Monday, July 27, 2009

MLPs Dominate Distribution Increases

Checking the pulse of dividend increases is an exercise whose goal is to uncover potential dividend growth plays that I might have otherwise missed out on. Another reason for that is to refute the idea that dividend investing is dead. It is also interesting to look for trends in the data, while browsing through the list of dividend increasers. While the REITs have been slaughtered along with other financials, Master Limited Partnerships and consumer staples have done pretty well. But just because I wrote about a certain stock, does not mean that I am going to add it to my portfolio. I need to research it and make sure that it could afford growing its generous distributions.

Stanley Works (SWK), which a diversified worldwide supplier of security solutions for commercial applications as well as tools and engineered solutions for professional, industrial, construction and do-it-yourself use, increased its quarterly dividend by 3.1% to 33 cents a share.
The comment by Chairman and Chief Executive Officer John F. Lundgren was particularly bullish: "We remain very focused on the total return we deliver to shareholders and know that our dividend is a key component. We are proud to not only have maintained our dividend during this challenging period, but to raise it for the 42nd consecutive year in the face of this tumultuous economic environment."
This dividend aristocrat currently yields 3.40%.

Besides Stanley Works, several MLPs also raised distributions over the past week. Master Limited Partnerships have kept distribution increases despite the credit crunch, which is why many dividend investors are flocking this sector. MLPs offer both appealing current yields but stable and growing distributions. Not all MLPs are created equal however; the most stable ones are engaged in transportation of oil or natural gas.

El Paso Pipeline Partners, L.P. (EPB), which engages in the ownership and operation of natural gas transportation pipelines and storage assets, announced that its Board has approved a 1% increase over the last quarterly distribution of 32.50 cents per unit. The new distribution rate is 33 cents/unit. This is the 6th consecutive distribution increase for El Paso Pipeline Partners, L.P. since it went public in 2007. The units currently yield 7.00%.

TC PipeLines, LP (TCLP), which transports natural gas from the western Canada Sedimentary Basin (WCSB) to various downstream markets in the United States, increased its quarterly distributions by 3.5% to 73 cents per unit. This is the tenth consecutive year where TC PipeLines, LP has increased its distributions. The units currently yield 7.50%.

Holly Energy Partners, L.P. (HEP), a master limited partnership which operates a system of refined product and crude oil pipelines, storage tanks, and distribution terminals primarily in west Texas, New Mexico, Utah, and Arizona, raised its quarterly distributions to 78.50 cents per unit, a 1.30% increase over last quarters distribution of 77.50 cents. This is the 19th consecutive quarterly distribution for Holly Energy Partners, L.P. The units currently yield 9.00%.

Suburban Propane Partners, L.P. (SPH), announced that its Board of Supervisors declared the 22nd increase in the Partnership's quarterly distribution from $0.815 to $0.825 per Common Unit. This master limited partnership engages in the distribution of propane, fuel oil, kerosene, diesel fuel, gasoline, and refined fuels, as well as marketing of natural gas and electricity in deregulated markets. Suburban Propane Partners, L.P.. is a dividend achiever, which has increased its quarterly distributions in each of the past eleven years. The units currently yield 7.60%.

Sunoco Logistics Partners L.P. (SXL), declared a cash distribution for the second quarter of 2009 of $1.04 per common partnership unit, which is a 2.5 percent increase over the prior quarter. The partnership engages in the transport, terminalling, and storage of refined products and crude oil, as well as the purchase and sale of crude oil in the United States.. Sunoco Logistics Partners L.P has regularly increased its quarterly distributions since 2002. The partnership currently yields 7.60%.

Western Gas Partners, LP (WES), declared a cash distribution of $0.31 per unit for the second quarter of 2009, representing an increase of $0.01 per unit over the prior quarter. Western Gas Partners, LP is a growth-oriented Delaware limited partnership formed by Anadarko Petroleum Corporation (APC) to own, operate, acquire and develop midstream energy assets. The partnership currently yields 7.20%.

Several companies, which are not MLPs, also raised distributions:

Park Electrochemical Corp. (PKE) increased its quarterly dividend by 25% to 10 cents per share. The company develops, manufactures, markets, and sells digital and radio frequency/microwave printed circuit materials for the telecommunications and Internet infrastructure, and computing markets; in addition to composite materials and parts for the aerospace markets. Park Electrochemical Corp. does not follow a pattern of regular dividend increases. In addition to that the stock currently yields 1.70%.

Lindsay Corporation (LNN) increased its quarterly dividend by 7% to 8 cents per share. Lindsay Corporation manufactures and sells automated agricultural irrigation systems that enhance or stabilize crop production while conserving water, energy, and labor. It operates in two segments, Irrigation and Infrastructure. The company started to regularly raise distributions in 2003. The stock currently yields 0.80%.

CARBO Ceramics Inc. (CRR), which engages in the manufacture and supply of ceramic proppant primarily used in the hydraulic fracturing of natural gas and oil wells, raised its quarterly dividend by 6% to 18 cents per share. This dividend increase represents the ninth consecutive year the company increased its dividend to shareholders. The stock currently yields 1.90%.

Full Disclosure: None

Relevant Articles:

- Master Limited Partnerships (MLPs)
- Which Bank will be next? Follow the dividend cuts
- Why do I like Dividend Aristocrats?
- Dividend Aristocrats keep raising their dividends

1 comment:

  1. Sunoco Logistics Partners also announced an 18.3% increase in 2Q EPS. More earnings cover for the dividend.

    ReplyDelete

Questions or comments? You can reach out to me at my website address name at gmail dot com.

Popular Posts