Monday, September 13, 2010

7 Dividend Stocks Raising Dividends and Returns

Investors could earn money in the stock market either through capital gains or through dividends. Dividends are the direct link between a company’s financial strength and investor’s return. Capital gains on the other hand are an indirect way for shareholders to profit from an enterprise. In addition to that companies cannot control their stock price, but they can control the level of the dividend payment. This is why an announcement of a dividend increase is a bullish sign for the company that has announced it.

Seven companies raised distributions to shareholders over the past week:

Philip Morris International Inc (PM), through its subsidiaries, engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Philip Morris International (PM) raised its quarterly dividend by 10.3% to 64 cents per share. This was the third consecutive annual dividend increase since the company was spun off from Altria (MO) in 2008. Check my analysis of the stock. Yield: 4.70%

Brady Corporation (BRC) manufactures and markets identification solutions and specialty products that identify and protect premises, products, and people. Brady Corporation’s Board of Directors announced an increase in its quarterly dividend to shareholders from 17.5 to 18 cents per share. This was the twenty fifth consecutive annual dividend increase for this dividend champion. Yield: 2.70%

Casey’s General Stores, Inc. (CASY), together with its subsidiaries, operates convenience stores under the names of Casey’s General Store, HandiMart, and Just Diesel in the Midwestern states. The company raised its quarterly dividend by 35% to 13.50 cents/share. This was the second dividend increase for the company in 2010. This dividend achiever has raised dividends for eleven consecutive years. The company is in the middle of being a takeover target, which would prove once again that dividend stocks are attractive takeover targets. Yield: 1.20%

R.G. Barry Corporation (DFZ), together with its subsidiaries, engages in designing, sourcing, marketing, and distributing accessory footwear products in North America. The company increased its quarterly dividend by 40% to 7 cents/share. This was the first dividend increase since a dividend policy was initiated in 2009. Yield: 2.80%

Frisch’s Restaurants, Inc. (FRS), together with its subsidiaries, operates full service restaurants in the United States. The company raised its quarterly dividend by % to 15 cents/share. This was the third consecutive annual dividend increase since 2007. Yield: 3.10%

Flexsteel Industries, Inc. (FLXS) engages in the manufacture, import, and marketing of residential, recreational vehicle, and commercial upholstered and wooden furniture products in the United States. The company declared a quarterly dividend of 7.5 cents per share, a 50% increase over the prior rate of 5 cents/share. Yield: 2%

It is interesting how the board of PMI approved a dividend increase just a week after the board of former parent Altria (MO) also raised distributions. Overall I find Philip Morris International Inc (PM) to have better long-term prospects than Altria (MO), whose operations are predominantly focused on the US. The company expects to grow earnings by 14%-17% in 2010. Analysts also expect the company to earn $4.10/share in FY 2011.

Full disclosure: Long PM and MO

Relevant Articles:

- Why Dividend Growth Stocks Rock?
- Altria (MO) Dividend Stock Analysis
- Altria Delivers Another Smoking Hot Dividend Increase
- Six Notable Dividend Increases for the week
- Dividend growth stocks are attractive buyout targets

3 comments:

  1. Question to the author regarding FRS. Although the company has operating income of approx $14m, with a current ratio of .36 and a quick ratio of about .07, is the dividend increase perhaps a sign of difficulty within the company instead of overall health? On what factors do you draw the distinction?

    ReplyDelete
  2. I would consider FRS when it has raised dividends for 10 years in a row. I guess we will talk in about 7 years..

    Right now the dividend is adequately covered with room to grow by at least 50% untill I am worried. The main issue is -EPS has been mostly flat to slightly up over the past decade.. We are still below the EPS from 2004

    ReplyDelete
  3. Raising dividends signifies growth of investment. Engaging with this companies will certainly provide great returns of your investment and a stable financial gains. Catering this kind of information really plays an important aspect in making valuable decision.

    ReplyDelete

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