Monday, August 31, 2009

Altria Group's 6% Dividend Hike

When companies decide to share a portion of their earnings with their shareholders, it is a sign of prudent fiscal discipline. Shareholders who are rewarded on a timely basis in the form of dividend payments are less likely to sell their holdings, even during a steep market correction. However, when companies decide to raise their distributions they exert strong confidence in their near-term performance. This dividend increase is a strong bullish signal especially if it comes after a long string of consecutive dividend increases.

Several companies announced that their boards of directors have approved dividend increases. The companies include:

Altria Group, Inc. (MO), which engages in the manufacture and sale of cigarettes and other tobacco products in the United States, increased its quarterly dividend by 6.3% to 34 cents per share. The stock currently yields 7.50%. Check my analysis of the stock.

MGE Energy, Inc. (MGEE), which engages in generating, purchasing, transmitting, and distributing electricity, increased its quarterly dividend by 8% to 14 cents per share. MGE Energy, Inc. is a dividend achiever, which has increased its quarterly dividend for 34 consecutive years. The stock currently yields 3.90%.

HCC Insurance Holdings, Inc. (HCC), which provides property and casualty, surety, group life, accident, and health insurance coverage, as well as related agency and reinsurance brokerage services to commercial customers and individuals., increased its quarterly dividend by 8% to 13.50 cents per share. HCC Insurance Holdings, Inc. is a dividend achiever, which has increased its quarterly dividend in each of the past thirteen years. The stock currently yields 1.90%.

Delta Natural Gas Company, Inc. (DGAS), which sells and distributes or transports natural gas to customers in central and southeastern Kentucky., increased its quarterly dividend by 1.6% to 32.50 cents per share. The company has raised dividends consistently since 2005. The stock currently yields 5.20%.

G&K Services, Inc. (GKSR), which provides branded identity apparel and facility services programs in North America., increased its quarterly dividend by 7% to 7.5 cents per share The stock currently yields only 1.30%.

Alliance Financial Corporation (ALNC), which which provides various banking products and services to commercial, retail, government, and investment management customers, increased its quarterly dividend by 7.7% to 28 cents per share. The stock currently yields 4.00%.

Guess?, Inc. (GES), which designs, markets, distributes, and licenses lifestyle collections of apparel and accessories for men, women, and children., increased its quarterly dividend by 25% to 12.5 cents per share. The stock currently yields 1.40%.

ESSA Bancorp, Inc. (ESSA), which provides financial services to individuals, families, and businesses in Pennsylvania, increased its quarterly dividend by 25% to 5 cents per share. The stock currently yields only 1.20%.

Harris Corporation (HRS), which operates as a communications and information technology company that serves government and commercial markets worldwide, increased its quarterly dividend by 10% to 22 cents per share. The stock currently yields 1.90%.

In summary I view Altria's dividend increase as a bullish sign for the company stock. The company seems to be following its policy of consistent dividend increases that it used to follow before the spin-offs of Philip Morris International (PM) and Kraft Foods (KFT) I do however also own some Philip Morris International in order to benefit from international exposure to the tobacco sector.

Full Disclosure: Long PM and MO

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Friday, August 28, 2009

V.F. Corporation (VFC) Dividend Stock Analysis

V.F. Corporation, 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. It owns a portfolio of brands in the jeanswear, outerwear, packs, footwear, sportswear, and occupational apparel categories. The company is also a member of the S&P Dividend Aristocrats index.
V.F. Corporation has consistently increased dividends for 36 consecutive years. The company last announced a dividend raise in October 2008.

Over the past decade this dividend growth stock has delivered an average total return of 5.70% annually. The stock price decreased from its all time highs of $96.20 in 2007 to a multi-year low of $38.22 in 2008, before strongly recovering from its lows.

The company has managed to deliver a 6.80% average annual increase in its EPS between 1999 and 2008. V.F. Corporation is expected to earn $4.90 share in FY 2009, followed by $5.50/share in FY 2010. The company is currently experiencing some short term in demand, which has led to a drop in revenues. If this recession proves to be a short one, the company would certainly manage to hit its annual goals of 8% annual revenue growth. The company’s foreign operations do have the ability to generate strong revenue growth over time. Another part of V.F. Corp’s growth strategy entails buying brands that could utilize the company’s extensive distribution network and result in economies of scale to produce the new apparel brands at a lower cost.

The Return on Equity has generally remained stable around 17% with the exception of 2000 and 2001. 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 11.90% annually since 1999, which is higher than the growth in EPS. Much of the increase came from V.F. Corporation’s 90% dividend increase in 2006. If we take this big increase out of the dividend growth calculation, we would see that the company typically raises distributions by an average of 3% to 5% annually.
A 12 % growth in dividends translates into the dividend payment doubling every six years, whereas at a 4% growth rate it could take 18 years for the dividend payment to double. If we look at historical data, going as far back as 1986, V.F. Corporation has actually managed to double its dividend payment every eight years on average.


The trends in the dividend payout ratio have closely tracked short term EPS weakness in 2000 and 2001 by rising to disproportionate levels. It also fell to 24% before the company decided to drastically raise distributions by 90% in 2006. The ratio has largely remained under 50% over the past decade, which is a good sign. 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 V.F. Corporation is attractively valued, trading at 14 times earnings, yields 3.50% and has an adequately covered dividend payment. I would be looking forward to initiating a small position in V.F. Corporation (VFC) on dips.

Full Disclosure: No position at the time of writing

Wednesday, August 26, 2009

Financial Stocks for Dividend Investors

Financial stocks, which used to be great dividend investments, have had their share of troubles over the past two years. The sector has rebounded sharply since hitting its lows in March. Since the major dividend growth stories of the past such as Bank of America (BAC) and US Bancorp (USB) have cut dividends, most dividend growth investors seem to have a very low allocation to the sector. As a result dividend investors could suffer inferior risk adjusted returns in the future since they won't own any financial stocks.

There are several alternatives for investors who are underweight the financial sector right now. One of them involves purchasing shares in some of US insurance companies such as Aflac (AFL) or Chubb (CB), which offer decent yields and have a long history of dependable dividend growth.

