Monday, October 24, 2011

Ten Income Stocks Confident in their Growth Prospects

Dividends are paid out of real cash, generated by businesses. In order for these companies to be able to afford it, they should be expecting to generate sufficient amounts of cashflow. Thus, companies which announce an increase in their distributions, show their optimism about near-term business prospects. It is particularly refreshing to hear about companies which are optimistic about their future, particularly in light of all bearish news around Greece and US Budget deficits to name a few.

The following companies were confident enough in their business prospects, to increase distributions over the past week. Some were even bold enough to provide guidance extending over several years into the future:

Kinder Morgan Energy Partners, L.P. (KMP) owns and manages energy transportation and storage assets. This master limited partnership raised distributions to $1.16/unit. This was an increase of 4.50% compared to the last distribution paid out in 2010. This master limited partnership has increased distributions for 15 years in a row and currently yields 6.10%. According to this press release, the partnership will distributed almost $5/unit in 2012, followed by a 5%-7% distribution growth for the foreseeable future. Check my analysis of Kinder Morgan.

Realty Income Corporation (O) engages in the acquisition and ownership of commercial retail real estate properties in the United States. This high yielding real estate investment trust increased its monthly distribution by a fraction of a penny to 0.1451875 cents/share. Overall, the four increases in distributions since the start of 2011 have resulted in annual dividend increases of 1.50 cents/share to $1.736625/share. While this distribution growths looks low, investors should not forget that Realty Income is one of the few REITs that did not cut distributions during the financial meltdown. The company has raised dividends for 17 years in a row and yields 5.40%. Check my analysis of the stock.

Eaton Vance Corp. (EV), through its subsidiaries, engages in the creation, marketing, and management of investment funds in the United States. It also provides investment management and counseling services to institutions and individuals. The company raised its quarterly dividend by 5.60% to 19 cents/share. This marked the 31st consecutive annual dividend increase for this dividend champion. Yield: 3.10%. Check my analysis of the stock.

Stepan Company (SCL), together with its subsidiaries, engages in the production and sale of specialty and intermediate chemicals to manufacturers in various industries worldwide. The company raised its quarterly dividend by 7.70% to 28 cents/share. This marked the 44th consecutive annual dividend increase for this dividend champion. Yield: 1.50%.

Met-Pro Corporation (MPR) manufactures and sells product recovery and pollution control equipment for purification of air and liquids, fluid handling equipment for corrosive, abrasive and high temperature liquids, and filtration and purification products in the United States and internationally. The company raised its quarterly dividend by 7.60% to 7.1 cents/share. This marked the 11th consecutive annual dividend increase for this dividend achiever. Yield: 3.20%.

Magellan Midstream Partners, L.P. (MMP), together with its subsidiaries, engages in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. The master limited partnership increased distributions by 1.90% to 80 cents/unit. This represents a 7.40% increase over the distribution paid out in the last quarter of 2010. Magellan Midstream Partners has increased distributions for 11 consecutive years. Yield: 5.10%

Visa Inc. (V) operates retail electronic payments network worldwide. It facilitates commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. The company raised its quarterly dividend by 46.70% to 22 cents/share. This was the third consecutive annual dividend increase since the company went public in 2008. The stock yields only 1%, but could be the next big dividend growth story.

Cass Information Systems, Inc. (CASS) provides payment and information processing services to large manufacturing, distribution, and retail enterprises in the United States. The company raised its quarterly dividend by 6.25% to 17 cents/share. This marked the tenth consecutive annual dividend increase for this future dividend achiever. Yield: 1.90%

Bar Harbor Bankshares (BHB) operates as the holding company for Bar Harbor Bank & Trust that provides various banking products and services to individuals, businesses, not-for-profit organizations, and municipalities primarily in Hancock, Washington, and Knox counties. The company increased dividends by 1.80% to 28 cents/share. Bar Harbor Bankshares has increased dividends for 9 consecutive years. The quarterly dividend has been raised 3 times over the past year, after being flat for 2 years. The flat period included half of 2008 and 2010 and the whole year 2009. Yield: 3.90%

Prosperity Bancshares, Inc. (PRSP) operates as the holding company for Prosperity Bank that provides retail and commercial banking services to small and medium-sized businesses and consumers. The company raised its quarterly dividend by 11.40% to 19.50 cents/share. This marked the 14th consecutive annual dividend increase for this future dividend achiever. Yield: 2.10%

As a side note, I own the i-shares of Kinder Morgan (KMR). Investors in KMR do not receive cash distributions, but receive shares proportional to the ownership interest they have in the stock. The cash distributions for KMP and KMR are equal, the only difference is that KMR distributions are paid in the form of additional shares.

Full Disclosure: Long KMR, O, EV

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  1. Hi,

    I've been a fan and loyal of your site for over a year now. I always find your post fun, insightful, and most importantly informative.

    I also noticed Visa this week, as we should, since it raised its dividend. I personally see both Visa and MasterCard as toll routes. Kinda like how you perceive KMP. Although, Visa nor MasterCard are not even champions yet I do believe they will be and most likely one day aristocrats.

    I was wondering if it as at possible that you do what you do best and analyze these two up and coming companies.

    Thank you,
    Rob ~ Bubba

  2. I'd like to apologize for the spelling mistakes and the obvious lack of cohesion. Should of waited til the morning to write the comment.

    As I reread my comment, I realize it does convey my question/statement.

    Take care,
    Rob ~ Bubba

  3. I just started investing last year. I currently have $85,000 in dividend stocks.

    However, I found out that Scottrade is not reinvesting my dividends. The dividends are placed in my account as available cash.

    What is the best online brokerage that will reinvest dividends?

    I am assuming that is the cheapest way to reinvest dividends.



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