Shell has managed to boost distributions at least since 1993. Currently the company is trading at a P/E of 11.10 and yields 6.30%. (analysis)
ConocoPhillips operates as an integrated energy company worldwide. It operates through six segments: Exploration and Production (E&P), Midstream, Refining and Marketing (R&M), LUKOIL Investment, Chemicals, and Emerging Businesses. ConocoPhillips has raised dividends for ten years in a row. Currently the company is trading at a P/E of 8.90 and yields 4%.
Full Disclosure: Long CVX RDS.B and XOM
Relevant Articles:
- Three Dividend Stocks to Capitalize on BP’s weakness
- Chevron Corporation (CVX) Dividend Stock Analysis
- Exxon Mobil (XOM) Dividend Stock Analysis
- Dividends versus Share Buybacks/Stock repurchases
Friday, August 20, 2010
Illinois Tool Works (ITW) Dividend Stock Analysis
Illinois Tool Works Inc. manufactures a range of industrial products and equipment worldwide. This dividend champion has raised dividends for 46 years in a row. The company most recently announced a 9.70% dividend increase to 34 cents/share.
Over the past decade, this dividend stock has delivered an annual total return of 5.70%.
At the same time the company has managed to increase earnings per share by 2.30% per year. In 2009, earnings per share declined by 36% due to weak revenues caused by the global recession. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $3.05 and $3.60 respectively. The company derives over 57% of its revenues from international operations. In addition to that it is operating under eight segments: Industrial Packaging, Power Systems & Electronics, Transportation, Construction Products, Food Equipment, Decorative Surfaces, Polymers & Fluids and All Other.
Return on Equity has decreased from 19% in 2000 to 12% in 2009.
Dividends per share have increased by 14% annually over the past decade. A 14% increase in dividends translates into the dividend payment doubling every 5 years on average. Since 1989 the company has indeed managed to raise dividends every 5 years on average.
The dividend payout ratio has more than doubled over the past decade, from 24% in 2000 to 64% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
Currently Illinois Tool Works trades at a P/E of 14.40, yields 2.70% and has an adequately covered dividend payment based off next year’s earnings. I would add to my position there subject to availability of funds in my portfolio.
Full Disclosure: Long ITW
Relevant Articles:
- Automatic Data Processing (ADP) Dividend Stock Analysis
- Wal-Mart (WMT): A High Dividend Growth Stock
- Chubb Corporation (CB) Dividend Stock Analysis
- Family Dollar Stores (FDO) Dividend Stock Analysis...
Over the past decade, this dividend stock has delivered an annual total return of 5.70%.
At the same time the company has managed to increase earnings per share by 2.30% per year. In 2009, earnings per share declined by 36% due to weak revenues caused by the global recession. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $3.05 and $3.60 respectively. The company derives over 57% of its revenues from international operations. In addition to that it is operating under eight segments: Industrial Packaging, Power Systems & Electronics, Transportation, Construction Products, Food Equipment, Decorative Surfaces, Polymers & Fluids and All Other.
Return on Equity has decreased from 19% in 2000 to 12% in 2009.
Dividends per share have increased by 14% annually over the past decade. A 14% increase in dividends translates into the dividend payment doubling every 5 years on average. Since 1989 the company has indeed managed to raise dividends every 5 years on average.
The dividend payout ratio has more than doubled over the past decade, from 24% in 2000 to 64% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
Currently Illinois Tool Works trades at a P/E of 14.40, yields 2.70% and has an adequately covered dividend payment based off next year’s earnings. I would add to my position there subject to availability of funds in my portfolio.
Full Disclosure: Long ITW
Relevant Articles:
- Automatic Data Processing (ADP) Dividend Stock Analysis
- Wal-Mart (WMT): A High Dividend Growth Stock
- Chubb Corporation (CB) Dividend Stock Analysis
- Family Dollar Stores (FDO) Dividend Stock Analysis...
Wednesday, August 18, 2010
Eight Dividend Stocks Yielding More than Fixed Income
Over the past two years, the yields on most investment grade fixed income securities have declined substantially. Investors who need to generate income in retirement are running out of options. For example back in 2006 and 2007 the yield on US 10 year Treasury note was almost 5%. Currently the yield on US 10 Year Treasury note is less than 3%. As a result many investors are focusing their attention to blue chip dividend stocks these days.
There are many solid Blue chip stocks which yield more than fixed income. In addition to that solid dividend stocks could also afford to increase the dividend payment, which offers protection against inflation. Thus, investors could either tie up their money for a prolonged period of time in bonds or they could purchase dividend stocks which provide a higher yield as well as the possibility of dividend growth to outrun inflation.
Finding the best dividend stocks does require some research however. Investors should evaluate whether the company researched has the ability to raise earnings for the foreseeable future. Investors should then make sure that they are not overpaying for the shares. The sustainability of the dividend payment is important as well, since a well covered dividend could withstand short-term earnings fluctuations much more easily than a not so well covered payment. In addition to that, by focusing on companies with a strong culture of paying higher dividends for at least ten consecutive years, investors would be increasing their chances of generating income in retirement that at least keeps up with inflation overtime.
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company has managed to deliver a 11.10% average annual increase in its EPS since 2000. Analysts expect a 9.80% increase in EPS to $4.83 in 2010, followed by an 8% increase to $5.23 in 2011. Yield: 3.60% (Analysis)
Chevron Corporation (CVX) operates as an integrated energy company worldwide. The company has managed to deliver a 3.10% average annual increase in its EPS since 2000. For fiscal year 2010 analysts expect earnings to increase by 53% to $8/share. Analysts also expect earnings per share to rise 25% from there to $10/share by FY 2011. Yield: 3.60% (analysis)
Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. The company has managed to increase earnings per share by 8.40% on average since the year 2000. For fiscal years 2010 and 2011, analysts expect EPS to increase from 3.69 in FY 2009 to $4.24 and $4.77. Yield: 3.40% (Analysis)
Kimberly-Clark Corporation (KMB), together with its subsidiaries, engages in the manufacture and marketing of various health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional & Other, and Health Care. Yield: 4.00% (Analysis)
The Procter & Gamble Company (PG) engages in the manufacture and sale of consumer goods worldwide. The company operates in three global business units (GBUs): Beauty, Health and Well-Being, and Household Care. Earnings per share have grown at an average pace of 12.50% per annum. For FY 2010, analysts expect the company to earn $4.15/share, which is higher than 2009’s EPS of $3.58. For FY 2011 analysts expect Procter & Gamble to earn $4.10/share. Yield: 3.20% (Analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. The company has managed to deliver a 14.30% average annual increase in its EPS over the past decade. Analysts are expecting a 17% increase in EPS to $3.45 for 2010 and $3.76 by 2011. Yield: 3.10% (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. 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. Yield: 5% (Analysis)
Sysco Corporation (SYY), through its subsidiaries, markets and distributes a range of food and related products primarily to the foodservice industry in the United States. The company has managed to deliver an 11.20% average annual increase in its EPS since 2000 to 1.80/share. For the next two years analysts expect EPS to increase to $1.81 and $1.92 respectively. Yield: 3.20% (Analysis)
While dividend stocks would likely produce total returns that are higher than purchasing fixed income today, bonds still should have a place in a retirement portfolio. An allocation to US Treasuries would have protected one’s portfolio during the Great Depression or during the most recent financial crisis. Ensuring that your portfolio lasts a lifetime should be much more important than focusing on one asset class. Blue Chip dividend stocks would provide inflation adjusted stream of income over time, while even a modest 25% allocation to bonds purchased over time would provide payout stability in the event of a deflation or during an economic recession coupled with low inflation. In addition to that stocks are inherently riskier than government bonds, and as such there is a possibility of losing principal invested.
Full Disclosure: Long all stocks mentioned
This article was included in the Carnival of Personal Finance #272 – Yogi Berra Edition!
Relevant Articles:
- Inflation Proof your income in retirement with Dividend Stocks
- Living off dividends in retirement
- Fixed Income for dividend investors
- Dividends Stocks versus Fixed Income
There are many solid Blue chip stocks which yield more than fixed income. In addition to that solid dividend stocks could also afford to increase the dividend payment, which offers protection against inflation. Thus, investors could either tie up their money for a prolonged period of time in bonds or they could purchase dividend stocks which provide a higher yield as well as the possibility of dividend growth to outrun inflation.
Finding the best dividend stocks does require some research however. Investors should evaluate whether the company researched has the ability to raise earnings for the foreseeable future. Investors should then make sure that they are not overpaying for the shares. The sustainability of the dividend payment is important as well, since a well covered dividend could withstand short-term earnings fluctuations much more easily than a not so well covered payment. In addition to that, by focusing on companies with a strong culture of paying higher dividends for at least ten consecutive years, investors would be increasing their chances of generating income in retirement that at least keeps up with inflation overtime.