Another alternative is buying shares in the five major Canadian banks, which seem to have escaped the financial meltdown. While none of them have increased their dividends in over one year, they have not cut them either. In addition to that major Canadian banks spot very decent yields as well. It is important to check individual payout ratios in order to gauge the sustainability of the dividend payments. The major Canadian banks include
Toronto-Dominion Bank (TD) , Bank of Montreal (BMO), Royal Bank of Canada (RY), Canadian Imperial Bank of Commerce (CIBC) and Bank of Nova Scotia (BNS).

Buying Preferred stocks could also be a decent bet on the long recovery of US financial institutions. Preferred shares have a higher ranking than ordinary shares in the event of a bankruptcy, but a lower priority relative to bonds. Preferred stocks do not have voting rights but have a fixed dividend payment, just like a bond. Preferred stockholders are also first in line to receive dividend payments, which are typically fixed. They don’t typically get to share in the prosperity of the enterprise however as preferred stock dividends do not increase. In tough economic conditions however, preferred stock dividends are much less likely to be cut or suspended; as long as the company continues operating as a going concern preferred stock dividends continue getting paid. In addition to that if you buy a cumulative preferred stock, the company is obligated to pay distributions to you even if it skips a few payments. That is of course as long as the company is not bankrupt. These two ETFs PFF and PGF are good vehicles to gain exposure to preferred stocks. Most of the issues they hold are in the financial sector.

Some investors also believe that the major US financial institutions would one day return to their former glory. This could mean that companies like Bank of America (BAC), Citigroup (C) and US Bancorp (USB) could yield very decent returns if they were to increase distributions to their 2007 levels. This option of getting exposure to financials is the riskiest of all, since most of the TARPed financial institutions are already paying billions in dividends to the Treasury every year. In addition to that the Treasury and other strategic investors might elect to convert their preferred stock into common, which would dilute existing shareholders. Last but not least it is very difficult to forecast how the US banking industry would look like a few years from now. Just because a bank survives the meltdown, does not mean it would be a solid long-term investment.
The strong gains off the March lows have definitely pushed financial stocks in overbought territory. Thus, if you believe that owning US banks provides you with the best exposure to the US financial sector, you might consider waiting to buy them on pullbacks.

These options could either be used on a standalone basis or in a combination. As a dividend growth investor I currently own mostly insurers and have a position in one of the Canadian banks. I might add to my Canadian exposure, which also provides international diversification for my portfolio.

Full Disclosure: Long AFL, CB and TD

This article was included in the Carnival of Personal Finance 221- Labour Day Edition

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Monday, August 24, 2009

Aflac (AFL) Dividend Stock Analysis

Aflac Incorporated, through its subsidiary, American Family Life Assurance Company of Columbus (Aflac), provides supplemental health and life insurance in the USA and Japan. The company is member the S&P Dividend Aristocrats index.
Aflac has consistently increased dividends for 27 consecutive years. The company announced a 16.70% dividend raise in October 2008.

Between June of 1999 up until June 2009 this dividend growth stock has delivered an average total return of 3.90% annually. The stock fell from its all time high of $68.81 in 2008 to a multi-year low of $10.83 in March 2009, before recovering by 300% off its lows.

The company has managed to deliver a 10.80% average annual increase in its EPS between 1999 and 2008. Aflac is expected to earn $4.70 share in FY 2009, followed by $5.15/share in FY 2010. The company generates over 70% of its revenues in Japan. New distribution channels in the country for Aflac’s supplemental health and life insurance plans, which are not covered by Japanese healthcare, would drive sales in the future. The brand recognition that the company is building in the US should also be a strong driver of growth over time, in addition to focusing on retirement services targeting the baby boomers.

The Return on Equity has ranged over the past decade between a low of 12% and a high of 19%. 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 22.90 % annually since 1999, which is higher than the growth in EPS. The disparity is mostly due to a gradual increase in the dividend payout ratio and the amounts this insurer has spent on stock buybacks.
A 23 % growth in dividends translates into the dividend payment doubling almost every three years. If we look at historical data, going as far back as 1986, Aflac has actually managed to double its dividend payment every four and a half years on average.

The dividend payout ratio has increased rather sharply over the past two years, but is still much lower than my 50% threshold. 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 Aflac is trading at 16 times 2008 earnings, yields 2.70% and has an adequately covered dividend payment. I would be looking forward to adding to my position in Aflac (AFL) on dips below $37.30.

Full Disclosure: Long AFL

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Friday, August 21, 2009

Cincinnati Financial’s Dividend Surprise

Cincinnati Financial (CINF) surprised investors in a positive way, after the provider of property, casualty, personal, and life insurance products to businesses and individuals in the United States upped its quarterly dividend from 39 to 39.5 cents/share.

Kenneth W. Stecher, president and chief executive officer, commented, "The company has consistently increased dividends for 48 years, and the board of directors chose to continue that record for the benefit of our shareholders. This action demonstrates their confidence in our strong capital, liquidity and financial flexibility and in our initiatives to improve earnings performance."

The company last increased its dividend in 2008. If it hadn’t raised it in 2009, the Cincinnati, Ohio based insurer would have been booted out of both the dividend aristocrats and dividend achievers indexes.

The company is a hold for me right now, as it has pretty disappointing short-term EPS prospects. Its insurance premiums are under pressure on increased competition. It might not be able to cover its dividend payment by a factor of 2 until 2010 or 2011.
Half of the company’s investment portfolio was allocated to equities in 2007. The losses in the stock markets and an initiative to reduce equity exposure lead to a decrease in the equity exposure to 33% in 2008.

Three other companies announced dividend hikes over the past week as well.

Getty Realty Corp. (GTY), which engages in the ownership and leasing of retail motor fuel and convenience store properties, and petroleum distribution terminals, increased its quarterly dividend from 47 to 47.50 cents per share. This dividend achiever currently yields 8.50%.

ITC Holdings Corp. (ITC), which invests in the electricity transmission grid to improve electric reliability, improve access to markets, and lower the overall cost of delivered energy, increased its quarterly dividend by 4.90% to 32 cents per share. This is the fourth consecutive dividend increase for ITC Holdings Corp. since the company went public in 2005. The stock currently yields 2.60%.

