Every week I screen the list of companies whose board of directors has approved an increase in their dividend. I then further narrow the list by including only companies which have shown commitment to raising distributions for at least five consecutive years. The purpose of this exercise is to note whether any companies in my dividend portfolio are raising distributions and also to identify any hidden dividend gems. Further screening based on quantitative factors such as valuation, earnings growth, dividend sustainability could add value by decreasing the list of potential candidates for further research to a more manageable level.
Last week, there were twelve stocks which announced dividend hikes:
The Chubb Corporation (CB), through its subsidiaries, provides property and casualty insurance to businesses and individuals. The company raised its quarterly distributions by 5.40% to 39 cents/share. This dividend aristocrat has raised distributions for 46 years in a row. The company has managed to raise distributions by 8.30% on average over the past decade. Yield: 2.60% (analysis)
Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. The company raised its quarterly distributions by 9.40% to 58 cents/share. This dividend champion has raised distributions for 48 years in a row. The company has managed to raise distributions by 12.40% on average over the past decade. Yield: 3% (analysis)
Genuine Parts Company (GPC) distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, Canada, and Mexico. The company raised its quarterly dividend by 9.80% to 45 cents/share. This dividend king has raised dividends for 55 consecutive years. The company has managed to raise distributions by 4.20% on average over the past decade. Yield: 3.40% (analysis)
British American Tobacco p.l.c. (BTI) , through its subsidiaries, engages in the manufacture, distribution, and sale of tobacco products. The company’s board of directors approved an increase in its final dividend to 81 pence/share. The total annual dividend would thus be at 114.20 pence/share, which represents a 15% increase over the payment in 2009. British American Tobacco is an international dividend achiever, which has raised distributions for thirteen years in a row. The US ADR annual dividend equivalent at current forex rates comes out to $3.68/share. Yield: 4.60%
McGrath RentCorp (MGRC) operates as a business-to-business rental company in the United States. It operates in four segments: Mobile Modular Management Corporation (Mobile Modular); TRS-RenTelco; Adler Tank Rentals, LLC (Adler Tank); and Enviroplex, Inc. (Enviroplex). The company raised its quarterly distributions by 2.20% to 23 cents/share. This dividend achiever has raised distributions for 19 years in a row. The company has managed to raise distributions by 12.70% on average over the past decade. Yield: 3.30%
Essex Property Trust, Inc. (ESS), a real estate investment trust (REIT), engages in the ownership, operation, management, acquisition, development, and redevelopment of apartment communities primarily in the West Coast of the United States. This real estate investment trust raised quarterly distributions by 0.70% to $1.04/share. The company is a member of the dividend achievers index, and has consistently raised distributions for seventeen consecutive years. The company has managed to raise distributions by 5.90% on average over the past decade. Yield: 3.40%
Old Republic International Corporation (ORI), through its subsidiaries, engages in insurance underwriting business. It operates in three segments: General Insurance, Mortgage Guaranty, and Title Insurance. The company raised its quarterly dividend by 1.40% to 17.50 cents/share. This dividend champion has raised distributions for 30 years in a row. The company has managed to raise distributions by 8.90% on average over the past decade. Yield: 5.60%
RenaissanceRe Holdings Ltd. (RNR), together with its subsidiaries, provides reinsurance and insurance products and services worldwide. The company operates through two segments, Reinsurance and Individual Risk. The company raised its quarterly dividend by 4% to 26 cents/share. This marked the sixteenth consecutive dividend increase for this dividend achiever. The company has managed to raise distributions by 7.20% on average over the past decade. Yield: 4%
EOG Resources, Inc. (EOG), together with its subsidiaries, engages in the exploration, development, production, and marketing of natural gas and crude oil primarily in the United States, Canada, the Republic of Trinidad, Tobago, the United Kingdom, and the People's Republic of China. The company raised its quarterly dividend by 3.20% to 16 cents/share. This marked the 12th consecutive annual dividend increase for this dividend achiever. The company has managed to raise distributions by 25.10% on average over the past decade. Yield: 0.60%
Westar Energy, Inc. (WR), an electric utility company, engages in the generation, transmission, and distribution of electricity. The company raised its quarterly dividend by 3.20% to 32 cents/share. This marked the seventh consecutive dividend increase for Westar Energy. Yield: 4.90%
Tim Hortons Inc. (THI) develops, franchises, and operates quick service restaurants primarily in Canada and the United States. The company raised its quarterly dividend by 30.80% to 17 cents/share. This marked the sixth annual consecutive dividend increase for Tim Hortons. Yield: 1.60%
Sempra Energy (SRE), together with its subsidiaries, engages in the development of energy infrastructure, operation of utilities, and provision of energy-related products and services worldwide. It operates through two divisions, Sempra Utilities and Sempra Global. The company raised its distributions by 23.10% to 48 cents/share. This marked the seventh consecutive annual dividend increase for the stock. Yield: 3.60%
Full Disclosure: Long CB and CL
Relevant Articles:
- Sixteen Consistent Dividend Payers Raising Dividens
- Nineteen Consistent Dividend Growth Stocks raising distributions
- Eleven Dividend Machines Delivering Higher Distributions
- Five High Yield Dividend Growth Stocks Raising Distributions
Monday, February 28, 2011
Friday, February 25, 2011
Kimberly-Clark (KMB) Dividend Stock Analysis
Kimberly-Clark Corporation (KMB), together with its subsidiaries, engages in the manufacture and marketing of various health care products worldwide. The company operates in four segments: Personal Care, Consumer Tissue, K-C Professional & Other, and Health Care. The company is a dividend aristocrat which has increased distributions for 38 years in a row.