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company has managed to deliver a 11.10% average annual increase in its EPS since 2000. Analysts expect a 9.80% increase in EPS to $4.83 in 2010, followed by an 8% increase to $5.23 in 2011. Yield: 3.60% (Analysis)
Chevron Corporation (CVX) operates as an integrated energy company worldwide. The company has managed to deliver a 3.10% average annual increase in its EPS since 2000. For fiscal year 2010 analysts expect earnings to increase by 53% to $8/share. Analysts also expect earnings per share to rise 25% from there to $10/share by FY 2011. Yield: 3.60% (analysis)
Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. The company has managed to increase earnings per share by 8.40% on average since the year 2000. For fiscal years 2010 and 2011, analysts expect EPS to increase from 3.69 in FY 2009 to $4.24 and $4.77. Yield: 3.40% (Analysis)
Kimberly-Clark Corporation (KMB), together with its subsidiaries, engages in the manufacture and marketing of various health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional & Other, and Health Care. Yield: 4.00% (Analysis)
The Procter & Gamble Company (PG) engages in the manufacture and sale of consumer goods worldwide. The company operates in three global business units (GBUs): Beauty, Health and Well-Being, and Household Care. Earnings per share have grown at an average pace of 12.50% per annum. For FY 2010, analysts expect the company to earn $4.15/share, which is higher than 2009’s EPS of $3.58. For FY 2011 analysts expect Procter & Gamble to earn $4.10/share. Yield: 3.20% (Analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. The company has managed to deliver a 14.30% average annual increase in its EPS over the past decade. Analysts are expecting a 17% increase in EPS to $3.45 for 2010 and $3.76 by 2011. Yield: 3.10% (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. 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. Yield: 5% (Analysis)
Sysco Corporation (SYY), through its subsidiaries, markets and distributes a range of food and related products primarily to the foodservice industry in the United States. The company has managed to deliver an 11.20% average annual increase in its EPS since 2000 to 1.80/share. For the next two years analysts expect EPS to increase to $1.81 and $1.92 respectively. Yield: 3.20% (Analysis)
While dividend stocks would likely produce total returns that are higher than purchasing fixed income today, bonds still should have a place in a retirement portfolio. An allocation to US Treasuries would have protected one’s portfolio during the Great Depression or during the most recent financial crisis. Ensuring that your portfolio lasts a lifetime should be much more important than focusing on one asset class. Blue Chip dividend stocks would provide inflation adjusted stream of income over time, while even a modest 25% allocation to bonds purchased over time would provide payout stability in the event of a deflation or during an economic recession coupled with low inflation. In addition to that stocks are inherently riskier than government bonds, and as such there is a possibility of losing principal invested.
Full Disclosure: Long all stocks mentioned
This article was included in the Carnival of Personal Finance #272 – Yogi Berra Edition!
Relevant Articles:
- Inflation Proof your income in retirement with Dividend Stocks
- Living off dividends in retirement
- Fixed Income for dividend investors
- Dividends Stocks versus Fixed Income
Monday, August 16, 2010
Six Notable Dividend Increases for the week
Few companies have managed to raise dividends for several consecutive years in a row. For example there are fewer than 300 companies listed on US exchanges which have raised distributions for more than one decade. Of particular interest to many dividend investors are companies which are able to raise earnings, which fuels future dividend growth. As a result, investors in those companies have much better chances of generating an income stream which meets or exceeds the rate of inflation.
The most notable companies that raised dividends last week include:
Aflac Incorporated (AFL), through its subsidiary, American Family Life Assurance Company of Columbus (Aflac), provides supplemental health and life insurance. The company raised its quarterly dividend by 7.10% to 30 cents/share. The company also announced today its intent to resume share repurchase activities. This dividend aristocrat has raised dividends for 28 consecutive years. Yield: 2.50% (analysis)
Aflac is an example that a company does not need to raise dividends every year, in order for it's annual dividend payment to increase. The quarterly dividend was last raised in the first quarter of 2009, and remained unchanged for the next seven quarters. The annual dividend still increased, mostly helped by the most recent dividend increase.
Questar Corporation (STR), a natural gas-focused energy company, through its subsidiaries, engages in the gas and oil exploration and production, midstream field services, energy marketing, interstate gas transportation, and retail gas distribution businesses. The company increased quarterly dividends by 7.70% to 14 cents/share. This was the 31st consecutive annual dividend increase for this dividend aristocrat. Yield: 3.30%
Parker-Hannifin Corporation (PH) manufactures fluid power systems, electromechanical controls, and related components. The company raised quarterly dividend by 3.80% to 27 cents/share. This was the second dividend increase this year. This dividend champion has raised dividend for 54 years in a row. Yield: 1.70%
Connecticut Water Service, Inc. (CTWS), through its subsidiaries, operates as a regulated water company in Connecticut. It operates in three segments: Water Activities, Real Estate Transactions, and Services and Rentals. The company raised its quarterly dividend by 2.20% to 23.25 cents/share. This dividend champion has increased dividend payments for each of the last 41 years. Yield: 4.30%
The Scotts Miracle-Gro Company (SMG), together with its subsidiaries, manufactures, markets, and sells lawn and garden care products primarily in North America and the European Union. The company raised its quarterly dividend by 100% from $0.125 to $0.25/share. Yield: 2.10%
Textainer Group Holdings Limited (TGH), through its subsidiaries, engages in the purchase, ownership, management, leasing, and disposal of intermodal containers worldwide. The company raised its quarterly dividend by 4.20% to 25 cents/share. This was the first dividend increase since 2008. Yield: 3.60%
Torchmark Corporation (TMK), through its subsidiaries, provides individual life and supplemental health insurance products, and annuities to middle income households. The company raised its quarterly dividend by 6.70% to 16 cents/share. The company has raised dividends since 2005. The company, which was one of the original dividend aristocrats, was removed from the index in 1996. Yield: 1.30%
Full Disclosure: Long AFL
This article was included in the The Wealth Builder Carnival #3
Relevant Articles:
- Aflac (AFL) Dividend Stock Analysis
- Financial Stocks for Dividend Investors
- Twelve Dividend Stocks in the news
- Why Dividend Growth Stocks Rock?
The most notable companies that raised dividends last week include:
Aflac Incorporated (AFL), through its subsidiary, American Family Life Assurance Company of Columbus (Aflac), provides supplemental health and life insurance. The company raised its quarterly dividend by 7.10% to 30 cents/share. The company also announced today its intent to resume share repurchase activities. This dividend aristocrat has raised dividends for 28 consecutive years. Yield: 2.50% (analysis)
Aflac is an example that a company does not need to raise dividends every year, in order for it's annual dividend payment to increase. The quarterly dividend was last raised in the first quarter of 2009, and remained unchanged for the next seven quarters. The annual dividend still increased, mostly helped by the most recent dividend increase.
Questar Corporation (STR), a natural gas-focused energy company, through its subsidiaries, engages in the gas and oil exploration and production, midstream field services, energy marketing, interstate gas transportation, and retail gas distribution businesses. The company increased quarterly dividends by 7.70% to 14 cents/share. This was the 31st consecutive annual dividend increase for this dividend aristocrat. Yield: 3.30%
Parker-Hannifin Corporation (PH) manufactures fluid power systems, electromechanical controls, and related components. The company raised quarterly dividend by 3.80% to 27 cents/share. This was the second dividend increase this year. This dividend champion has raised dividend for 54 years in a row. Yield: 1.70%
Connecticut Water Service, Inc. (CTWS), through its subsidiaries, operates as a regulated water company in Connecticut. It operates in three segments: Water Activities, Real Estate Transactions, and Services and Rentals. The company raised its quarterly dividend by 2.20% to 23.25 cents/share. This dividend champion has increased dividend payments for each of the last 41 years. Yield: 4.30%
The Scotts Miracle-Gro Company (SMG), together with its subsidiaries, manufactures, markets, and sells lawn and garden care products primarily in North America and the European Union. The company raised its quarterly dividend by 100% from $0.125 to $0.25/share. Yield: 2.10%
Textainer Group Holdings Limited (TGH), through its subsidiaries, engages in the purchase, ownership, management, leasing, and disposal of intermodal containers worldwide. The company raised its quarterly dividend by 4.20% to 25 cents/share. This was the first dividend increase since 2008. Yield: 3.60%
Torchmark Corporation (TMK), through its subsidiaries, provides individual life and supplemental health insurance products, and annuities to middle income households. The company raised its quarterly dividend by 6.70% to 16 cents/share. The company has raised dividends since 2005. The company, which was one of the original dividend aristocrats, was removed from the index in 1996. Yield: 1.30%
Full Disclosure: Long AFL
This article was included in the The Wealth Builder Carnival #3
Relevant Articles:
- Aflac (AFL) Dividend Stock Analysis
- Financial Stocks for Dividend Investors
- Twelve Dividend Stocks in the news
- Why Dividend Growth Stocks Rock?