Nordson Corporation (NDSN), which manufactures equipment used for precision dispensing, testing and inspection, and surface preparation and curing., increased its quarterly dividend by 4.10% to 19 cents per share. This represents the 46th consecutive year of annual dividend increases for this dividend achiever. The stock currently yields 1.50%.

Full disclosure: Long CINF

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Wednesday, August 19, 2009

29 stocks with sustainable dividends

The financial crisis has been tough not only for stock prices but also for dividends as well. Some former dividend darlings in the financial sector have seen their dividends being cut or eliminated after taking in billions in TARP aid due to severe losses from complex financial instruments. As a result the ratio of dividend increases to dividend cutters has been hovering at almost even for both. This means that so far in 2009, there is roughly one dividend cutter for every dividend raiser. Over the past 5 years this ratio has been more like 6 to 1 in favor of the dividend growers.

Due to the horrifying statistics of the overall bleak dividend picture, some reporters are claiming that dividend investing is dead. Just because you read it in the paper however, doesn’t mean it is true for everybody. While the overall statistics have been rather scary, the negative dividend news has been concentrated in the financial sector. Thus a well-diversified portfolio of income stocks should have performed well even during crisis.

Broad statistics on dividends could be misleading however as they focus on all companies, not just on the ones which have a proven track record of raising dividends. Even if the sky truly is falling down, there still are companies, which are generating enough cash flows and are confident enough in their business to increase distributions. In fact the dividend aristocrats index with its 52 components has seen 8 dividend cuts, one buyout and 32 dividend increases so far in 2009.

In addition to that, most dividend growth strategies tend to evaluate sustainability of dividends on a per issue basis, thus weeding out companies whose dividends are in peril. It really is a no brainer that a company, which generates enough earnings to cover dividend payments by a factor of 2 or 3, is much less likely to cut or eliminate distributions compared to a company, which pays out almost all of its cash flows out as dividends. This simple formula does exclude certain vehicles such as REITs for example, which are required to distribute almost all of their earnings as distributions to shareholders in order to maintain their tax status. Thus, these vehicles (such as REITs) should be evaluated using other criteria, which I would describe in a future post.

I have selected several prominent dividend growth stocks, whose earnings and cash flows provide adequate coverage for their dividends:



Investors should be cautioned that entry price does matter. Thus this list should only be considered as a starting point in the process of analyzing potential dividend stock candidates. Chances are that a dividend growth stock that manages to grow earnings is a likely candidate to continue growing distributions, which will increase yield on cost over time.

Full Disclosure: Long ABT, ADM, ADP, AFL, APD, CLX, EMR, FDO, GW, JNJ, MCD, MHP, MMM, NUE, PG, SHW, WMT

This post was featured on 10 Best Roundup for the Week of August 24, 2009 by blogger JLP from AllFinancialMatters.

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Tuesday, August 18, 2009

Buffett's Newest Stock Pick

Jae Jun is the author of Old School Value, a value investing blog focused on fundamental analysis, stock valuation and stock ideas that offer high returns with low risk.

With the release of Berkshire Hathaway's 13-F filing, you can see that a new addition has been made to the holdings of Berkshire Hathaway.

1.2million shares of Becton Dickinson & Co (BDX) were added which totals $86.6 mil but compared to his total portfolio and other holdings, it is a very small position. This initial position is half the size of when Berkshire first added Eaton Corp (ETN) which again leads me to think that it was a subsidiary making the purchase as Buffett is known to go big first time around.

I previously went over BDX briefly while going through the 40 Best Stocks to Retire on and noted that the company...

...has consistently produced plenty of FCF but FCF growth has been minimal, very good CROIC of 15%, steady growth in shareholders equity/book value, stable rising margins, debt to equity is consistently dropping, sales has been increasing. - Best Stocks for Retirement

Whoever made the purchase, BDX looks to be a typical Buffett type company. Long history or consistent performance with results to match.

Quick Look


[caption id="attachment_2136" align="alignnone" width="433" caption="BDX Spider Graph"]BDX Spider Graph[/caption]

Business Summary


Becton, Dickinson and Company (BDX) is a medical technology company that operates through three business segments: BD Medical, BD Diagnostics, and BD Biosciences.

  • BD Medical: offers syringes, needles, monitoring systems, drug delivery systems, blades, scalpels and thermometers



  • BD Diagnostics: microbiology products, specimen collection products, specimen management systems, diagnostic instruments and consulting services



  • BD Biosciences: flow cytometry systems for cell analysis, monoclonal antibodies for biomedical research, molecular biology products for the study of genes and their functions, cell growth and screening products and labware products


The company generates more than half of its revenues from international operations which will help to diversify income but swings in foreign currency can impact top line results. But remember, it's the bottom line that is most important.

Financial Statement Analysis


Running through the numbers I see the following:

  • Gross, operating and net margins have been steadily increasing even in a recessionary environment

  • A dividend aristocrat which has increased dividends for 36 years

  • FCF positive for more than 10 years

  • Inventory turnover consistent but since margins have increased, leads to higher efficiency and profit

  • ROA and ROE increasing steadily

  • Reduced debt

  • Very low capitalization ratio which shows how leveraged the company is with debt

  • Has plenty of FCF to pay down debt rather than issue stock or seek loans

  • CROIC is very steady at 17% which means that the company makes 17c off every $1 of cash invested

  • Converts 12c of every dollar in sales to FCF. BDX is a FCF machine.

  • Excellent management


DCF Intrinsic Value Estimate


The assumptions are as following for the DCF model:

  • With the level of consistency and outstanding numbers a 9% discount rate is used

  • 10% growth rate which is just a little under the FCF growth but looks to be the rate of growth the company has displayed according to the graph below. After all price follows value which means I can reverse engineer the DCF to find the growth rate.

  • 50% margin of safety but don't feel it has to be so big for BDX


With a couple of assumptions you can see from the graph below that BDX has been trading close to its intrinsic value until September 2008 when the markets crashed. It's probably the biggest drop and difference its had so far.

Intrinsic value comes out to $87.

[caption id="attachment_2139" align="alignnone" width="500" caption="BDX Price vs Value Graph"]BDX Price vs Value Graph[/caption]

(Click on the image to view the PDF version of the stock analysis and graphs.)

