A dividend increase is generally a bullish sign, which reflects management’s optimistic view on the near term prospects for the company. The sign of dividend increases is especially bullish for companies which have raised distributions for over one decade. One has to be careful however to avoid the excessively high yielding stocks which might not be able to sustain future dividend payments. Investors should also avoid chasing dividend growth stocks which don’t have a long history of dividend increases.
Several companies announced their intent to increase distributions to shareholders. I have separated the dividend raisers of the past week in three groups: dividend achievers, champions and aristocrats; master limited partnerships; and potential dividend achievers
Dividend Growth Stocks
Kimberly-Clark Corporation (KMB), which engages in the manufacture and marketing of health and hygiene products worldwide, announced that a high single-digit to low double-digit increase in the dividend is anticipated effective April 2010, subject to approval by the Board of Directors.. The company typically raises distributions in February. Kimberly-Clark Corporation is a dividend aristocrat, which has increased its quarterly dividend in each of the past thirty=seven consecutive years. The stock currently yields 3.90%. (analysis)
Praxair, Inc. (PX), which engages in the production and distribution of industrial gases, increased its quarterly dividend by 13% to 45 cents per share. Praxair, Inc. is a dividend achiever, which has increased its quarterly dividend in each of the past seventeen consecutive years. The stock currently yields 2.40%.
Energen Corporation (EGN), which is engages in the development, acquisition, exploration, and production of oil, natural gas, and natural gas liquids in the continental United States, increased its quarterly dividend by 4% to 13 cents per share. Energen Corporation is a dividend achiever, which has increased its quarterly dividend for twenty-eight consecutive years. The stock currently yields 1.10%.
SJW Corp. (SJW), engages in the production, purchase, storage, purification, distribution, and retail sale of water, increased its quarterly dividend by 3% to 17 cents per share. SJW Corp. is a dividend champion, which has increased its quarterly dividend in each of the past forty-three consecutive years. The stock currently yields 3.00%.
Master Limited Partnerships
El Paso Pipeline Partners, L.P. (EPB), which engages in the ownership and operation of natural gas transportation pipelines and storage assets in the United States, increased its quarterly distributions to 36 cents per unit. This is the eight consecutive quarterly distribution increase for the company since going public in 2007. The stock currently yields 5.60%.
Holly Energy Partners, L.P. (HEP), 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, increased its quarterly distribution to 80.5 cents per unit. Holly Energy has increased its distribution to unit holders every quarter since becoming a public partnership in July 2004. This increase marks the twenty-first consecutive quarterly increase. This master limited partnership currently yields 7.60%.
Sunoco Logistics Partners (SXL), which 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, increased its quarterly distributions by $1.09 per unit. This master limited partnership has consistently raised distributions since 2002. Sunoco Logistics Partners currently yields 6.00%.
Inergy Holdings GP, LLC, (NRGP), has ownership interest in Inergy, L.P. that engages in the
sale, distribution, storage, marketing, trading, processing, and fractionation of propane, natural gas, and other natural gas liquids to residential, commercial, industrial, and agricultural customers. This master limited partnership increased its quarterly distributions to 94 cents per unit. Inergy Holdings GP, LLC has increased its quarterly distributions since 2005. Inergy Holdings GP, LLC, currently yields 5.20%.
Potential Dividend Achievers
Rollins, Inc. (ROL), which provides pest and termite control services, and protection against termite damage, rodents, and insects, increased its quarterly dividend by 28.60% to 9 cents per share. Rollins, Inc. has only raised distributions since 2002. The stock currently yields 1.80%.
National Instruments (NATI), which is one of the top telecommunications companies in the US, increased its quarterly dividend by 8% to 13 cents per share. This is the 7th consecutive increase in distributions since the company initiated a dividend policy in 2002. The stock currently yields 1.70%.
Airgas (ARG), which distributes industrial, medical, and specialty gases, as well as hardgoods in the United States, increased its quarterly dividend by 22.20% to 22 cents per share. Airgas has raised dividends since 2003 The stock currently yields 2.00%.
CMS Energy (CMS), which is operates as an energy company primarily in Michigan, increased its quarterly dividend by 20% to 15 cents per share. This is the third consecutive dividend increase since CMS Energy started paying dividends again in 2007. The stock currently yields 3.95%.
Full Disclosure: Long KMB
- Dividend Aristocrats List for 2010
- Master Limited Partnerships (MLPs) – an island of stability for dividend investors
- Dividend Investing vs Trading
- High yield stocks for current income
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