Over the past decade this dividend stock has delivered an annualized total return of 2% to its loyal shareholders.
The company has managed to deliver an average increase in EPS of 3.40% per year since 2000. Analysts expect Kimberly-Clark to earn $4.64 per share in 2010 and $5.01 per share in 2011. This would be a nice increase from the $4.52/share the company earned in 2009. The company’s EPS has been aided by the consistent share buybacks, which has led to a 3.10% average decrease in total shares outstanding per year. This means that over the past decade net income has been mostly flat.
The company has been trying to increase market share through product innovation and increased marketing. The company is under intense inflation pressure, but is closely. It has worked closely in streamlining operations in the sluggish North American market, eliminating positions and closing several facilities. Over the past several years, the company has only been able to pass on to consumers just half of the price increases that it experienced. Commodity prices could be detrimental to total costs at the company, as is the competitive nature of developed markets in which Kimberly-Clark does business. As with other consumer products companies, the growth is likely to come from developing and emerging markets, rather than developed markets. Developed markets could benefit from cost cutting and efficiency profits, which would decrease the total price of doing business. Under the company’s global business plan, announced in 2003, it is looking for annual sales growth in the 3%-5% range, EPS growth in the mid to high single digits and dividend increases in line with earnings growth. For more on the global business plan, check this document.
The company’s high return on equity has been on the rise since hitting a bottom at 25.70% in 2006. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by 9.30% per year since 2000, which is substantially more than the growth in EPS. This dividend growth has been possible mostly due to the expansion in the dividend payout ratio. Without growth in earnings, future dividend growth would be limited. A 9% growth in distributions translates into the dividend payment doubling every eight years. If we look at historical data, going as far back as 1980, we see that Kimberly-Clark has actually managed to double its dividend every seven and a half years on average. I expect modest dividend growth of up to 6% per year in the future, which could translate in the dividend payment doubling every twelve years.
Over the past decade the dividend payout ratio has increased from 32.30% to over 53%. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently, Kimberly-Clark is attractively valued at 14.40 times earnings, yields 4.20% and has a sustainable dividend payout. In comparison Procter & Gamble (PG) yields 3% and trades at a P/E of 15.90, while Colgate-Palmolive (CL) yields 2.60% and trades at a P/E of 18.80. The issue with Kimberly-Clark is that it has not been able to increase net income over the past decade. The reason behind the increase in earnings per share is because it consistently repurchased shares. In addition to that, the company was able to deliver dividend growth by paying a higher portion of earnings in the form of dividends. Over the next few years I see Kimberly-Clark raising dividends by 4% - 5% per year. The company is suited for investors seeking current income, but should be able to deliver decent total returns over the next decades. I would continue monitoring Kimberly-Clark and will consider adding to my position in the stock on dips.
Full Disclosure: Long KMB
Relevant Articles:
- Becton, Dickinson and Company (BDX) Dividend Stock Analysis
- McCormick & Company (MKC) Dividend Stock Analysis
- Sysco Corporation (SYY) Dividend Stock Analysis
- Genuine Parts (GPC) Dividend Stock Analysis
Over the past decade this dividend stock has delivered an annualized total return of 2% to its loyal shareholders.