Friday, August 13, 2010
Cardinal Health (CAH) Dividend Stock Analysis
Cardinal Health, Inc. provides health care products and services primarily in the United States. The company is a member of the Dividend Achievers index and has raised dividends for 21 years in a row. The company last raised its dividend by 11% to 21.50 cents/share in May 2010.
Over the past decade this dividend stock has delivered a total return of 1.40% per year.
Earnings per share have increased by 7.90% per year over the past decade. Since 2004 however the company has delivered no growth in earnings. The earnings picture is expected to further deteriorate in FY 2010 and FY 2011, as earnings per share are expected to contract to $2.21 and $2.44 respectively. The reason for the decrease in earnings include CareFusion Corp’s (CFN) spinoff, decrease in drug volumes due to the recession and a shift of significant amount of the drug volumes to fee-for-service compensation by most drug makers. Longer term drug volumes would increase, as the population ages and as millions of baby boomers will need increased medical attention. With increased penetration of low priced generic drugs being available in the market, revenues could be further depressed. One positive of generic drugs is that margins are higher in comparison to branded drugs. The problem is that the prices of generic drugs are much lower than prices for branded drugs.
The annual dividend per share has increased by a staggering 31.80% over the past decade, which was several times faster than the growth in earnings. The disconnect between earnings and dividend growth came as a result of the increase in the dividend payout ratio. If the company manages to maintain earnings per share at $3, the dividend could increase by 10% annually over the next decade and would still be adequately covered. The company has managed to double dividends every three and a half years on average since 1988.
Since reaching its highs at 20% in 2003, the return on equity has declined steadily. Any earnings reinvested back into the business have not led to increase in net income and might have even led to losses, which could be one reason for the decline in returns since 2003.
The dividend payout ratio has increased from 3% in 2000 to 19% in 2009. As the company’s earnings have stagnated in recent years, and given management’s recent history of dividend increases, I expect the company to share a greater proportion of its profits with shareholders in the form of dividends.
Right now the company is trading at a P/E ratio of 17 and yields 2.40%, with an adequately covered dividend payment. I view the stock as a hold. Cardinal Health is a prime example why investors should not purchase stocks with long history dividend growth on autopilot without doing any research. While the company could expand its payout ratio for the next decade until it reaches danger territory at 50%, and yields on cost could grow to 5% or 6%, without the ability to grow earnings per share, future dividend growth will be limited.
Full Disclosure: None
Relevant Articles:
Over the past decade this dividend stock has delivered a total return of 1.40% per year.
Earnings per share have increased by 7.90% per year over the past decade. Since 2004 however the company has delivered no growth in earnings. The earnings picture is expected to further deteriorate in FY 2010 and FY 2011, as earnings per share are expected to contract to $2.21 and $2.44 respectively. The reason for the decrease in earnings include CareFusion Corp’s (CFN) spinoff, decrease in drug volumes due to the recession and a shift of significant amount of the drug volumes to fee-for-service compensation by most drug makers. Longer term drug volumes would increase, as the population ages and as millions of baby boomers will need increased medical attention. With increased penetration of low priced generic drugs being available in the market, revenues could be further depressed. One positive of generic drugs is that margins are higher in comparison to branded drugs. The problem is that the prices of generic drugs are much lower than prices for branded drugs.
The annual dividend per share has increased by a staggering 31.80% over the past decade, which was several times faster than the growth in earnings. The disconnect between earnings and dividend growth came as a result of the increase in the dividend payout ratio. If the company manages to maintain earnings per share at $3, the dividend could increase by 10% annually over the next decade and would still be adequately covered. The company has managed to double dividends every three and a half years on average since 1988.
Since reaching its highs at 20% in 2003, the return on equity has declined steadily. Any earnings reinvested back into the business have not led to increase in net income and might have even led to losses, which could be one reason for the decline in returns since 2003.
The dividend payout ratio has increased from 3% in 2000 to 19% in 2009. As the company’s earnings have stagnated in recent years, and given management’s recent history of dividend increases, I expect the company to share a greater proportion of its profits with shareholders in the form of dividends.
Right now the company is trading at a P/E ratio of 17 and yields 2.40%, with an adequately covered dividend payment. I view the stock as a hold. Cardinal Health is a prime example why investors should not purchase stocks with long history dividend growth on autopilot without doing any research. While the company could expand its payout ratio for the next decade until it reaches danger territory at 50%, and yields on cost could grow to 5% or 6%, without the ability to grow earnings per share, future dividend growth will be limited.
Full Disclosure: None
Relevant Articles:
Wednesday, August 11, 2010
33 Dividend Champions to Consider
As a dividend growth investor, two of the best dividend lists for further research that I have focused on have been the S&P Dividend Aristocrats and the Dividend Achievers Indexes. The first list focuses on stocks which have increased dividends for 25 consecutive years in row, while the second list focuses on stocks which have consistently raised distributions for over one decade. The Dividend Aristocrats index has supposedly outperformed the stock market over the past five years. In my research I have uncovered many dividend stocks however which have raised dividends for more than 25 years in a row, yet they are not included in the Dividend Aristocrats Index. I discussed this in dividend conspiracies.
The limitations behind the dividend aristocrat’s index are that first a company has to be included in the S&P 500 before it qualifies. In addition to that, S&P requires minimum market capitalization of $3 billion and an average daily trading volume of $5 million. This means that even if a company has managed to raise annual dividends for 25 years in a row, it might not be included in the elite dividend index if it has a low market capitalization or that it is relatively illiquid. As a dividend investor, the last two criteria are irrelevant to me.
Luckily, dividend investor David Fish has created a list of dividend stocks which have raised distributions for 25 consecutive years and has named it the dividend champions list. His list includes 100 companies, which is more than twice the size of the Dividend Aristocrats. I ran a screen on the list in order to identify stocks for further research. My criteria were as follows:
1) Price/Earnings Ratio below 20
2) Dividend Yield > 2.50%
3) Dividend Payout Ratio <60%
(Click image to enlarge)
Basic Materials
Air Products and Chemicals, Inc. (APD) offers atmospheric gases, process and specialty gases, performance materials, and equipment and services worldwide. (Analysis)
Exxon Mobil Corporation (XOM) engages in the exploration, production, transportation, and sale of crude oil and natural gas. It also involves in the manufacture, transportation, and sale of petroleum products. (Analysis)
Conglomerates
3M Company (MMM), together with its subsidiaries, operates as a diversified technology company worldwide. It operates in six segments: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics; and Electro and Communications. (Analysis)
Consumer Goods
Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. (Analysis)
The Clorox Company (CLX) engages in the production, marketing, and sales of consumer products in the United States and internationally. The company operates through four segments: Cleaning, Lifestyle, Household, and International. (Analysis)
Kimberly-Clark Corporation (KMB), together with its subsidiaries, engages in the manufacture and marketing of various health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional & Other, and Health Care. (Analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. (Analysis)
PepsiCo, Inc. (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, (Analysis)
The Procter & Gamble Company (PG) engages in the manufacture and sale of consumer goods worldwide. The company operates in three global business units (GBUs): Beauty, Health and Well-Being, and Household Care. (Analysis)
Sonoco Products Company (SON) provides industrial and consumer packaging products, and packaging services in North and South America, Europe, Australia, and Asia.
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. (Analysis)
V.F. Corporation (VFC), together with its subsidiaries, engages in the design, manufacture, and sourcing of branded apparel and related products for men, women, and children in the United States. (Analysis)
Weyco Group, Inc. (WEYS) engages in the retail and wholesale distribution of men’s footwear in North America, Australia, South Africa, the Asia Pacific, and Europe. It offers men’s casual, dress, and fashion shoes under Florsheim, Nunn Bush, Stacy Adams, Brass Boot, and Nunn Bush NXXT brands.
Financial
Bank of Hawaii Corporation (BOH) operates as the holding company for Bank of Hawaii that provides a range of financial services and products in Hawaii and the Pacific Islands. The company operates in four segments: Retail Banking, Commercial Banking, Investment Services, and Treasury.
