Saturday, March 7, 2009

Seven Solid Dividend Increases bucking the trend of dividend cuts

Last week marked one of the worst times for dividend investors as several prominent companies cut their dividends significantly. The last bastion of companies standing, which were paying dividends such as US Bancorp and Wells Fargo, disappointed their shareholders with dividend cuts. In addition to that markets fell to fresh 12-year lows.

However there were several notable dividend increases from a few solid investor focused stocks. Companies that still continue raising their dividends show that they have enough cash flows to not only operate successfully but also appear relatively immune to overall disruptions in the economy.

Wal-Mart (WMT), which operates the largest chain of retail stores in various formats worldwide, announced that its Board has approved a 15% increase in its quarterly dividend to $0.2725 per share. CEO Mike Duke said, "The strength of our operations and the resulting strong financial position allow us to increase our dividend payout to shareholders again this year. Our free cash flow remains strong enough to fund Wal-Mart's growth around the world, make strategic acquisitions and fund returns to shareholders through dividends and share repurchases."
Wal-Mart is a dividend aristocrat, which has consistently increased its dividends for thirty-five consecutive years. The stock currently yields 1.90%. Check out my analysis of Wal-Mart.

WGL Holdings (WGL), which engages in the delivery and sale of natural gas, and provides energy-related products and services, announced that its Board has approved an increase in its quarterly dividend from $0.355 to $0.3675 per common share. WGL Holdings is a dividend champion, which has consistently increased its dividends for thirty-three consecutive years. The stock currently yields 4.70%.

Qualcomm (QCOM), which designs, manufactures, and markets digital wireless telecommunications products and services based on its code division multiple access (CDMA) technology and other technologies, announced that its Board has approved a 6% increase in its quarterly dividend from $0.16 to $0.17 per common share. Qualcomm has consistently increased its dividends for six consecutive years. The stock currently yields 1.90%.

General Dynamics (GD), which provides business aviation; combat vehicles, weapons systems, and munitions; shipbuilding design and construction; and information systems, technologies, and services, announced that its Board has approved an 8.60% increase in its quarterly dividend from $0.35 to $0.38 per share. General Dynamics has consistently increased its dividends for fifteen consecutive years. The stock currently yields 3.20%.

Piedmont Natural Gas (PNY), which engages in the distribution of natural gas to residential, commercial, industrial, and power generation customers, announced that its Board has approved a 3.80% increase in its quarterly dividend from $0.26 to $0.27 per share. Piedmont Natural Gas is a dividend champion, which has consistently increased its dividends for thirty-one consecutive years. The stock currently yields 4.30%.

Essex Property Trust (ESS), which engages in the ownership, operation, management, acquisition, development, and redevelopment of apartment communities, announced that its Board has approved a small increase in its quarterly dividend from $1.02 to $1.03 per share. Essex Property Trust is a dividend achiever, which has consistently increased its dividends for fourteen consecutive years. This real estate investment trust currently yields 7.50%.

Canadian Natural Resources Limited (CNQ), which engages in the acquisition, exploration, development, production, marketing, and sale of crude oil, natural gas liquids, natural gas, and bitumen, announced that its Board has approved 5% increase in its quarterly dividend from $0.10 to $0.105 per share. Canadian Natural Resources Limited is an international dividend achiever, which has consistently increased its dividends since 2001. The stock currently yields 1.00%.

The latest list of solid dividend raisers proves that income investors should seek to invest in companies with business models that are not cyclical. Companies which have a moat in a certain geographical area, industry or product should do fine irrespective of the overall gyrations of the economy and the stock market. It is companies like these that could generate increasing streams of income, which dividend growth investors are after.

Full Disclosure: Long WMT

Relevant Articles:

- Wal-Mart Dividend Analysis
- Dividend Aristocrats List for 2009
- The Dividend Edge
- Best Dividends Stocks for the Long Run

2 comments:

  1. I'm new to the dividend investing scene, and I'm trying to understand the appeal for an investor of a stock that yields 1%, however securely. Is there a difference between a dividend investor and a fixed income investor?

    ReplyDelete
  2. David,

    Thanks for stopping by. There are many differences. the first is that dividends could be increased over time, while bonds interest stays the same.
    Dividends should not be viewed in isolation however - you should also diversify your holdings and own as many quality dividend growers from as many sectors as possible. Furthermore owning some fixed income could be a good portfolio diversifyer.

    ReplyDelete

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