The company has managed to deliver an average increase in EPS of 3.40% per year since 2000. Analysts expect Kimberly-Clark to earn $4.64 per share in 2010 and $5.01 per share in 2011. This would be a nice increase from the $4.52/share the company earned in 2009. The company’s EPS has been aided by the consistent share buybacks, which has led to a 3.10% average decrease in total shares outstanding per year. This means that over the past decade net income has been mostly flat.
The company has been trying to increase market share through product innovation and increased marketing. The company is under intense inflation pressure, but is closely. It has worked closely in streamlining operations in the sluggish North American market, eliminating positions and closing several facilities. Over the past several years, the company has only been able to pass on to consumers just half of the price increases that it experienced. Commodity prices could be detrimental to total costs at the company, as is the competitive nature of developed markets in which Kimberly-Clark does business. As with other consumer products companies, the growth is likely to come from developing and emerging markets, rather than developed markets. Developed markets could benefit from cost cutting and efficiency profits, which would decrease the total price of doing business. Under the company’s global business plan, announced in 2003, it is looking for annual sales growth in the 3%-5% range, EPS growth in the mid to high single digits and dividend increases in line with earnings growth. For more on the global business plan, check this document.
The company’s high return on equity has been on the rise since hitting a bottom at 25.70% in 2006. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment has increased by 9.30% per year since 2000, which is substantially more than the growth in EPS. This dividend growth has been possible mostly due to the expansion in the dividend payout ratio. Without growth in earnings, future dividend growth would be limited. A 9% growth in distributions translates into the dividend payment doubling every eight years. If we look at historical data, going as far back as 1980, we see that Kimberly-Clark has actually managed to double its dividend every seven and a half years on average. I expect modest dividend growth of up to 6% per year in the future, which could translate in the dividend payment doubling every twelve years.
Over the past decade the dividend payout ratio has increased from 32.30% to over 53%. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently, Kimberly-Clark is attractively valued at 14.40 times earnings, yields 4.20% and has a sustainable dividend payout. In comparison Procter & Gamble (PG) yields 3% and trades at a P/E of 15.90, while Colgate-Palmolive (CL) yields 2.60% and trades at a P/E of 18.80. The issue with Kimberly-Clark is that it has not been able to increase net income over the past decade. The reason behind the increase in earnings per share is because it consistently repurchased shares. In addition to that, the company was able to deliver dividend growth by paying a higher portion of earnings in the form of dividends. Over the next few years I see Kimberly-Clark raising dividends by 4% - 5% per year. The company is suited for investors seeking current income, but should be able to deliver decent total returns over the next decades. I would continue monitoring Kimberly-Clark and will consider adding to my position in the stock on dips.
Full Disclosure: Long KMB
Relevant Articles:
- Becton, Dickinson and Company (BDX) Dividend Stock Analysis
- McCormick & Company (MKC) Dividend Stock Analysis
- Sysco Corporation (SYY) Dividend Stock Analysis
- Genuine Parts (GPC) Dividend Stock Analysis
Wednesday, February 23, 2011
Dividend Growth Investing Gets No Respect
Dividend Growth investing is one of the most misunderstood investment strategies out there. Yet various studies have proven that quality dividend growth stocks tend to outperform the broad market indices over time.
The main obstacle to understanding dividend investing in general is that dividend stocks are equities and not a separate asset class. Companies exist for the benefit of shareholders, which mean that they have to generate some return either in the form of dividends or in the form of capital gains. Paying a dividend instills discipline on management to be careful with the cash position and not take excessive risks such as ill-timed acquisitions or investing in projects which might not generate sufficient returns for the company. Investing should be all about the middle ground, and not excessive assumptions about relying exclusively on capital gains or exclusively on dividends. Everything is good in moderation, and investing should not be any different.
Dividend investors realize that focusing just on the dividend income is not preferred. In order to be able to pay the dividend, a company needs to have a sustainable income stream, which preferably could grow over time. This would support a growing dividend over time. A growing stream of earnings also means that unless an unjustifiably high price was paid for the stock, its price should rise over time as well. By reinvesting dividends into purchasing more shares, and by enjoying capital gains in the process, investors will be able to take full advantage of the power of compounding, which will help them in achieving higher net worths over time. The point that dividend stocks are equities and that compounding a smaller initial investment at a certain return could lead to a higher invested amount over time is missed not only by ordinary investors, but even some financial writers.