Benjamin Graham Formula Valuation


BDX top line growth is just as good as its bottom line. By looking at multiple years and comparing them in a staggered fashion and then looking at the mean to smooth out cycles and one time bad years still shows a historical EPS growth rate of 17%. My calculated 17% is actually fairly close with Yahoo or Reuters past 5 yr growth rate of 16%.

This is a little too high by my standards for future growth in a mature company which is why I lowered it down to 10%.

This gives a fair value of $111.

Competitor and Peer Analysis


Probably the simplest way to value a company.

If you look at the 7th page of the stock analysis report that I posted, you will see that BDX side by side with 5 competitors and the numbers show that BDX is slightly cheaper than its competitors.

BDX current PE of 13.86 is lower than peers with less revenue and lower metrics. Seems like 15 or 16 is what BDX would be trading at if priced correctly.

  • PE 15 = $72

  • PE 16 = $76


Summary


From the valuations we looked at, BDX looks to be worth somewhere between $72 - $111 but I believe the range would be more towards $76-$90.

Becton Dickinson looks to be a very typical Buffett type company selling at a discount to its intrinsic value.

This article was featured on Carnival of Personal Finance - History of College Football Edition

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Monday, August 17, 2009

7 Dividend Raisers during a financial crisis

Companies that pay dividends show prudent fiscal management in place, which is an important piece of information about a business. Some investors believe that a dividends shows that earnings are real and not manufactured by smart accountants manipulating GAAP rules.

Companies that raise dividends however show not only smart cash management skills, but also confidence in the company’s near term prospects. This assurance of balance sheet strength, despite the challenging economic environment, show their focus on delivering sustainable long-term results to shareholders. The boards of several firms announced dividend hikes over the past week:

Connecticut Water Service, Inc. (CTWS), which operates as a regulated water company in Connecticut. , increased its quarterly dividend by 2.20% to 22.75 cents per share. Connecticut Water Service, Inc. is a dividend achiever, which has increased dividend payments for each of the last 40 years. The stock currently yields 4.20%.

Consolidated Water Co. Ltd. (CWCO), which uses reverse osmosis technology to produce fresh water from seawater, announced an increase to its quarterly dividend by 15% to 7.50 cents per share. Consolidated Water Co. Ltd. is an international dividend achiever, which has increased its quarterly dividend in each of the past ten years. The stock currently yields 1.40%.

Badger Meter, Inc. (BMI), which engages in manufacturing and marketing flow measurement and control products for water utilities, municipalities, and industrial customers worldwide, increased its quarterly dividend by 9% to 12 cents per share. CEO Richard A. Meeusen noted, "This is our seventeenth consecutive year of increased dividend payments. The increase reflects our ongoing commitment to our shareholders and our continued confidence in the future of Badger Meter. This dividend achiever currently yields only 1.30%.

Kinross Gold (KGC), which engages in the gold mining and exploration, increased its quarterly dividend by 25% to 5 cents per share. This is the first dividend increase for Kinross Gold is since the company started paying dividends in 2008. The stock currently yields only 0.40%. If you believe that gold is going to increase over the next few years, gold miners could be a good bet, since they pay some dividends, no matter how small they really are.

Equity LifeStyle Properties, Inc. (ELS) announced that its board of directors has approved a 20% increase in its quarterly dividends to 30 cents/share. This real estate investment trust (REIT) engages in the ownership and operation of lifestyle oriented properties. This is the sixth dividend increase for Equity LifeStyle Properties, Inc. since the company suspended distributions in 2003. The stock currently yields 2.80%.

Broadridge Financial Solutions, Inc. (BR) announced that its board of directors has approved a 100% increase in its quarterly dividends to 14 cents/share and authorized the repurchase of up to 10 million shares of its outstanding common stock. The company provides technology-based outsourcing solutions to the financial services industry. This is the second dividend increase for Broadridge Financial Solutions, Inc. since the company started a dividend policy in 2007. The stock currently yields 2.80%.

Lorillard, Inc. (LO), which engages in the manufacture and sale of cigarettes in the United States, increased its quarterly dividend by 8.7% to 1 dollar per share. Lorillard, Inc.was spun off from Loews in 2008, which explains the lack of long history of dividend increases. The stock currently yields 5.10%.

Full Disclosure: None

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Saturday, August 15, 2009

Berkshire Hathaway’s portfolio changes for 2Q 2009

Berkshire Hathaway (BRK-B) just posted its 13-F filing with the SEC, which lists changes in its stock positions.

Buffett initiated a new position in medical technology company Becton Dickinson (BDX) in the second quarter. The sec filing shows Berkshire Hathaway purchased.1.20 million shares in Becton Dickinson (BDX). Becton Dickinson is a dividend aristocrat, which has raised distributions for 36 years in a row.

Berkshire added 4.4 million shares to its position in health care giant Johnson & Johnson (JNJ). This is the second consecutive addition to its holdings there. Johnson and Johnson (JNJ) is another dividend aristocrat, which has rewarded shareholders with 47 years of consecutive dividend increases. Check my analysis of the stock.

Those recent moves by Buffett reiterate my convictions that he is a closet dividend investor. Most companies that have managed to increase their dividends for long periods of time are ones that have wide moats as well as excellent competitive advantages in the marketplace. Having these qualities leads to rising earnings which tend to support a steady pace of increase in dividends.

Berkshire eliminated its position in utility company Constellation Energy (CEG). This wasn’t a surprising move since Buffett’s company had already disclosed this sale in a June 1 filing.

Berkshire Hathaway disclosed lowered stakes in Carmax (KMX), ConocoPhillips (COP), Eaton Corporation (ETN), Home Depot (HD), United Health Group (UNH) when comparing June 30 to March 31 filings.

In a July 22 filing Berkshire Disclosed it had also cut its stake in the credit rating company Moody’s (MCO) by 16%.

Over the past several months Berkshire Hathaway has been allocating funds to preferred stocks with at very good prices. The company has invested billions in preferred shares of companies like Goldman Sachs (GS), General Electric (GE), Tiffany’s (TIF), Harley Davidson (HOG) and Dow Chemical (DOW). Some of these deals deliver not only solid yields in the low double digits, but also give warrants which could provide solid capital gains if these stocks recover over the next few years.

