Monday, September 23, 2013

Six Notable Dividend Increases so far in September

In this article, I have highlighted several notable companies, which have approved dividend increases in the month of September 2013. The thing that makes these companies notable is the fact that they have not only achieved a long streak of consecutive dividend increases, but also keep showing a tenacity to continue rewarding shareholders with higher distributions over time. In addition, most of these companies provide meaningful current income to shareholders. The companies that boosted dividends include:

Philip Morris International Inc. (PM), through its subsidiaries, manufactures and sells cigarettes and other tobacco products. The company raised dividends by 10.60% to 94 cents/share. This dividend paying stock has consistently raised distributions since the spin-off from Altria Group (MO) in 2008. The average rate of dividend increase since 2008 has been 12.70%. The stock is attractively valued at 17.40 times earnings and yields 4.20%. I like the long-term growth picture behind this international tobacco conglomerate so much, that it has been my largest portfolio holding for several years in a row. Check my analysis of Philip Morris International

McDonald’s Corporation (MCD) franchises and operates McDonald's restaurants in the United States, Europe, the Asia/Pacific, the Middle East, Africa, Canada, and Latin America. The company raised dividends by 5.20% to 81 cents/share. This was the lowest rate of increase since 2002, when dividends were raised by only 4.40%. The five year dividend growth rate is 13.90%/year. However, variability in dividend growth rates are something normal and to be expected in a long-term dividend holding. This dividend champion has raised distributions for 37 years in a row. The stock is attractively valued at 17.80 times earnings and yields 3.30%. I recently added to my position in the stock, and would buy more subject to availability of cash. Check my analysis of McDonald’s.

Realty Income Corporation (O) is a publicly traded real estate investment trust. The company raised monthly dividends to 18.185 cents/share. This dividend achiever has raised distributions for 19 years in a row. The five year dividend growth rate is low at 1.50%/year. However, this period includes the Financial Crisis, which led to steep dividend cuts across the REIT sector. The REIT yields 5.50%. I recently added to my position in Realty Income, with a purchase on Friday. Check my analysis of Realty Income.

Microsoft Corporation (MSFT) develops, licenses, and supports software, services, and hardware devices worldwide. The company raised dividends by 21.70% to 28 cents/share. This dividend achiever has raised distributions for 11 years in a row. The five year dividend growth rate is 15.10%/year. While the stock is attractively valued at 12.70 times earnings and yields 3.40%, I am not able to determine if 20 years from now it would have the same durable competitive advantages in has today. Check my analysis of Microsoft.

YUM! Brands, Inc. (YUM), together with its subsidiaries, operates quick service restaurants in the United States and internationally. The company raised dividends by 10.40% to 37 cents/share. This dividend achiever has raised distributions for ten years in a row. The five year dividend growth rate is 17.80%/year. The stock is valued at 23 times earnings and yields 2.10%. The company has had some short-term headwinds in China, which would likely create opportunities to accumulate the stock on weakness. I do not believe these short-term issues will affect the long-term growth potential of Yum Brands. I would look forward to adding to my position in Yum! Brands on dips below $60/share. Check my analysis of YUM! Brands.

W. P. Carey Inc. (WPC) is an independent equity real estate investment trust. The company raised its quarterly dividends to 86 cents/share. This dividend achiever has raised distributions for 16 years in a row. This REIT yields 5.20%. I had been following dividend increases in W.P. Carey for several years, and was aware of the potential for strong dividend growth after 2012. For whatever reason however, I failed to pull the trigger. Sometimes, failing to act timely on companies to buy can result in missed opportunities, which are not reflected on your brokerage statements or tax returns.

Full Disclosure: Long PM, MCD, O, YUM

Relevant Articles:

Check the Complete Article Archive
Realty Income (O) – The Monthly Dividend Company
Why Dividend Growth Stocks Rock?
My Dividend Portfolio Holdings
Return on Investment with Dividend Stocks

4 comments:

  1. I've been kind of taking Microsoft's move as a way to ensure they can hold on to their shareholders as they go through a period of disruption. It has some unique fundamentals, but you have to wonder about its advantage eroding over the years.

    ReplyDelete
  2. I am curious to see your take/analysis on a few smaller companies that have had dividends for a while. Some I own, some I am thinking about.

    1st - PGH (Pengrowth Energy), a Canadian Oil Shale company. Cost per share is approximately $5.85 and the dividend is roughly $0.04/month, but you lose 15% of your total dividend to upfront Canadian taxes, which you can write off on your IRS return.

    2nd - WIN (Windstream), this one has been a boom for me. $8.50 a share, gives $0.25 quarterly dividends. In the telecom field, providing internet, phone, and cable services.

    3rd - OAKS (Five Oaks Investment Corp), a real estate firm, that costs around $11 per share, with $0.16 dividends per month. They are really new to the market so I am very curious on this one.

    4th - NVE (Nevada Energy), currently at $23 per share, with $0.19 dividends. I like this one, and got it much cheaper before, but cost has gone up rapidly.

    5th - AHL (Aspen Insurance Holdings), $37 per share, $0.18 quarterly dividends. This is a second one I am interested, in after all insurance seems to always do well.

    - thanks!

    ReplyDelete
  3. Nick,

    MSFT is really cheap right now. The thing that concerns me is that I do not know how durable its competitive advantages are.

    However, I am sure that it would likely do well at least five years from now. I am just not sure how the future will look like with in 20 years from now. With a company like KO, I think the future will be more like the past than with MSFT. But again, it's my guess versus yours.

    Thanks for stopping by!

    ReplyDelete
  4. Anonymous,

    Thanks for stopping by. On my site, I focus on companies that can maintain a stable and growing payment.

    Unfortunately, few of the companies you mentioned posses these characteristics. In addition, I have not looked at most of them before, and therefore I do not have an opinion. As for NVE, I think it is in the process of being acquired by a Berkshire Hathaway subsidiary for $23.75/cash. Therefore, it would likely cease trading pretty soon.

    As for WIN, I have looked before, and have my doubts about the sustainability of the dividend. I might be wrong, but I tend to focus on companies where the dividend payout ratio is below 60%.

    Best Regards,

    DGI

    ReplyDelete

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