Another misunderstood fact is that a company that grows distributions over time, could generate sufficient yield on cost to its early investors. If one invests $500,000 today in dividend stocks which yield 3%, they would be generating $15,000 in dividend income. If dividends grow at 6% per year for 12 years, the dividend income would be $30,000 in 2023. This income stream would be the same as the income stream generated by a $1,000,000 investment in 2023, yielding 3%. Dividend growth is not a given of course, although it has been a fact of life for the past several decades, and that is for broader market indices.
Dividend stocks do have risks of course. There are no risk-free assets to invest in to begin with however. Even investing in US treasuries, which are viewed as fairly low risk, could lead to losses if interest rates increase, the dollar loses purchasing power or the US government fails to meet its obligations. Investors could lower their risks by diversifying into at least 30 individual stocks representative of as many market sectors as applicable. A long record of consistent dividend growth is a must, coupled with a business model that boasts strong competitive advantages, stable and growing earnings and strong brand recognition. Overpaying for stocks is a sure way to increase risks of investment losses, just like chasing the highest yielding stocks without checking whether the payout is sustainable is a recipe for disaster.
Even when one looks at the dividends per share in the S&P 500 over the past 30 years, a clear trend of dividend growth is obvious. Dividend growth investors are simply playing on that trend by investing in the companies that actually do grow dividends over time. Not all companies that are purchased by investors would keep growing distributions over time, but if a careful selection method is utilized by investors, coupled with a sound diversification policy, a dividend portfolio should be able to generate high income over time.
As mentioned above, dividend growth is a function of earnings growth. Companies make more money by expanding, raising prices at a higher pace than the increase in costs, cutting costs, acquiring companies or by a combination of any of the above. A gradual decrease in the dollars purchasing power due to inflation actually benefits equities, since this makes nominal prices higher, even if the product or service was acquired at lower nominal amounts. In addition to that, as the number of consumers in the world increases, this could only benefit global companies such as Procter & Gamble (PG), McDonald’s (MCD), Johnson & Johnson (JNJ), Coca Cola (KO) or Colgate-Palmolive (CL).
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company has raised dividends for 48 years in a row and has a ten year dividend growth rate of 13% per annum .Yield: 3.60% (analysis)
The Procter & Gamble Company (PG) provides consumer packaged goods in the United States and internationally. The company operates in three global business units (GBUs): Beauty and Grooming, Health and Well-Being, and Household Care. The company has raised distributions for 54 years in a row and has a ten year dividend growth rate of 10.90% annually. Yield: 3.00% (analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. The company has raised dividends for 49 years in a row and has a ten year dividend growth rate of 10% per year. Yield: 2.70% (analysis)
Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. The company has raised distributions for 47 years in a row and has a ten year dividend growth rate of 12.40% per year. Yield: 2.70% (analysis)
Full Disclosure: Long MCD, CL, KO, PG, JNJ
Relevant Articles:
The main obstacle to understanding dividend investing in general is that dividend stocks are equities and not a separate asset class. Companies exist for the benefit of shareholders, which mean that they have to generate some return either in the form of dividends or in the form of capital gains. Paying a dividend instills discipline on management to be careful with the cash position and not take excessive risks such as ill-timed acquisitions or investing in projects which might not generate sufficient returns for the company. Investing should be all about the middle ground, and not excessive assumptions about relying exclusively on capital gains or exclusively on dividends. Everything is good in moderation, and investing should not be any different.
Dividend investors realize that focusing just on the dividend income is not preferred. In order to be able to pay the dividend, a company needs to have a sustainable income stream, which preferably could grow over time. This would support a growing dividend over time. A growing stream of earnings also means that unless an unjustifiably high price was paid for the stock, its price should rise over time as well. By reinvesting dividends into purchasing more shares, and by enjoying capital gains in the process, investors will be able to take full advantage of the power of compounding, which will help them in achieving higher net worths over time. The point that dividend stocks are equities and that compounding a smaller initial investment at a certain return could lead to a higher invested amount over time is missed not only by ordinary investors, but even some financial writers.
Another misunderstood fact is that a company that grows distributions over time, could generate sufficient yield on cost to its early investors. If one invests $500,000 today in dividend stocks which yield 3%, they would be generating $15,000 in dividend income. If dividends grow at 6% per year for 12 years, the dividend income would be $30,000 in 2023. This income stream would be the same as the income stream generated by a $1,000,000 investment in 2023, yielding 3%. Dividend growth is not a given of course, although it has been a fact of life for the past several decades, and that is for broader market indices.