What this filing does not show however is the fact that Buffett’s conglomerate “goofed on derivatives”. While there may be more buzz than actual news and the SEC issues have been resolved, it is interesting how Buffett talks one thing but then does exactly the opposite of what he preaches. He’s always held a view against derivatives, yet his company has always engaged in options selling, futures and insurance derivatives.

One of his riskiest trades is the selling of puts on four major world stock indices, which expire somewhere between 2018 and 2028. Berkshire assumed over $37.50 billion in potential liabilities in the process, and has already lost $8 billion on them at the end June 2009. If world stock markets resemble the Japanese stock market of the second “lost decade” for the country with the rising sun, then Berkshire would be on the hook for almost half the $37 billion in assumed liabilities.

Does is pay to follow Buffett’s moves? The answer is yes it does. According to this paper a portfolio that mimicked Buffet’s stock investments would have outperformed S&P 500 by 14.6% annually between 1976 and 2006. Here’s a list of Berkshire Hathaway’s portfolio holdings as of June 30, 2009:



Full Disclosure: Long JNJ

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Friday, August 14, 2009

Chubb (CB) Dividend Stock Analysis

The Chubb Corporation, through its subsidiaries, provides property and casualty insurance to businesses and individuals. The company operates through three segments: Personal Insurance, Commercial Insurance, and Specialty Insurance. The company is member of the S&P 500 and the S&P Dividend Aristocrats indexes.
Chubb has consistently increased dividends every year for 44 years. The company announced a 6.10% dividend raise in February 2009, plus a 20 million share repurchase initiative in December 2008.

Between June of 1999 up until June 2009 this dividend growth stock has delivered an average total return of 3.90% annually. The stock is trading almost 50% above the levels it was changing hands a decade ago.

The company has managed to deliver an 11.60% average annual increase in its EPS between 1999 and 2008. Next year Chubb is expected to earn $5.15 share, followed by $5.20/share in FY 2010.

The Return on Equity has ranged over the past decade between a low of 2% and a high of 20%. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time. With the exception of 2001 and 2002, this indicator has been stable.

Annual dividends have increased by an average of 8.40 % annually since 1999, which is slower than the growth in EPS. The disparity is mostly due to a gradual decrease in the dividend payout ratio and the billions of dollars the insurer has spent on stock buybacks.
An 8 % growth in dividends translates into the dividend payment doubling almost every four years. If we look at historical data, going as far back as 1984, Chubb has indeed managed to double its dividend payment every eight years on average.


The dividend payout ratio has been on the decline, and is still much lower than my 50% threshold. 2001 and 2002 stick as outliers, since earnings per share were lower on high underwriting combined ratios. 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 Chubb is trading at 9.20 times earnings, yields 3.10% and has an adequately covered dividend payment. In comparison rival Travelers Cos (TRV) trades at a P/E multiple of 10 and yields 2.80% , while Cincinnati Financial (CINF) trades at a P/E multiple of 8 and yields 6.40%. Berkshire Hathaway (BRK.B) is also a competitor to Chubb(CB), although it trades at a P/E of 29, and does not pay a dividend. The company does spend a lot of its cash flow on stock buybacks, which could prove beneficial in the long run since it could provide above average dividend growth over time for the same effort. I like the company and its business model. Insurance companies like Chubb (CB) are a way for investors to fill in the need for exposure to the financial sector, after several high profile payers like Citigroup (C) and Bank of America (BAC) cut their distributions.
I believe that the company is attractively valued at the moment; thus I would be looking forward to adding to my position in Chubb (CB).

Full Disclosure: Long CB

Thursday, August 13, 2009

OptionsXpress $100 Referal Bonus

Besides Tradeking’s $50 promotion, Optionsxpress is also offering new customers $100 account opening bonus through their refer a friend program. The referred account must maintain an average account balance of $500 for 6 months, and the account must trade at least once.

I just opened an account with Optionsxpress so I do have referral codes. If you want in shoot me an e-mail at dividendgrowthinvestor@gmail.com. I would then request that Optionsxpress sent you an e-mail, and you have to click on the link inside in order to qualify.
OptionsXpress stock trades are a little pricey at 14.95/trade, but they do have an outstanding options service if that’s what you are into. This definitely is a good deal since just for trying out a new service you get paid $100. If you just want to get the bonus, open an account with $520, make one stock trade for one share of a low priced stock such as Freddie Mac (FRE) or Fannie Mae (FNM) and you would make at least a 15% return on your investment in 6 months.

Here’s the overview of the promotion bonus from OptionsXpress site:

Offer limited to one $100 bonus per referrer and referred friend, for each unique referral resulting in a newly activated, funded optionsXpress account meeting the terms and conditions of the refer a friend program. To qualify for the $100 bonus, the referred account must maintain a per account average balance of $500 for 6 months, and the account must trade at least once. The $100 bonus will be deposited into the referrer and referred accounts within 45 days after the referred friend meets the terms and conditions of the offer. To qualify, the referrer must enter the referred friend's email address through this page, and the referred friend must enter the promo code "FRIEND" through the new account application form when opening the new account. A referred customer can only qualify for the $100 bonus a total of one time. A customer can only qualify for a total of $500 from any combination of optionsXpress cash promotions per calendar year. Deposits of new funds or securities from existing optionsXpress accounts are not eligible for this offer. Qualified (IRA), linked and shared accounts are not eligible for this offer. This offer is not valid for optionsXpressassociates, non-U.S. residents, certain referring parties, and where otherwise prohibited. Customers can not exchange the $100 for other offers, cash or credit. We reserve the right at our sole discretion, to cancel, modify or suspend this offer program at any time without notice.

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- TradeKing $50 Promotion
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Wednesday, August 12, 2009

13 dividend stocks to enter on dips

Ever since the markets hit a milti year low in March, investors have been wondering how sustainable the advance is. Some claim that the bear market is over, while others believe that the worst is yet to come in the grand scheme of events.

Intelligent dividend investors are not worried about short-term fluctuations in the markets however. They understand that if they follow a rigorous screening process and acquire a diversified mix of the best dividend paying companies in the world, their distributions would provide a positive return in any market. In a previous post I identified 12 attractively valued dividend stocks to acquire now. It is important however not to overpay for stocks, even those with exceptional moats, as this could lead to underperformance relative to their benchmark over time.