The Chubb Corporation (CB), through its subsidiaries, provides property and casualty insurance to businesses and individuals. (Analysis)
Commerce Bancshares, Inc. (CBSH) operates as the bank holding company for Commerce Bank, N.A. that provides various general banking services to individuals and businesses. It operates in three segments: Consumer, Commercial, and Wealth. (Analysis)
Cincinnati Financial Corporation (CINF), through its subsidiaries, operates in the property casualty insurance business in the United States. It operates in four segments: Commercial Lines Property Casualty Insurance, Personal Lines Property Casualty Insurance, Life Insurance, and Investment. (Analysis)
Healthcare
Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. (Analysis)
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. (Analysis)
Eli Lilly and Company (LLY) develops, manufactures, and sells pharmaceutical products worldwide. If the company doesn’t raise dividends in 2010 however, it would be out of the dividend champions list. (Analysis)
Medtronic, Inc. (MDT) develops, manufactures, and sells device-based medical therapies worldwide. The company operates in the following segments:Cardiac Rhythm Disease Management , Spinal, CardioVascular, Neuromodulation, Diabetes, Surgical Technologies and Physio-Control.
Teleflex Incorporated (TFX) primarily develops, manufactures, and supplies single-use medical devices used by hospitals and healthcare providers worldwide. The company operates through three segments, Medical, Aerospace and Commercial. (Analysis)
Industrial Goods
Emerson Electric Co. (EMR), a diversified global technology company, engages in designing and supplying product technology, as well as delivering engineering services and solutions to various industrial, commercial, and consumer markets worldwide. The company operates in five segments: Process Management, Industrial Automation, Network Power, Climate Technologies and Appliance and Tools. (Analysis)
Illinois Tool Works Inc. (ITW) manufactures a range of industrial products and equipment worldwide. The company’s segments include Transportation, Industrial Packaging, Food Equipment, Power Systems & Electronics, Construction Products, Polymers & Fluids and Decorative Surfaces. (Analysis)
RPM International Inc.(RPM) engages in the manufacture, marketing, and sale of various specialty chemical products to industrial and consumer markets worldwide. The company operates through two segments, Industrial and Consumer. (Analysis)
Services
McDonald’s Corporation (MCD), together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonalds restaurants that offer various food items, soft drinks, coffee, and other beverages. (Analysis)
The McGraw-Hill Companies, Inc. (MHP) provides information services and products to the education, financial services, and business information markets worldwide. It operates in three segments: McGraw-Hill Education, Financial Services, and Information & Media. (Analysis)
Sysco Corporation (SYY), through its subsidiaries, markets and distributes a range of food and
related products primarily to the foodservice industry in the United States. (Analysis)
Walgreen Co. (WAG), together with its subsidiaries, operates a chain of drugstores in the United States. The drugstores sell prescription and non-prescription drugs, and general merchandise. (Analysis)
Technology
Automatic Data Processing, Inc. (ADP) provides technology-based outsourcing solutions to employers, and vehicle retailers and manufacturers. It operates in three segments: Employer Services, Professional Employer Organization Services, and Dealer Services. (Analysis)
Utilities
American States Water Company (AWR), through its subsidiaries, provides water, electric, and contracted services in the United States. The company engages in the purchase, production, distribution, and sale of water in California; and the distribution of electricity in San Bernardino Mountain communities.
National Fuel Gas Company (NFG), through its subsidiaries, operates as a diversified energy company primarily in the United States. The company operates through four segments: Utility, Pipeline and Storage, Exploration and Production, and Energy Marketing.
Piedmont Natural Gas Company, Inc. (PNY), an energy services company, distributes natural gas to residential, commercial, industrial, and power generation customers in portions of North Carolina, South Carolina, and Tennessee.
Mechanical investing is not what I am writing about here. It is just the beginning step in order to bring the list to a manageable list. The rest is up to investor to determine whether a certain stock is a buy.
Full Disclosure: Long ABT, ADP,APD, CB, CINF, CL, CLX, EMR, JNJ, KMB, KO, MCD, MHP, MMM PEP,PG, RPM, SYY, UVV, WAG, XOM
This article was included in the Carnival of Personal Finance #271 – The Secret to Successful Budgeting eBook Edition
Relevant Articles:
- A dividend portfolio for the long-term
- 14 Dividend Stocks with Dividend Growth Potential
- 16 Quality Dividend Stocks for the long run
- The right time to buy dividend stocks
The limitations behind the dividend aristocrat’s index are that first a company has to be included in the S&P 500 before it qualifies. In addition to that, S&P requires minimum market capitalization of $3 billion and an average daily trading volume of $5 million. This means that even if a company has managed to raise annual dividends for 25 years in a row, it might not be included in the elite dividend index if it has a low market capitalization or that it is relatively illiquid. As a dividend investor, the last two criteria are irrelevant to me.
Luckily, dividend investor David Fish has created a list of dividend stocks which have raised distributions for 25 consecutive years and has named it the dividend champions list. His list includes 100 companies, which is more than twice the size of the Dividend Aristocrats. I ran a screen on the list in order to identify stocks for further research. My criteria were as follows:
1) Price/Earnings Ratio below 20
2) Dividend Yield > 2.50%
3) Dividend Payout Ratio <60%
(Click image to enlarge)
Basic Materials
Air Products and Chemicals, Inc. (APD) offers atmospheric gases, process and specialty gases, performance materials, and equipment and services worldwide. (Analysis)
Exxon Mobil Corporation (XOM) engages in the exploration, production, transportation, and sale of crude oil and natural gas. It also involves in the manufacture, transportation, and sale of petroleum products. (Analysis)
Conglomerates
3M Company (MMM), together with its subsidiaries, operates as a diversified technology company worldwide. It operates in six segments: Industrial and Transportation; Health Care; Consumer and Office; Safety, Security and Protection Services; Display and Graphics; and Electro and Communications. (Analysis)
Consumer Goods
Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. (Analysis)
The Clorox Company (CLX) engages in the production, marketing, and sales of consumer products in the United States and internationally. The company operates through four segments: Cleaning, Lifestyle, Household, and International. (Analysis)
Kimberly-Clark Corporation (KMB), together with its subsidiaries, engages in the manufacture and marketing of various health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional & Other, and Health Care. (Analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. (Analysis)
PepsiCo, Inc. (PEP) manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, (Analysis)
The Procter & Gamble Company (PG) engages in the manufacture and sale of consumer goods worldwide. The company operates in three global business units (GBUs): Beauty, Health and Well-Being, and Household Care. (Analysis)
Sonoco Products Company (SON) provides industrial and consumer packaging products, and packaging services in North and South America, Europe, Australia, and Asia.
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. (Analysis)
V.F. Corporation (VFC), together with its subsidiaries, engages in the design, manufacture, and sourcing of branded apparel and related products for men, women, and children in the United States. (Analysis)
Weyco Group, Inc. (WEYS) engages in the retail and wholesale distribution of men’s footwear in North America, Australia, South Africa, the Asia Pacific, and Europe. It offers men’s casual, dress, and fashion shoes under Florsheim, Nunn Bush, Stacy Adams, Brass Boot, and Nunn Bush NXXT brands.
Financial
Bank of Hawaii Corporation (BOH) operates as the holding company for Bank of Hawaii that provides a range of financial services and products in Hawaii and the Pacific Islands. The company operates in four segments: Retail Banking, Commercial Banking, Investment Services, and Treasury.
The Chubb Corporation (CB), through its subsidiaries, provides property and casualty insurance to businesses and individuals. (Analysis)
Commerce Bancshares, Inc. (CBSH) operates as the bank holding company for Commerce Bank, N.A. that provides various general banking services to individuals and businesses. It operates in three segments: Consumer, Commercial, and Wealth. (Analysis)
Cincinnati Financial Corporation (CINF), through its subsidiaries, operates in the property casualty insurance business in the United States. It operates in four segments: Commercial Lines Property Casualty Insurance, Personal Lines Property Casualty Insurance, Life Insurance, and Investment. (Analysis)
Healthcare
Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. (Analysis)
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. (Analysis)
Eli Lilly and Company (LLY) develops, manufactures, and sells pharmaceutical products worldwide. If the company doesn’t raise dividends in 2010 however, it would be out of the dividend champions list. (Analysis)
Medtronic, Inc. (MDT) develops, manufactures, and sells device-based medical therapies worldwide. The company operates in the following segments:Cardiac Rhythm Disease Management , Spinal, CardioVascular, Neuromodulation, Diabetes, Surgical Technologies and Physio-Control.