Dividend stocks do have risks of course. There are no risk-free assets to invest in to begin with however. Even investing in US treasuries, which are viewed as fairly low risk, could lead to losses if interest rates increase, the dollar loses purchasing power or the US government fails to meet its obligations. Investors could lower their risks by diversifying into at least 30 individual stocks representative of as many market sectors as applicable. A long record of consistent dividend growth is a must, coupled with a business model that boasts strong competitive advantages, stable and growing earnings and strong brand recognition. Overpaying for stocks is a sure way to increase risks of investment losses, just like chasing the highest yielding stocks without checking whether the payout is sustainable is a recipe for disaster.
Even when one looks at the dividends per share in the S&P 500 over the past 30 years, a clear trend of dividend growth is obvious. Dividend growth investors are simply playing on that trend by investing in the companies that actually do grow dividends over time. Not all companies that are purchased by investors would keep growing distributions over time, but if a careful selection method is utilized by investors, coupled with a sound diversification policy, a dividend portfolio should be able to generate high income over time.
As mentioned above, dividend growth is a function of earnings growth. Companies make more money by expanding, raising prices at a higher pace than the increase in costs, cutting costs, acquiring companies or by a combination of any of the above. A gradual decrease in the dollars purchasing power due to inflation actually benefits equities, since this makes nominal prices higher, even if the product or service was acquired at lower nominal amounts. In addition to that, as the number of consumers in the world increases, this could only benefit global companies such as Procter & Gamble (PG), McDonald’s (MCD), Johnson & Johnson (JNJ), Coca Cola (KO) or Colgate-Palmolive (CL).
McDonald's Corporation (MCD), together with its subsidiaries, operates as a worldwide foodservice retailer. It franchises and operates McDonald's restaurants that offer various food items, soft drinks, coffee, and other beverages. The company has raised distributions for 34 years in a row and has a ten year dividend growth rate of 26.50% per year .Yield: 3.20% (analysis)
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company has raised dividends for 48 years in a row and has a ten year dividend growth rate of 13% per annum .Yield: 3.60% (analysis)
The Procter & Gamble Company (PG) provides consumer packaged goods in the United States and internationally. The company operates in three global business units (GBUs): Beauty and Grooming, Health and Well-Being, and Household Care. The company has raised distributions for 54 years in a row and has a ten year dividend growth rate of 10.90% annually. Yield: 3.00% (analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. The company has raised dividends for 49 years in a row and has a ten year dividend growth rate of 10% per year. Yield: 2.70% (analysis)
Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. The company has raised distributions for 47 years in a row and has a ten year dividend growth rate of 12.40% per year. Yield: 2.70% (analysis)
Full Disclosure: Long MCD, CL, KO, PG, JNJ
This article was featured on the Carnival of Personal Finance #298 – The Best Money Articles Online
Relevant Articles:
Monday, February 21, 2011
Sixteen Consistent Dividend Payers Raising Dividends
Dividend investing is one of the many strategies individuals could use in order to generate income in retirement. Most of the quality dividend paying companies which I follow on my blog pursue a policy of stable and growing distributions. These companies are hesitant to cut dividends during recessions or temporary earnings setbacks, which provides retirees with a higher degree of confidence that their income stream would not be jeopardized. The fact that most stocks pay regular quarterly dividend distributions makes it easy for retirees to forecast the level of income they are going to generate in a given period. This stable recurring income stream is essential for budgeting and meeting their recurring expenses in retirement. While stable dividend payments are helpful in generating income, it is companies that also regularly raise distributions that could generate an inflation adjusted stream of income which doesn’t lose purchasing power over time.