If the markets were truly overstretched, then a slight retracement from markets recent highs would be a welcoming sign for income investors, who are looking to exploit these conditions by acquiring great franchises on dips. Pockets of opportunity allow dividend investors to buy solid businesses at reasonable prices, decent yields and acceptable dividend growth rates.

In order to capitalize on such opportunities, I have screened for companies, which have raised their dividends for more than 25 consecutive years. My criteria were are follows:

1) Stock has increased dividends for more than a quarter of a century
2) Price/Earnings Ratio of less than 20
3) Dividend payout ratio of less than 50%
4) Dividend yield is more than 2%, but no more than 3%

The companies, which I identified in the screen, are listed below:



(Open as a spreadsheet)

I require a 3% initial dividend yield before initiating a position in a stock. Thus the above-mentioned stock list should be acquired only on dips below the target price. Another strategy for enterprising dividend growth investors is selling cash secured puts on the stocks below, with strike prices close to the target price mentioned above. I have provided some explanation why I require at least some yield below.

Investors often overpay for stocks because of the recency phenomenon, where they discount double-digit growth indefinitely. This leads to purchasing stocks with unacceptably low dividend yields, high P/E ratios and rosy predictions for strong dividend growth for eternity. Such conditions are simply unsustainable.

Thus by buying a stock with a dividend yield of at least 3% an investor’s income is relatively well covered in a scenario where the company stops growing its distributions. With this margin of safety the investor still generates some dividend income until they manage to sell the stock and re-invest the proceeds in a more promising dividend growth stocks. With a 1%-2% yielder, it would take forever for our enterprising dividend investor to earn a reasonable dividend income if distribution growth slows down or grinds to a halt.

Full Disclosure: Long MHP, MMM, SHW and WMT

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Monday, August 10, 2009

9 Dividend Stocks in the news

Two more dividend aristocrats raised their distributions last week, bringing the total number of raisers in the elite index to 30. This is quite impressive, given the fact that there are almost 5 more months to go before the year is out and that there are only 51 components in it.

Dover Corporation (DOV), manufactures industrial products and components, as well as provides related services and consumables in the United States and internationally, increased its quarterly dividend by 4% to 26 cents per share. Dover Corporation is a dividend aristocrat, which has increased its quarterly dividend in each of the past fifty-four consecutive years. The stock currently yields 2.90%.

Leggett & Platt (LEG), which designs and produces a range of engineered components and products worldwide, increased its quarterly dividend by 4% to 26 cents per share. Leggett & Platt is a dividend aristocrat, which has increased its quarterly dividend in each of the past 38 years. The stock currently yields 5.80%. The company has been unable to cover its dividend payment in 2007 and 2008, so this move is definitely a surprising one from this High-Yield dividend stock at risk. On the positive side, over the past two years the company had a $1.42 and $1.16 in cash flow per share, which still barely leaves any funds for other activities. Another positive fact is that the company has announced that as long as cash flows from operations exceed $300 million, which is enough for capex and distributions, dividends are safe.

Aqua America (WTR), which operates regulated utilities that provide water or wastewater services in the United States, increased its quarterly dividend by 7.4% to 14.50 cents per share. Aqua America is a dividend achiever, which has increased its quarterly dividend in each of the past eighteen years. The stock currently yields 3.00%.

Carlisle (CSL), is a diversified global manufacturing company, increased its quarterly dividend by 3.20% to 16 cents per share. This marks the 33rd consecutive year of dividend increases for Carlisle, which is a member of the dividend champion’s list. The stock currently yields 1.90%.

On July 29, 2009, the Board of Directors of Church & Dwight Co (CHD), which evelops, manufactures, and markets a range of household, personal care, and specialty products under various brand names in the United States and internationally, increased its quarterly dividend by 55.60% to 14 cents per share. Church & Dwight Co is a dividend achiever, which has increased its quarterly dividend in each of the past thirteen years. The stock currently yields only 1.00%.

BCE Inc. (BCE), which provides a suite of communication services to residential and business customers in Canada, increased its quarterly dividend by 5% to 40.50 Canadian cents per share. This increase is funded from free cash flow and is consistent with the company's target dividend payout ratio of 65% to 75% of Adjusted EPS. The stock currently yields 6.10%.

Apollo Investment Corporation (AINV) announces that its Board of Directors has declared its second fiscal quarter 2010 dividend of $0.28 per share. Apollo Investment Corporation is business Development Company specializing in investments in middle market companies. Apollo Investment Corporation cut its quarterly per share distributions by half in 2009, from $0.52 to $0.26. The current distribution raise is a positive, as long as the company can sustain the momentum of distribution raises over time. The stock currently yields 14.00%.

Chemed Corporation (CHE), provides hospice care services, increased its quarterly dividend by an astounding 100% to 12 cents per share. Before you get too excited about this dividend increase, please be alert that this is the first raise since 2002; furthermore the new distribution of 12 cents/share is still way below Chemed’s 26.50 cents/share quarterly distribution before it cut its dividends in 1999. The stock currently yields 1.10%.

Atrion Corporation (ATRI), which designs, develops, manufactures, sells, and distributes products and components for the medical and healthcare industry, increased its quarterly dividend by 20% to 36 cents per share. Atrion has consistently paid and increased its quarterly dividend since 2003. The stock currently yields 0.90%.

Despite the recent outperformance of speculative stocks since March 2009, long term investors are beginning to put their money in stable companies which share portions of their profits with shareholders. While markets can go up and down, creating and destroying capital gains in seconds, investors who focus on getting "a bird in hand" should do well overtime as they receive an ever increasing stream of income from their investments.

Full Disclosure: None

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- Dividend Aristocrats - YTD dividend raisers versus Cutters
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Friday, August 7, 2009

Wal-Mart (WMT) Dividend Stock Analysis

Wal-Mart Stores, Inc. operates retail stores in various formats worldwide. The company is member of the S&P 500, Dow Jones Industrials Average and the S&P Dividend Aristocrats indexes. Wal-Mart Stores has consistently increased dividends every year for 35 years. The company announced a 15% dividend raise in March 2009, plus a $15 billion stock buyback initiative last month.