Teleflex Incorporated (TFX) primarily develops, manufactures, and supplies single-use medical devices used by hospitals and healthcare providers worldwide. The company operates through three segments, Medical, Aerospace and Commercial. (Analysis)
Industrial Goods
Emerson Electric Co. (EMR), a diversified global technology company, engages in designing and supplying product technology, as well as delivering engineering services and solutions to various industrial, commercial, and consumer markets worldwide. The company operates in five segments: Process Management, Industrial Automation, Network Power, Climate Technologies and Appliance and Tools. (Analysis)
Illinois Tool Works Inc. (ITW) manufactures a range of industrial products and equipment worldwide. The company’s segments include Transportation, Industrial Packaging, Food Equipment, Power Systems & Electronics, Construction Products, Polymers & Fluids and Decorative Surfaces. (Analysis)
RPM International Inc.(RPM) engages in the manufacture, marketing, and sale of various specialty chemical products to industrial and consumer markets worldwide. The company operates through two segments, Industrial and Consumer. (Analysis)
Services
McDonald’s Corporation (MCD), together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonalds restaurants that offer various food items, soft drinks, coffee, and other beverages. (Analysis)
The McGraw-Hill Companies, Inc. (MHP) provides information services and products to the education, financial services, and business information markets worldwide. It operates in three segments: McGraw-Hill Education, Financial Services, and Information & Media. (Analysis)
Sysco Corporation (SYY), through its subsidiaries, markets and distributes a range of food and
related products primarily to the foodservice industry in the United States. (Analysis)
Walgreen Co. (WAG), together with its subsidiaries, operates a chain of drugstores in the United States. The drugstores sell prescription and non-prescription drugs, and general merchandise. (Analysis)
Technology
Automatic Data Processing, Inc. (ADP) provides technology-based outsourcing solutions to employers, and vehicle retailers and manufacturers. It operates in three segments: Employer Services, Professional Employer Organization Services, and Dealer Services. (Analysis)
Utilities
American States Water Company (AWR), through its subsidiaries, provides water, electric, and contracted services in the United States. The company engages in the purchase, production, distribution, and sale of water in California; and the distribution of electricity in San Bernardino Mountain communities.
National Fuel Gas Company (NFG), through its subsidiaries, operates as a diversified energy company primarily in the United States. The company operates through four segments: Utility, Pipeline and Storage, Exploration and Production, and Energy Marketing.
Piedmont Natural Gas Company, Inc. (PNY), an energy services company, distributes natural gas to residential, commercial, industrial, and power generation customers in portions of North Carolina, South Carolina, and Tennessee.
Mechanical investing is not what I am writing about here. It is just the beginning step in order to bring the list to a manageable list. The rest is up to investor to determine whether a certain stock is a buy.
Full Disclosure: Long ABT, ADP,APD, CB, CINF, CL, CLX, EMR, JNJ, KMB, KO, MCD, MHP, MMM PEP,PG, RPM, SYY, UVV, WAG, XOM
This article was included in the Carnival of Personal Finance #271 – The Secret to Successful Budgeting eBook Edition
Relevant Articles:
- A dividend portfolio for the long-term
- 14 Dividend Stocks with Dividend Growth Potential
- 16 Quality Dividend Stocks for the long run
- The right time to buy dividend stocks
Monday, August 9, 2010
24 Dividend Paying Companies Confident in the Economic Rebound
Management typically evaluates short and mid-term economic and business conditions when they decide on allocation of limited resources. Cash is one such resource, which could either be reinvested back in the business, or returned to shareholders. Companies typically achieve some optimal balance in allocating cash flows from earnings between owners and the business. It is interesting to note than when management expects rosy business conditions in the next two to three years, dividends have a higher chance of getting raised. Back in 2007 and 2008 when the economic picture was particularly gloomy, the boards of directors of many companies cut dividends in anticipation of financial Armageddon. With assistance from the US Government this Armageddon has been averted. While the economic situation is not as good as it were during the 1990’s, nevertheless the boards of many companies have started raising dividends at an increasing pace. This is a bullish sign, as it shows that managers are mostly optimistic for near-term business conditions.
Dover Corporation (DOV) and its subsidiaries manufacture industrial products and components, as well as provide related services and consumables in the United States and internationally. Dover Corporation increased its quarterly cash dividend to $0.275 per share, from the previous $0.26 per share, an increase of 6%. This dividend aristocrat has raised distributions for 55 consecutive years. Yield: 2.30% (analysis)
Leggett & Platt (LEG), Incorporated designs and produces a range of engineered components and products worldwide. Leggett & Platt raises its quarterly dividend by 3.8% from $0.26 to $0.27 per share. The company is a member of the dividend aristocrats index, and has raised distributions for 40 years in a row. Yield: 5.10%
Carlisle Companies Incorporated (CSL) manufactures construction materials in the United States and internationally. This dividend champion raised its quarterly dividend by 6.30% to 17 cents/share. This was the 34th consecutive annual dividend increase for this dividend champion. Yield: 2.10% (analysis)
Illinois Tool Works Inc. (ITW) manufactures a range of industrial products and equipment worldwide. The company raised its quarterly dividend by 9.70% to 34 cents/share. This was the 46th consecutive annual dividend increase for this dividend champion. Yield: 3% (analysis)
Harleysville Group Inc. (HGIC), through its subsidiaries, engages in the property and casualty insurance business primarily in the eastern and Midwestern United States. The company increased its quarterly dividend by 11% to 36 cents/share. This dividend achiever has raised distributions for 24 consecutive years. Yield: 4.70%
Aqua America, Inc. (WTR), through its subsidiaries, operates regulated utilities that provide water or wastewater services in the United States. Aqua America’s Board of Directors announced a 6.90% increase in the company’s quarterly dividend to 15.50 cents/share. This dividend achiever has raised distributions for 19 years in a row. Yield: 3.10%
Murphy Oil Corporation (MUR) engages in the exploration and production of oil and gas properties worldwide. It explores for and produces crude oil, natural gas, natural gas liquids, condensate, and synthetic oil. Murphy Oil raised its quarterly dividend payment by 10% from $0.25 to $0.275 per share. The company, which is a member of the dividend achievers index, has raised its annual dividend since 2000. Yield: 2%
Acme United Corporation (ACU) produces and sells cutting devices, measuring instruments, and safety products for school, office, home, hardware, and industrial use in the United States, Canada, Europe, and Asia. Acme United Corporation increased its quarterly dividend by 20% to 6 cents/share. The company has raised dividends for 5 consecutive years. Yield: 2.40%
Monsanto Company (MON), together with its subsidiaries, provides agricultural products for farmers in the United States and internationally. Monsanto Company increased in the quarterly dividend on its common shares from $0.265 cents per share to $0.28 per share. The company has raised annual dividends since 2002. Yield 1.90%
Delphi Financial Group, Inc. (DFG), together with its subsidiaries, provides integrated employee benefit services. Delphi Financial Group, Inc. increased its quarterly dividend by 10% to 11 cents/share. The company has raised annual dividends since 2002. Yield: 1.70%
Microchip Technology Incorporated (MCHP), together with its subsidiaries, develops and manufactures semiconductor products for various embedded control applications. Microchip, Inc. (MCHP) increased its Quarterly dividend to $0.34/share. The company has consistently raised distributions since 2003. Yield: 4.40%
W&T Offshore, Inc.(WTI), together with its subsidiaries, engages in the acquisition, exploitation, exploration, production, and development of oil and natural gas properties in the Gulf of Mexico. W Offshore, Inc increased the regular cash quarterly dividend to $0.04 per share from $0.03 per share. This was the first dividend increase since 2006. Yield: 1.60%
Atrion Corporation (ATRI) develops and manufactures ophthalmology, cardiovascular, and fluid delivery devices primarily for medical applications in the United States and internationally. Atrion Corporation announced an increase in its quarterly cash dividend from $0.36 per share to $0.42 per share. The company has consistently raised dividends since 2004. Yield: 1.20%
STERIS Corporation (STE) develops, manufactures, and markets infection prevention, contamination control, microbial reduction, and surgical support products and services to healthcare, pharmaceutical, scientific, research, industrial, and governmental customers worldwide. Steris’s Board of Directors has authorized a four cent increase in its quarterly dividend to $0.15 per common share. The company has consistently raised annual dividends since 2005. Yield: 1.90%
Euroseas Ltd. (ESEA), together with and subsidiaries, provides ocean-going transportation services worldwide. Euroseas increased its quarterly dividend by 20% to 6 cents/share. Yield: 6.80%
NuStar GP Holdings, LLC (NSH) owns general partner and limited partner interests in NuStar Energy L.P. that engages in the terminalling and storage of petroleum products, transportation of petroleum products and anhydrous ammonia, and marketing of asphalt and fuels. NuStar GP Holdings, LLC increased its quarterly distribution to 46 cents/unit, which was 2.20% higher than last quarter’s rate of distribution. The company has consistently raised distributions since 2007. Yield: 6%
Buckeye GP Holdings L.P. (BGH), through its interest in Buckeye Partners, L.P., primarily operates refined petroleum products pipeline systems in the United States. Buckeye GP Holdings L.P. raised its quarterly cash distribution to 45 cents/unit, which represents an increase in the quarterly distribution rate of 4.7 percent compared to the most recent cash distribution of $0.43 paid in May 2010 and an increase of 21.6 percent compared to the quarterly cash distribution of $0.37 paid with respect to the second quarter of 2009. This master limited partnership has raised distributions every quarter since 2007 and yields 4.20%.