In this week’s look of dividend raisers, I have highlighted the companies which not only announced dividend increases, but also have a history of at least five consecutive annual dividend increases:
Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. The company announced its plans to raise its quarterly dividend by 9.10% to 48 cents/share. This dividend aristocrat has increased dividends for 39 consecutive years and has a ten year annual dividend growth rate of 8.80%.Yield: 4.10 % (analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. The company announced its plans to raise its quarterly dividend by 6.80% to 47 cents/share. This dividend aristocrat has increased dividends for 49 consecutive years and has a ten year annual dividend growth rate of 10%. Yield: 2.90 % (analysis)
Nestle S.A. (NSRGY) provides nutrition, health, and wellness products worldwide. The company’s Board of Directors has proposed a 15.60% increase in dividends to 1.85 CHF/share ($1.96/share). This international dividend achiever has consistently raised distributions since 1996. Yield: 3.50%
TransCanada Corporation (TRP) operates as an energy infrastructure company in North America. The company operates in two segments, Pipelines and Energy. The Company announced its plans to raise its quarterly dividend by 5 % to 42 cents/share. This international dividend achiever has consistently increased dividends since 2001. Yield: 4.40%
Buckeye Partners, L.P. (BPL) primarily operates refined petroleum products pipeline systems in the United States. The Company announced its plans to raise its quarterly distributions to 98.75 cents/share. This member of the dividend achievers index has increased dividends for 16 consecutive years and has a ten year annual distribution growth rate of 4.80%. Yield: 6.10%
Questar Corporation (STR), a natural gas-focused energy company, through its subsidiaries, engages in the gas and oil exploration and production, midstream field services, energy marketing, interstate gas transportation, and retail gas distribution businesses. The company announced its plans to raise its quarterly dividend by 8.90% to 15.25 cents/share. This dividend aristocrat has increased dividends for 32 consecutive years and has a ten year annual dividend growth rate of 4.70%. Yield 3.40%
The Sherwin-Williams Company (SHW) engages in the development, manufacture, distribution, and sale of paints, coatings, and related products in North and South America, Europe, and Asia. The company announced its plans to raise its quarterly dividend by 1.40 % to 36.50 cents/share. This dividend aristocrat has increased dividends for 33 consecutive years and has a ten year annual dividend growth rate of 10.30%%. Yield: 1.70% (analysis)
Stanley Black & Decker, Inc. (SWK) manufactures tools and engineered security solutions worldwide. The Company announced its plans to raise its quarterly dividend by 20.60 % to 41 cents/share. This dividend champion has increased dividends for 44 consecutive years. Yield: 2.20% (analysis)
Reynolds American Inc. (RAI), through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. The company announced its plans to raise its quarterly dividend by 8.20 % to 53 cents/share. The company has increased dividends for 6 years in a row. Yield: 6.10%
MOCON, Inc. (MOCO) develops, manufactures, markets, and services measurement, analytical, and monitoring products that are used to detect, measure, and analyze gases and chemical compounds; and provides related consulting services. The company announced its plans to raise its quarterly dividend by 5.30% to 10 cents/share. The company is a member of the dividend challengers list and has increased dividends for 9 consecutive years. Yield 3.20%
NextEra Energy, Inc. (NEE), through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. The company announced its plans to raise its quarterly dividend by 10% to 55 cents/share. The company is a member of the dividend achievers index and has increased dividends for 17 consecutive years. Yield: 4%
Silgan Holdings Inc. (SLGN), through its subsidiaries, engages in the manufacture and sale of metal and plastic consumer goods packaging products primarily in the United States, Canada, and Europe. The company announced its plans to raise its quarterly dividend by 4.80% to 11 cents/share. The company has increased dividends for 8 consecutive years. Yield: 1.10%
T. Rowe Price Group, Inc. (TROW) is a publicly owned asset management holding company. The company announced its plans to raise its quarterly dividend by 14.80% to 31 cents/share. The company is a member of the dividend achievers index and has increased dividends for 24 consecutive years. Yield: 1.70%
Albemarle Corporation (ALB) develops, manufactures, and markets engineered specialty chemicals in the United States and internationally. The company announced its plans to raise its quarterly dividend by 17.90 % to 16.50 cents/share. The company is a member of the dividend achievers index and has increased dividends for 17 consecutive years. Yield: 1.10%
Cheviot Financial Corp. (CHEV) operates as the holding company for Cheviot Savings Bank that provides a range of banking services in Ohio. The company announced its plans to raise its quarterly dividend by 9.10% to 12 cents/share. The company has increased dividends for 8 years in a row. Yield: 5.50%