Between June of 1999 up until June 2009 this dividend growth stock has delivered an average total return of 1.10% annually. The stock is trading below the levels it was changing hands a decade ago.

The company has managed to deliver an 11.60% average annual increase in its EPS between 1999 and 2008. Next year Wal-Mart is expected to earn $3.55 share, followed by $3.90/share in FY 2011. With growth slowing down, the price/earnings multiple could contract even lower. This being said I believe Wal-Mart is an excellent business, as it always investing in innovation that helps control inventory and focus on certain types of merchandise that offsets weaker demand in recessions. Despite the expected slow down in consumer spending, Wal Mart is well positioned with its diverse product mix of consumer staples and foods that it is offering on its shelves. It has lower prices in comparison to its competitors, which could drive more traffic for the retailer.
Just like Walgreen (WAG), Wal-Mart Stores expects to slow down on the rate of opening new stores and instead would try to focus on developing the profitability of existing locations, without cannibalizing sales in its existing outlets.
A potential growth area for the company are its international joint ventures in China, Brazil, India and Chile.

The Return on Equity has ranged over the past decade between a low of 20% and a high of 22%, with the exception of 1999. 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 18.90 % annually since 1999, which is higher than the growth in EPS. The disparity is mostly due to a gradual increase in the dividend payout ratio and the billions of dollars the Bentonville, AR based retailer has spend on stock buybacks.
A 19 % growth in dividends translates into the dividend payment doubling almost every four years. If we look at historical data, going as far back as 1976, Wal-Mart has actually managed to double its dividend payment every three years on average.
The slowdown in capital spending could free up more cash for dividend increases and share buybacks. Thus, despite expectations for EPS growth of 7% over the next few years, Wal-Mart could still manage to deliver low double-digit dividend growth.

The dividend payout ratio has been on the rise, although it is still much lower than my 50% threshold. 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 Wal-Mart Stores is trading at 14.20 times earnings, yields 2.20% and has an adequately covered dividend payment. The company does spend a lot of its cash flow on stock buybacks, which could prove beneficial in the long run since it could provide above average dividend growth over time for the same effort. Most analysts are bullish on the stock, but this could be a recency bias due to the strong performance of the stock in 2008. Although I really like the company, I don’t want to pay top dollar for it. Thus I would consider adding to my position there on dips below $40.

Full Disclosure: Long WMT

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Thursday, August 6, 2009

TradeKing $50 Promotion

TradeKing which is one of the leading online discount brokers in the US is offering a $50 sign-up bonus for new customer accounts. If you receive a referral code, simply open an account by August 31, fund the account with $1000 and make a trade. Both accounts would get $50 deposits.

"Simply refer a friend to TradeKing using our Refer a Friend Dashboard between now and August 27th. As soon as your friend deposits $1,000 and executes a trade, we'll deposit $50 into both of your accounts. Keep in mind this isn't a one-friend deal, so you don't have to pick favorites. The more friends you refer, the more you and your friends will profit.1

New qualifying account must be opened within the dates of 7-31-09 to 8-31-09. New referred client must fund their account with a minimum of $1,000 within 30 days of opening the new account. New referred client must also execute at least one trade in the new account within 180 days of the account opening. The minimum funds of $1,000 must remain in the account (minus any trading losses) for a minimum of 180 days or the credit may be surrendered. Account types that don't qualify include: traditional IRA, ROTH IRA, Rollover IRA, SEP IRA, Simple IRA, Solo 401K and Coverdell IRA."

I have a TradeKing account, and I am quite happy with it. If you are interested in this promotional offer and getting $50 in the process, simply e-mail me at dividendgrowthinvestor@gmail.com, and I would send you a referral e-mail. Once you receive it, you have to click on a link in it, fund it with $1000 and make one trade within 180 days of opening the account in order to get the $50 bonus.

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Dividend Aristocrats - YTD dividend raisers versus cutters

Despite Avery Dennison's recent dividend cut, the dividend aristocrats index appears to be business as usual in 2009. The dividend aristocrats represent S&P 500 members which have consistently raised their dividends for more than 25 consecutive years. At the end of 2008, there were 52 constituents in the index. Dividend growth investors typically use the Dividend Aristocrats and the Dividend Achievers Indexes as a starting point in their additional stock research.

There were 28 dividend increases in the elite dividend index so far in 2009. The companies raising distributions this year include:



There were 8 dividend cuts in the elite dividend index so far in 2009. The other dividend cutters include:



One company, Rohm & Haas was taken over by Dow Chemical (DOW) in the first half of 2009.

The changes in the Dividend Aristocrats index should be expected and they are a natural process that occurs even in normal years. The index is relatively well diversified between different sectors, which helped soften its decline over the past 2 years, relative to the S&P 500.

Full Disclosure: Long ABT, ADM, APD, CB, CLX, ED, FDO, GWW, KMB, KO, MHP, MMM, PEP, PG, SHW and WMT

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- Why do I like Dividend Aristocrats?
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Wednesday, August 5, 2009

Supervalu (SVU) Dividend Stock Analysis

SUPERVALU INC. operates as a grocery retailer in the United States. The company is member of the S&P 500 and the S&P Dividend Aristocrats indexes.
SUPERVALU INC. has paid dividends for more than 70 years and consistently increased payments to common shareholders every year for 35 years. The company announced a 1.5% dividend raise in May 2009, plus a $70 million stock buyback initiative.

Between June of 1999 up until June 2009 this dividend growth stock has delivered a negative average total return of 4.00% annually. The stock is trading below the levels it was changing hands a decade ago.

The company has managed to deliver a 4.80% average annual increase in its EPS between 1999 and 2008. Not reflected in 2008 earnings per share is a $15.71/share non-cash impairment charge, required by Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” to goodwill at certain Retail food reporting units and indefinite-lived trademarks and tradenames related to the Acquired Trademarks. You could read more about it here and here. For 2010 analysts are expecting a decline in EPS to $2.10, followed by rebound to $2.40 in FY 2011.
Future EPS growth would come from synergies related to the acquisition of 1124 Albertson’s stores in 2006 and new store openings. The latter are expected to slow down in FY 2010. Despite flat same store sales, the company generates sufficient cash to distribute back to shareholders in the form of dividends or stock buybacks.