PetMed Express, Inc. (PETS), doing business as 1-800-PetMeds, markets prescription and non-prescription pet medications; and other health products for dogs, cats, and horses direct to the consumer in the United States. PetMed Express, Inc. raised its quarterly distribution by 25% to 12.50 cents/share. Yield: 3.10%
Nationwide Health Properties, Inc. (NHP) operates as a real estate investment trust (REIT) that invests primarily in healthcare-related senior housing and long-term care facilities in the United States. Nationwide Health Properties, Inc. raised its quarterly dividend by 2.20% to 46 cents/share. Yield: 4.80%
Broadridge Financial Solutions, Inc. (BR) provides technology-based solutions to the financial services industry in the United States, Canada, and the United Kingdom. Broadridge Financial Solutions, Inc. (BR) announced that its Board of Directors has approved a 7% increase in its quarterly cash dividend of $0.15 per share. Yield: 2.90%
EXCO Resources, Inc. (XCO), an independent oil and natural gas company, engages in the exploration, exploitation, development, and production of onshore North American oil and natural gas properties. EXCO Resources, Inc. (XCO) declared a third quarter cash dividend of $0.04 per share, a $0.01 per share (33%) increase from the previous quarterly rate of $0.03 per share. Yield: 1%
Chemed Corporation (CHE), through its subsidiaries, provides hospice care, and repair and maintenance services in the United States. The company raised its quarterly distribution by 16.70% to 14 cents/share. This was the second consecutive dividend increase since 2009. Yield: 1.10%
CMS Energy Corporation (CMS), through its subsidiaries, operates as an energy company primarily in Michigan. It operates in three segments: Electric Utility, Gas Utility, and Enterprises. The company raised its quarterly dividend by 40% to 21 cents/share. The company has raised dividends since 2008. Before you get excited about this increase however, it is important to notice that CMS Energy suspended its dividend for a 4 year period between 2003 and 2007. Yield: 5%
BCE Inc. (BCE) provides a suite of communication services to residential and business customers primarily in Canada. BCE increased annual dividend by 5% to $1.83 per year. Yield: 5.80%
Full Disclosure: Long DOV and ITW
Relevant Articles:
- 12 High Yield Stocks Raising Dividends
- General Electric (GE) raises dividend; 15 other companies follow suit
- Twelve Dividend Stocks in the news
- Five Reliable Dividend Stocks in the News
Dover Corporation (DOV) and its subsidiaries manufacture industrial products and components, as well as provide related services and consumables in the United States and internationally. Dover Corporation increased its quarterly cash dividend to $0.275 per share, from the previous $0.26 per share, an increase of 6%. This dividend aristocrat has raised distributions for 55 consecutive years. Yield: 2.30% (analysis)
Leggett & Platt (LEG), Incorporated designs and produces a range of engineered components and products worldwide. Leggett & Platt raises its quarterly dividend by 3.8% from $0.26 to $0.27 per share. The company is a member of the dividend aristocrats index, and has raised distributions for 40 years in a row. Yield: 5.10%
Carlisle Companies Incorporated (CSL) manufactures construction materials in the United States and internationally. This dividend champion raised its quarterly dividend by 6.30% to 17 cents/share. This was the 34th consecutive annual dividend increase for this dividend champion. Yield: 2.10% (analysis)
Illinois Tool Works Inc. (ITW) manufactures a range of industrial products and equipment worldwide. The company raised its quarterly dividend by 9.70% to 34 cents/share. This was the 46th consecutive annual dividend increase for this dividend champion. Yield: 3% (analysis)
Harleysville Group Inc. (HGIC), through its subsidiaries, engages in the property and casualty insurance business primarily in the eastern and Midwestern United States. The company increased its quarterly dividend by 11% to 36 cents/share. This dividend achiever has raised distributions for 24 consecutive years. Yield: 4.70%
Aqua America, Inc. (WTR), through its subsidiaries, operates regulated utilities that provide water or wastewater services in the United States. Aqua America’s Board of Directors announced a 6.90% increase in the company’s quarterly dividend to 15.50 cents/share. This dividend achiever has raised distributions for 19 years in a row. Yield: 3.10%
Murphy Oil Corporation (MUR) engages in the exploration and production of oil and gas properties worldwide. It explores for and produces crude oil, natural gas, natural gas liquids, condensate, and synthetic oil. Murphy Oil raised its quarterly dividend payment by 10% from $0.25 to $0.275 per share. The company, which is a member of the dividend achievers index, has raised its annual dividend since 2000. Yield: 2%
Acme United Corporation (ACU) produces and sells cutting devices, measuring instruments, and safety products for school, office, home, hardware, and industrial use in the United States, Canada, Europe, and Asia. Acme United Corporation increased its quarterly dividend by 20% to 6 cents/share. The company has raised dividends for 5 consecutive years. Yield: 2.40%
Monsanto Company (MON), together with its subsidiaries, provides agricultural products for farmers in the United States and internationally. Monsanto Company increased in the quarterly dividend on its common shares from $0.265 cents per share to $0.28 per share. The company has raised annual dividends since 2002. Yield 1.90%
Delphi Financial Group, Inc. (DFG), together with its subsidiaries, provides integrated employee benefit services. Delphi Financial Group, Inc. increased its quarterly dividend by 10% to 11 cents/share. The company has raised annual dividends since 2002. Yield: 1.70%
Microchip Technology Incorporated (MCHP), together with its subsidiaries, develops and manufactures semiconductor products for various embedded control applications. Microchip, Inc. (MCHP) increased its Quarterly dividend to $0.34/share. The company has consistently raised distributions since 2003. Yield: 4.40%
W&T Offshore, Inc.(WTI), together with its subsidiaries, engages in the acquisition, exploitation, exploration, production, and development of oil and natural gas properties in the Gulf of Mexico. W Offshore, Inc increased the regular cash quarterly dividend to $0.04 per share from $0.03 per share. This was the first dividend increase since 2006. Yield: 1.60%
Atrion Corporation (ATRI) develops and manufactures ophthalmology, cardiovascular, and fluid delivery devices primarily for medical applications in the United States and internationally. Atrion Corporation announced an increase in its quarterly cash dividend from $0.36 per share to $0.42 per share. The company has consistently raised dividends since 2004. Yield: 1.20%
STERIS Corporation (STE) develops, manufactures, and markets infection prevention, contamination control, microbial reduction, and surgical support products and services to healthcare, pharmaceutical, scientific, research, industrial, and governmental customers worldwide. Steris’s Board of Directors has authorized a four cent increase in its quarterly dividend to $0.15 per common share. The company has consistently raised annual dividends since 2005. Yield: 1.90%
Euroseas Ltd. (ESEA), together with and subsidiaries, provides ocean-going transportation services worldwide. Euroseas increased its quarterly dividend by 20% to 6 cents/share. Yield: 6.80%
NuStar GP Holdings, LLC (NSH) owns general partner and limited partner interests in NuStar Energy L.P. that engages in the terminalling and storage of petroleum products, transportation of petroleum products and anhydrous ammonia, and marketing of asphalt and fuels. NuStar GP Holdings, LLC increased its quarterly distribution to 46 cents/unit, which was 2.20% higher than last quarter’s rate of distribution. The company has consistently raised distributions since 2007. Yield: 6%
Buckeye GP Holdings L.P. (BGH), through its interest in Buckeye Partners, L.P., primarily operates refined petroleum products pipeline systems in the United States. Buckeye GP Holdings L.P. raised its quarterly cash distribution to 45 cents/unit, which represents an increase in the quarterly distribution rate of 4.7 percent compared to the most recent cash distribution of $0.43 paid in May 2010 and an increase of 21.6 percent compared to the quarterly cash distribution of $0.37 paid with respect to the second quarter of 2009. This master limited partnership has raised distributions every quarter since 2007 and yields 4.20%.