Compass Minerals International, Inc. (CMP), through its subsidiaries, engages in the production and marketing of inorganic mineral products in North America and the United Kingdom. The company operates in two segments, Salt and Specialty Fertilizer. The Company announced its plans to raise its quarterly dividend by 15.40% to 45 cents/share. The company has raised its quarterly dividend for 8 years in a row. Yield: 1.90%
Full Disclosure: Long ABT,KO, SHW, NSRGY
Relevant Articles:
- Ten Dividend Stocks Beating Inflation
- Fourteen Stocks Raising Dividends Like Clockwork
- Eleven Dividend Machines Delivering Higher Distributions
- Five High Yield Dividend Growth Stocks Raising Distributions
In this week’s look of dividend raisers, I have highlighted the companies which not only announced dividend increases, but also have a history of at least five consecutive annual dividend increases:
Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of health care products worldwide. It operates in four segments: Pharmaceutical Products, Diagnostic Products, Nutritional Products, and Vascular Products. The company announced its plans to raise its quarterly dividend by 9.10% to 48 cents/share. This dividend aristocrat has increased dividends for 39 consecutive years and has a ten year annual dividend growth rate of 8.80%.Yield: 4.10 % (analysis)
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. The company announced its plans to raise its quarterly dividend by 6.80% to 47 cents/share. This dividend aristocrat has increased dividends for 49 consecutive years and has a ten year annual dividend growth rate of 10%. Yield: 2.90 % (analysis)
Nestle S.A. (NSRGY) provides nutrition, health, and wellness products worldwide. The company’s Board of Directors has proposed a 15.60% increase in dividends to 1.85 CHF/share ($1.96/share). This international dividend achiever has consistently raised distributions since 1996. Yield: 3.50%
TransCanada Corporation (TRP) operates as an energy infrastructure company in North America. The company operates in two segments, Pipelines and Energy. The Company announced its plans to raise its quarterly dividend by 5 % to 42 cents/share. This international dividend achiever has consistently increased dividends since 2001. Yield: 4.40%
Buckeye Partners, L.P. (BPL) primarily operates refined petroleum products pipeline systems in the United States. The Company announced its plans to raise its quarterly distributions to 98.75 cents/share. This member of the dividend achievers index has increased dividends for 16 consecutive years and has a ten year annual distribution growth rate of 4.80%. Yield: 6.10%
Questar Corporation (STR), a natural gas-focused energy company, through its subsidiaries, engages in the gas and oil exploration and production, midstream field services, energy marketing, interstate gas transportation, and retail gas distribution businesses. The company announced its plans to raise its quarterly dividend by 8.90% to 15.25 cents/share. This dividend aristocrat has increased dividends for 32 consecutive years and has a ten year annual dividend growth rate of 4.70%. Yield 3.40%
The Sherwin-Williams Company (SHW) engages in the development, manufacture, distribution, and sale of paints, coatings, and related products in North and South America, Europe, and Asia. The company announced its plans to raise its quarterly dividend by 1.40 % to 36.50 cents/share. This dividend aristocrat has increased dividends for 33 consecutive years and has a ten year annual dividend growth rate of 10.30%%. Yield: 1.70% (analysis)
Stanley Black & Decker, Inc. (SWK) manufactures tools and engineered security solutions worldwide. The Company announced its plans to raise its quarterly dividend by 20.60 % to 41 cents/share. This dividend champion has increased dividends for 44 consecutive years. Yield: 2.20% (analysis)
Reynolds American Inc. (RAI), through its subsidiaries, manufactures and sells cigarette and other tobacco products in the United States. The company announced its plans to raise its quarterly dividend by 8.20 % to 53 cents/share. The company has increased dividends for 6 years in a row. Yield: 6.10%
MOCON, Inc. (MOCO) develops, manufactures, markets, and services measurement, analytical, and monitoring products that are used to detect, measure, and analyze gases and chemical compounds; and provides related consulting services. The company announced its plans to raise its quarterly dividend by 5.30% to 10 cents/share. The company is a member of the dividend challengers list and has increased dividends for 9 consecutive years. Yield 3.20%
NextEra Energy, Inc. (NEE), through its subsidiaries, engages in the generation, transmission, distribution, and sale of electric energy in the United States and Canada. The company announced its plans to raise its quarterly dividend by 10% to 55 cents/share. The company is a member of the dividend achievers index and has increased dividends for 17 consecutive years. Yield: 4%
Silgan Holdings Inc. (SLGN), through its subsidiaries, engages in the manufacture and sale of metal and plastic consumer goods packaging products primarily in the United States, Canada, and Europe. The company announced its plans to raise its quarterly dividend by 4.80% to 11 cents/share. The company has increased dividends for 8 consecutive years. Yield: 1.10%