The Return on Equity has ranged over the past decade between a low of 4.50% in 2000 and a high of 16.30% in 2004. 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 2.80 % annually since 1999, which is lower than the growth in EPS. It is also slightly lower than the rate of inflation as well.
A 3 % growth in dividends translates into the dividend payment doubling every twenty-four years. If we look at historical data, going as far back as 1985, Supervalu has actually managed to double its dividend payment every twelve years on average.

The dividend payout ratio has largely remained below 50%, with the exception of a brief spike in 2000. 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 Supervalu is trading at 6.20 times FY 2010 earnings and yields 5.10%. Despite its slow dividend growth, I like the above average dividend yield that the stock is offering, relative to other food retailers such as Safeway (SWY) and Kroger (KR). I also like the low price/earnings multiple. I would consider initiating a small starter position in Supervalu (SVU) on dips.

Full Disclosure: None

Monday, August 3, 2009

Chevron (CVX) Raises Dividends; MLPs follow suit

This week’s distribution increases were mainly focused on two of the energy majors and several master limited partnerships. In one occasion with master limited partnerships both the general and the limited partners received distribution increases, while in another only the general partners received a raise in quarterly distributions.
Dividend increases typically reflect management’s confidence in companies’ financial performance and their ability to meet shareholders’ expectations. The companies which met these goals include:

Chevron Corporation’s (CVX) board of directors declared a 4.60 % increase to its quarterly dividend to 68 cents per share. The company operates as an integrated energy company worldwide. Chevron Corporation is a dividend achiever, which has increased its quarterly dividend in each of the past twenty-two years. The stock currently yields 4.00%. Check my analysis of Chevron (CVX).

Kellogg Company’s (K) board of directors declared a 10.30 % increase to its quarterly dividend to 37.50 cents per share. The company engages in the manufacture and marketing of ready-to-eat cereal and convenience foods. Kellogg Company is a former dividend aristocrat, which has fought back to regain its status of a dividend growth stock since 2005. The stock currently yields 3.10%.

The board of Royal Dutch Shell (RDS.A)(RDS.B) increased its dividend for the second half of the year by 5% to 84 cents per share. The company engages in the exploration, production, and trading of various energy resources worldwide. Royal Dutch Shell is an international dividend achiever, which has increased its quarterly dividend in each of the past sixteen years. The stock currently yields 6.40%.

Harleysville Group’s (HGIC) board of directors declared an 8 % increase to its quarterly dividend to 32.50 cents per share. The company engages in the property and casualty insurance business primarily in the eastern and Midwestern United States. Harleysville Group Inc.is a dividend achiever, which has increased its quarterly dividend in each of the past twenty-two years. The stock currently yields 4.00%.

American Water Works Company, Inc. (AWK) announced that its board of directors hs declared a 5.00 % increase to its quarterly dividend to 21cents per share. American Water Works Company, Inc provides water and wastewater services to residential, commercial, and industrial customers in the United States and Canada. This is the company’s first dividend increase since going public in 2008. The stock currently yields 4.10%.

Lazard Ltd (LAZ) announced that its board of directors has declared a 25 % increase to its quarterly dividend to 12.50 cents per share. The company operates as a financial advisory and asset management firm worldwide. This is the third dividend increase for the company since going public in 2005. The stock currently yields 1.30%.

Digital Realty Trust, Inc. (DLR) increased its quarterly dividend by 9.10% to 36 cents per share. The company engages in the ownership, acquisition, development, redevelopment, and management of technology-related real estate. This is the fifth consecutive annual dividend increase for this REIT since it went public in 2004. The stock currently yields 3.60%.

Alliance Resource Partners LP (ARLP) announced an increase to its quarterly distributions to 74.50 cents per share. This represents a 2% increase over last quarter’s distribution and a 12.90% increase over its distribution announced this time last year. This master limited partnership engages in the production and marketing of coal for utilities and industrial users in the United States. Alliance Resource Partners LP has increased its quarterly distributions in each of the past seven years. The units currently yield 8.30%.

El Paso Pipeline Partners LP (EPB) which last week approved a 1% increase over the last quarterly distribution to 33 cents per unit, announced its intentions to further raise its quarterly distributions to 35 cents/unit in the fourth quarter.
This represents a 6% increase over last quarter’s distribution and a 16.70% increase over its distribution announced this time last year. This master limited partnership engages in the ownership and operation of natural gas transportation pipelines and storage assets. Once the board of the general partner approves the new rate, this will be the 7th consecutive distribution increase for El Paso Pipeline Partners, L.P. since it went public in 2007. The units currently yield 6.70%.

The board of directors of Inergy, L.P.’s (NRGY) general partner announced an increase to its quarterly distributions to 66.50 cents per unit. This represents the 31st consecutive quarterly increase and an approximate 6.4% increase over the distribution for the same quarter of the prior year. This master limited partnership’s operations include the retail marketing, sale, and distribution of propane to residential, commercial, industrial, and agricultural customers. The units representing limited partnership interests in this MLP currently yield 9.00%.

The Board of Directors of Inergy Holdings GP, LLC (NRGP) announced an increase to its quarterly distributions to 78 cents per unit. This represents an approximate 4% increase over the previously declared quarterly distribution of $0.75 per limited partner unit and an approximate 28% increase over the distribution for the same quarter of the prior year. Inergy Holdings, L.P.’s assets consist of its ownership interests in Inergy, L.P., including limited partnership interests, ownership of the general partners, and the incentive distribution rights. Inergy Holdings GP has increased its quarterly distributions for fifteen consecutive quarters. The units representing the General Partner interests in this MLP currently yield 7.30%.

The Board of Directors of Energy Transfer Equity, L.P. (ETE) announced an increase to its quarterly distributions to 53.50 cents per unit. This represents an approximate 2% increase over the previously declared quarterly distribution of 52.50 cents per unit and an approximate 11.40% increase over the distribution for the same quarter of the prior year. Energy Transfer Equity, L.P. (ETE) is a publicly traded partnership, which owns the general partner of Energy Transfer Partners, L.P. and approximately 62.5 million ETP limited partner units. The units representing the General Partner interests in this MLP currently yield 7.30%.

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. Just because I wrote about a certain stock however, 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.

Full Disclosure: Long CVX

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