PetMed Express, Inc. (PETS), doing business as 1-800-PetMeds, markets prescription and non-prescription pet medications; and other health products for dogs, cats, and horses direct to the consumer in the United States. PetMed Express, Inc. raised its quarterly distribution by 25% to 12.50 cents/share. Yield: 3.10%
Nationwide Health Properties, Inc. (NHP) operates as a real estate investment trust (REIT) that invests primarily in healthcare-related senior housing and long-term care facilities in the United States. Nationwide Health Properties, Inc. raised its quarterly dividend by 2.20% to 46 cents/share. Yield: 4.80%
Broadridge Financial Solutions, Inc. (BR) provides technology-based solutions to the financial services industry in the United States, Canada, and the United Kingdom. Broadridge Financial Solutions, Inc. (BR) announced that its Board of Directors has approved a 7% increase in its quarterly cash dividend of $0.15 per share. Yield: 2.90%
EXCO Resources, Inc. (XCO), an independent oil and natural gas company, engages in the exploration, exploitation, development, and production of onshore North American oil and natural gas properties. EXCO Resources, Inc. (XCO) declared a third quarter cash dividend of $0.04 per share, a $0.01 per share (33%) increase from the previous quarterly rate of $0.03 per share. Yield: 1%
Chemed Corporation (CHE), through its subsidiaries, provides hospice care, and repair and maintenance services in the United States. The company raised its quarterly distribution by 16.70% to 14 cents/share. This was the second consecutive dividend increase since 2009. Yield: 1.10%
CMS Energy Corporation (CMS), through its subsidiaries, operates as an energy company primarily in Michigan. It operates in three segments: Electric Utility, Gas Utility, and Enterprises. The company raised its quarterly dividend by 40% to 21 cents/share. The company has raised dividends since 2008. Before you get excited about this increase however, it is important to notice that CMS Energy suspended its dividend for a 4 year period between 2003 and 2007. Yield: 5%
BCE Inc. (BCE) provides a suite of communication services to residential and business customers primarily in Canada. BCE increased annual dividend by 5% to $1.83 per year. Yield: 5.80%
Full Disclosure: Long DOV and ITW
Relevant Articles:
- 12 High Yield Stocks Raising Dividends
- General Electric (GE) raises dividend; 15 other companies follow suit
- Twelve Dividend Stocks in the news
- Five Reliable Dividend Stocks in the News
Saturday, August 7, 2010
$50 Tradeking Brokerage Cash Bonus
Tradeking, which is a stock brokerage, has a limited time promotion for new clients. The promotion expires August 31, 2010 ( source: Tradeking
)
I'd love for you to check out my online broker, TradeKing.com. They're growing like gangbusters thanks to word-of-mouth referrals. To celebrate National Friendship Day on August 1, they're offering us both a great, limited-time offer with their "Refer a Friend" program.
Whenever someone I refer funds a new account with at $1,000 or more and makes their first trade, TradeKing automatically deposits $50 into my account -- and another $50 into yours.
I'm not just in it for the free money, though. TradeKing has quickly become one of the best online brokers in the business and they give you a lot of bang for your buck-just $4.95 per trade (plus 65 cents per option contract, if you trade options). And I'm not the only one who thinks so:
-- SmartMoney rated TradeKing #1 in customer service in 2009 and 2010
-- Barron's has awarded TradeKing 4 out of 5 stars for four years straight
-- Kiplinger's says "TradeKing reigns" in customer service, awarding them their highest rating of five stars.
I'm sure you'll love TradeKing as much as I do. Once you've opened an account, you can earn $50 for every friend you refer, too. Just make sure you click the link below when you sign up, so they'll know I sent you.
)
I'd love for you to check out my online broker, TradeKing.com. They're growing like gangbusters thanks to word-of-mouth referrals. To celebrate National Friendship Day on August 1, they're offering us both a great, limited-time offer with their "Refer a Friend" program.
Whenever someone I refer funds a new account with at $1,000 or more and makes their first trade, TradeKing automatically deposits $50 into my account -- and another $50 into yours.
I'm not just in it for the free money, though. TradeKing has quickly become one of the best online brokers in the business and they give you a lot of bang for your buck-just $4.95 per trade (plus 65 cents per option contract, if you trade options). And I'm not the only one who thinks so:
-- SmartMoney rated TradeKing #1 in customer service in 2009 and 2010
-- Barron's has awarded TradeKing 4 out of 5 stars for four years straight
-- Kiplinger's says "TradeKing reigns" in customer service, awarding them their highest rating of five stars.
I'm sure you'll love TradeKing as much as I do. Once you've opened an account, you can earn $50 for every friend you refer, too. Just make sure you click the link below when you sign up, so they'll know I sent you.
Friday, August 6, 2010
Automatic Data Processing (ADP) Dividend Stock Analysis
Automatic Data Processing, Inc. (ADP) provides technology-based outsourcing solutions to employers, and vehicle retailers and manufacturers. It operates in three segments: Employer Services, Professional Employer Organization Services, and Dealer Services. This dividend aristocrat has raised dividends for 35 consecutive years. Back in November 2009 Automatic Data Processing announced a 3% dividend increase.
Over the past decade this dividend stock has delivered an average total return of 1.20% annually. In 2007 ADP spun off its Brokerage Services business, distributing one share of Broadridge Financial (BR) common stock for every four shares of ADP common stock held by shareholders. The total returns calculation for ADP over the past decade includes this transaction.
The company has managed to deliver an 8.10% average annual increase in its EPS between 2000 and 2009. Analysts expect Automatic Data Processing to earn $2.40 share in FY 2010, followed by an increase to $2.55/share in FY 2011. While the employment picture is bleak in the US, it is improving. In addition to that, the market for payroll outsourcing for small and medium sized businesses could provide opportunities for growth, because of low penetration from outsourcers. The market for processing services that ADP specializes in is expected to grow at a pace of 5% per annum until 2013. The company's venture in the business process outsourcing is a bold move, considering the intense competition in this market segment, which could add pressure to margins. The market for business process outsourcing is expected to grow by almost 7% per year by 2013. Overall there is a high barrier to entry in the payroll processing field, since a sizeable investment in infrastructure is needed to process millions of employees' information. The big plus of this business is the recurring revenue stream and strong cash flow. ADP is a great proxy for exposure to the technology sector, since it has a proven business model, and it is less susceptible to technological obsolescence. As prices for technology products decrease, ADP can do its job cheaper, which helps profitability.
The Return on Equity has remained in a tight range between 17% and 26%. 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 15.90% annually since 2000, which is higher than the growth in EPS. A 16 % growth in dividends translates into the dividend payment doubling every four and a half years. If we look at historical data, going as far back as 1974, Automatic Data Processing has indeed managed to double its dividend payment every four and a half years.
Over the past decade the dividend payout ratio has doubled to 50%. This is a direct result of the higher dividend growth in proportion to earnings growth. As the company matures, it has returned most of its earnings back to stockholders in the form of increased distributions and share buybacks. 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 Automatic Data Processing is attractively valued at 15.60 times earnings, yields 3.20% and has an adequately covered dividend payment. In comparison to its closest competitor Paychex (PAYX), which trades at a P/E of 20.40 and yields 4.60% with a dividend payout ratio of 94%. I view ADP as more attractively valued. I would be looking forward to adding to my position in Automatic Data Processing (ADP) on dips.
Full Disclosure: Long ADP
Relevant Articles:
- Paychex (PAYX) Dividend Stock Analysis
- Eight Companies Rewarding investors with higher dividend payments
- 14 Dividend Stocks with Dividend Growth Potential
- Dividend Investing Works in All Markets
Over the past decade this dividend stock has delivered an average total return of 1.20% annually. In 2007 ADP spun off its Brokerage Services business, distributing one share of Broadridge Financial (BR) common stock for every four shares of ADP common stock held by shareholders. The total returns calculation for ADP over the past decade includes this transaction.
The company has managed to deliver an 8.10% average annual increase in its EPS between 2000 and 2009. Analysts expect Automatic Data Processing to earn $2.40 share in FY 2010, followed by an increase to $2.55/share in FY 2011. While the employment picture is bleak in the US, it is improving. In addition to that, the market for payroll outsourcing for small and medium sized businesses could provide opportunities for growth, because of low penetration from outsourcers. The market for processing services that ADP specializes in is expected to grow at a pace of 5% per annum until 2013. The company's venture in the business process outsourcing is a bold move, considering the intense competition in this market segment, which could add pressure to margins. The market for business process outsourcing is expected to grow by almost 7% per year by 2013. Overall there is a high barrier to entry in the payroll processing field, since a sizeable investment in infrastructure is needed to process millions of employees' information. The big plus of this business is the recurring revenue stream and strong cash flow. ADP is a great proxy for exposure to the technology sector, since it has a proven business model, and it is less susceptible to technological obsolescence. As prices for technology products decrease, ADP can do its job cheaper, which helps profitability.
