Monday, October 1, 2012

Five Income Stocks Boosting Investors’ Distributions

Over the past week, the boards of directors for several income stocks approved plans to boost investors’ dividends. Only five of these companies had boosted distributions for over five consecutive years. In this article I have presented only the companies that passed the first screen, along with a brief analysis of each company. The companies include:

Lockheed Martin Corporation (LMT), a security and aerospace company, engages in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products in the areas of defense, space, intelligence, homeland security, information technology, and cyber security in the United States and internationally. The company raised its quarterly distributions by 15% to $1.15 /share. This marked the tenth consecutive annual dividend increase for Lockheed Martin. Yield: 4.90%

The stock looks attractively valued at the moment, trading at 11 times earnings and yielding 4.90%. The dividend is well covered. In my previous analysis of the stock, I outlined that future growth in earnings might be limited due to tightening of US Government budgets on military spending. I would take another look at the company, and evaluate long-term prospects, before I initiate a position in the stock. Overall however, it is very rare to find a company that is attractively valued in this environment and offer such a high dividend which is also growing.

Bowl America Incorporated (BWL-A), together with its subsidiaries, operates bowling centers in the United States. The company raised its quarterly distributions by 3.10% to 16.50 cents/share. This dividend champion has boosted distributions for 41 years in a row. Yield: 5.10%

Currently, the dividend payout ratio is unsustainably high for the dividend to be safe. The company has been unable to cover the dividend out of earnings since 2009. As a result, future dividend growth is very limited. I would consider the stock a hold at best.

CLARCOR Inc. (CLC) provides filtration products, filtration systems and services, and consumer and industrial packaging products worldwide. The company raised its quarterly distributions by 12.50% to 13.50 cents/share. This dividend champion has boosted distributions for 48 years in a row. Yield: 1.20%

The company has managed to significantly increase earnings and dividends over the past decade. The stock currently trades at 18.40 times earnings, but unfortunately yields only 1.20%. I would consider researching Clarcor, and potentially initiating a position in it on weakness.

Pall Corporation (PLL), together with its subsidiaries, manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. The company raised its quarterly distributions by 19% to 25 cents /share. This marked the ninth consecutive annual dividend increase for Pall Corporation. Yield: 1.60%

Currently the stock is overvalued at 23 times earnings and yields only 1.60%. The company has managed to boost earnings per share from$ 0.84 in 2003 to $2.75 in 2012. The ten year dividend growth is only 0.30%/year since Pall cut distributions in 2002. I would pass on the stock for now, but may consider it once a dividend achiever status is reached and it trades at better valuations.

Artesian Resources Corporation (ARTNA), through its subsidiaries, provides water, wastewater, and engineering services on the Delmarva Peninsula. The company raised its quarterly distributions by 2.50% to 20.27 cents/share. This dividend achiever has boosted distributions for 16 years in a row. Yield: 3.50%

Artesian Resources has boosted distributions by 4.40%/year over the past decade. The company has managed to increase earnings per share from $0.78 in 2002 to $1.07 for the past four quarters. Given the slow increase in earnings, and the high dividend payout ratio, I do not expect much in future dividend growth. In addition, the stock is trading at 21.70 times earnings, which makes it a hold. Utility stocks are difficult to justify in the accumulation phase of dividend growth portfolios in general because of slow growth and high payout ratios.

Full Disclosure: None

Relevant Articles:

Lockheed Martin Corporation (LMT) Dividend Stock Analysis
Dividend Achievers Offer Income Growth and Capital Appreciation
Dividend Champions - The Best List for Dividend Investors
Dividend Aristocrats List for 2012


  1. I'd be very interested in a post about which of your dividend stocks you would consider adding to, given the current inflationary environment of QE-infinity. My portfolio looks similar to yours, and I am struggling with deciding where it would be best to add to my positions.

  2. Yeah, that's a great idea. I was thinking of a concentrated position in energy to also protect from inflation...


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