The Return on Equity has remained in a tight range between 17% and 26%. 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 15.90% annually since 2000, which is higher than the growth in EPS. A 16 % growth in dividends translates into the dividend payment doubling every four and a half years. If we look at historical data, going as far back as 1974, Automatic Data Processing has indeed managed to double its dividend payment every four and a half years.
Over the past decade the dividend payout ratio has doubled to 50%. This is a direct result of the higher dividend growth in proportion to earnings growth. As the company matures, it has returned most of its earnings back to stockholders in the form of increased distributions and share buybacks. 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 Automatic Data Processing is attractively valued at 15.60 times earnings, yields 3.20% and has an adequately covered dividend payment. In comparison to its closest competitor Paychex (PAYX), which trades at a P/E of 20.40 and yields 4.60% with a dividend payout ratio of 94%. I view ADP as more attractively valued. I would be looking forward to adding to my position in Automatic Data Processing (ADP) on dips.
Full Disclosure: Long ADP
Relevant Articles:
- Paychex (PAYX) Dividend Stock Analysis
- Eight Companies Rewarding investors with higher dividend payments
- 14 Dividend Stocks with Dividend Growth Potential
- Dividend Investing Works in All Markets
Wednesday, August 4, 2010
Buy and hold dividend investing is not dead
Many investors have been told that buy and hold does not work anymore. With almost everyone glued to screens streaming real-time quotes, news and charts and with so many institutional investors having extremely short term timeframes, one would certainly believe that buy and hold investing is a dinosaur strategy.
Over the past decade stock prices have been extremely volatile, which has led many to believe that short term trading is the answer. Even those who purchased shares in quality companies one decade ago such as Coca-Cola (KO) or Wal-Mart (WMT) didn’t perform better. The main reason for the low returns over the past decade was the fact that in the late 1990s investors forgot about fundamentals and bid up stock prices to unsustainable levels. The price/earnings ratio on the S&P 500 index increased to 30 times earnings, which was twice the average of the preceding eight decades. Thus investors were betting that earnings would keep increasing at a faster rate over the future.
The following stocks were overvalued in 2000. Yet these solid businesses still managed to grow earnings and distributions enough to make them attractive today:
For example Coca Cola (KO) ended at $60.94 in 2000. At that time the stock was trading at a price/earnings ratio of 69 and yielded 1.10%. Earnings per share increased almost 230% over the past decade, while dividends per share increased by 140%. Currently the stock trades at a price/earnings ratio of 18, while yielding 3.20%. (analysis)
Wal-Mart (WMT) ended at $53.13 in 2000. At that time the stock was trading at a price/earnings ratio of 44 and yielded 0.50%. Earnings per share increased almost 170% over the past decade, while dividends per share increased by 350%. Currently the stock trades at a price/earnings ratio of 13.50, while yielding 2.40%. (analysis)
McDonald's (MCD) ended at $34 in 2000. At that time the stock was trading at a price/earnings ratio of 23 and yielded 0.60%. Earnings per share increased almost 270% over the past decade, while dividends per share increased by 920%. Currently the stock trades at a price/earnings ratio of 16, while yielding 3.20%. (analysis)
Johnson & Johnson (JNJ) ended at $52.53 in 2000. At that time the stock was trading at a price/earnings ratio of 31 and yielded 1.20%. Earnings per share increased almost 170% over the past decade, while dividends per share increased by 210%. Currently the stock trades at a price/earnings ratio of 12, while yielding 3.70%. (analysis)
Automatic Data Processing (ADP) ended at $63.31 in 2000. At that time the stock was trading at a price/earnings ratio of 48 and yielded 0.65%. Earnings per share increased almost 100% over the past decade, while dividends per share increased by 280%. Currently the stock trades at a price/earnings ratio of 15.60, while yielding 3.30%. (analysis)
While stock prices were much overvalued at the beginning of the decade, some businesses managed to increase revenues and profits. The consistent increases in profitability have made many quality stocks that were overvalued in 2000 attractively valued. The only returns that buy and hold stock investors in those stocks generated came from dividends. This provided positive feedback to investors during two of the bear markets of the past decade. While yields were low due to the market being overvalued, quality companies kept raising dividends, which raised the yield on cost to original investors. If investors also managed to reinvest those dividends consistently, they would have been able to capitalize on any market weakness and further compound their dividend incomes in the process.
Despite the increasing noise in the markets, buy and hold investing does work. Investors who dismiss buy and hold investing altogether due to the poor performance over the past decade might be missing out on some great opportunities. Most of the quality dividend companies that were overvalued in 2000 are still quality businesses. Those businesses are attractively valued today, and yield much more than what they did in the year 2000. These businesses are also still growing, which means that investors should expect strong dividend growth in the future, which would increase their yield on cost. In addition to that, by reinvesting dividends, investors would be able to further compound their dividend income.
Full Disclosure: Long all stocks listed above
Relevant Articles:
- Dividend yield or dividend growth?
- 14 Dividend Stocks with Dividend Growth Potential
- Strong Brands Grow Dividends
- Benchmarking Dividend income
Over the past decade stock prices have been extremely volatile, which has led many to believe that short term trading is the answer. Even those who purchased shares in quality companies one decade ago such as Coca-Cola (KO) or Wal-Mart (WMT) didn’t perform better. The main reason for the low returns over the past decade was the fact that in the late 1990s investors forgot about fundamentals and bid up stock prices to unsustainable levels. The price/earnings ratio on the S&P 500 index increased to 30 times earnings, which was twice the average of the preceding eight decades. Thus investors were betting that earnings would keep increasing at a faster rate over the future.
The following stocks were overvalued in 2000. Yet these solid businesses still managed to grow earnings and distributions enough to make them attractive today:
For example Coca Cola (KO) ended at $60.94 in 2000. At that time the stock was trading at a price/earnings ratio of 69 and yielded 1.10%. Earnings per share increased almost 230% over the past decade, while dividends per share increased by 140%. Currently the stock trades at a price/earnings ratio of 18, while yielding 3.20%. (analysis)
Wal-Mart (WMT) ended at $53.13 in 2000. At that time the stock was trading at a price/earnings ratio of 44 and yielded 0.50%. Earnings per share increased almost 170% over the past decade, while dividends per share increased by 350%. Currently the stock trades at a price/earnings ratio of 13.50, while yielding 2.40%. (analysis)
McDonald's (MCD) ended at $34 in 2000. At that time the stock was trading at a price/earnings ratio of 23 and yielded 0.60%. Earnings per share increased almost 270% over the past decade, while dividends per share increased by 920%. Currently the stock trades at a price/earnings ratio of 16, while yielding 3.20%. (analysis)
Johnson & Johnson (JNJ) ended at $52.53 in 2000. At that time the stock was trading at a price/earnings ratio of 31 and yielded 1.20%. Earnings per share increased almost 170% over the past decade, while dividends per share increased by 210%. Currently the stock trades at a price/earnings ratio of 12, while yielding 3.70%. (analysis)
Automatic Data Processing (ADP) ended at $63.31 in 2000. At that time the stock was trading at a price/earnings ratio of 48 and yielded 0.65%. Earnings per share increased almost 100% over the past decade, while dividends per share increased by 280%. Currently the stock trades at a price/earnings ratio of 15.60, while yielding 3.30%. (analysis)
While stock prices were much overvalued at the beginning of the decade, some businesses managed to increase revenues and profits. The consistent increases in profitability have made many quality stocks that were overvalued in 2000 attractively valued. The only returns that buy and hold stock investors in those stocks generated came from dividends. This provided positive feedback to investors during two of the bear markets of the past decade. While yields were low due to the market being overvalued, quality companies kept raising dividends, which raised the yield on cost to original investors. If investors also managed to reinvest those dividends consistently, they would have been able to capitalize on any market weakness and further compound their dividend incomes in the process.
Despite the increasing noise in the markets, buy and hold investing does work. Investors who dismiss buy and hold investing altogether due to the poor performance over the past decade might be missing out on some great opportunities. Most of the quality dividend companies that were overvalued in 2000 are still quality businesses. Those businesses are attractively valued today, and yield much more than what they did in the year 2000. These businesses are also still growing, which means that investors should expect strong dividend growth in the future, which would increase their yield on cost. In addition to that, by reinvesting dividends, investors would be able to further compound their dividend income.
Full Disclosure: Long all stocks listed above
Relevant Articles:
- Dividend yield or dividend growth?
- 14 Dividend Stocks with Dividend Growth Potential
- Strong Brands Grow Dividends
- Benchmarking Dividend income