T. Rowe Price Group, Inc. (TROW) is a publicly owned asset management holding company. The company announced its plans to raise its quarterly dividend by 14.80% to 31 cents/share. The company is a member of the dividend achievers index and has increased dividends for 24 consecutive years. Yield: 1.70%
Albemarle Corporation (ALB) develops, manufactures, and markets engineered specialty chemicals in the United States and internationally. The company announced its plans to raise its quarterly dividend by 17.90 % to 16.50 cents/share. The company is a member of the dividend achievers index and has increased dividends for 17 consecutive years. Yield: 1.10%
Cheviot Financial Corp. (CHEV) operates as the holding company for Cheviot Savings Bank that provides a range of banking services in Ohio. The company announced its plans to raise its quarterly dividend by 9.10% to 12 cents/share. The company has increased dividends for 8 years in a row. Yield: 5.50%
Compass Minerals International, Inc. (CMP), through its subsidiaries, engages in the production and marketing of inorganic mineral products in North America and the United Kingdom. The company operates in two segments, Salt and Specialty Fertilizer. The Company announced its plans to raise its quarterly dividend by 15.40% to 45 cents/share. The company has raised its quarterly dividend for 8 years in a row. Yield: 1.90%
Full Disclosure: Long ABT,KO, SHW, NSRGY
Relevant Articles:
- Ten Dividend Stocks Beating Inflation
- Fourteen Stocks Raising Dividends Like Clockwork
- Eleven Dividend Machines Delivering Higher Distributions
- Five High Yield Dividend Growth Stocks Raising Distributions
Friday, February 18, 2011
PepsiCo (PEP) Dividend Stock Analysis
PepsiCo, Inc. manufactures, markets, and sells various foods, snacks, and carbonated and non-carbonated beverages worldwide. The company operates in four divisions: PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB), PepsiCo Europe, and PepsiCo Asia, Middle East and Africa (AMEA). The company is a dividend aristocrat which has increased distributions for 38 years in a row.
Over the past decade this dividend stock has delivered an annualized total return of 4.90% to its loyal shareholders.
The company has managed to deliver an average increase in EPS of 10.90% per year since 2000. Analysts expect PepsiCo to earn $4.12 per share in 2010 and $4.61 per share in 2011. This would be a nice increase from the $3.77/share the company earned in 2009.
The company has recognized that carbonated drink sales are not going to grow significantly in the future, which is why it has focused on fast growing non-carbonated soft drinks. The company’s innovation in the area has been successful with the introduction of Aquafina , Gatorade and Propel, Lipton teas and Tropicana. Pepsi has also started to emphasize on health and wellness, and has worked to minimize the amount of trans fats in its snack foods. Future earnings growth could also come from synergies associated with the acquisitions of its bottlers, streamlining of operations and cost cutting. The distribution networks of the bottlers acquired could be used to push some of PepsiCo’s non-beverage products such as snacks and other foods. Earnings growth could also come from strategic acquisitions, as well as product innovations in health and wellness food and beverage section. The company has recently announced its plans to acquire the leading Russian food and beverage company Wimm-Bill-Dann (WBD), in an effort to position itself in the growing emerging market in Russia and to build its nutrition business.
The company has a high return on equity, which has remained above 30%, with the exception of a brief decrease in 2004. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment in US dollars has increased by 13.70% per year since 2000. A 14% growth in distributions translates into the dividend payment doubling every five years. If we look at historical data, going as far back as 1978, we see that PepsiCo has actually managed to double its dividend every six and a half years on average.
Over the past decade the dividend payout ratio has remained above 50% only in 2008. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently, PepsiCo is attractively valued at 16.50 times earnings, yields 2.90% and has a sustainable dividend payout. In comparison Coca Cola (KO) yields 2.70% and trades at a P/E of 20. I would continue monitoring PepsiCo and will consider adding to my position in the stock on dips.
Full Disclosure: Long PEP and KO
Relevant Articles:
- Lowe’s Companies (LOW) Dividend Stock Analysis
- Why dividend investing beats US Treasuries today?
- Commerce Bancshares (CBSH) Dividend Stock Analysis
- Genuine Parts (GPC) Dividend Stock Analysis
Over the past decade this dividend stock has delivered an annualized total return of 4.90% to its loyal shareholders.
The company has managed to deliver an average increase in EPS of 10.90% per year since 2000. Analysts expect PepsiCo to earn $4.12 per share in 2010 and $4.61 per share in 2011. This would be a nice increase from the $3.77/share the company earned in 2009.
The company has recognized that carbonated drink sales are not going to grow significantly in the future, which is why it has focused on fast growing non-carbonated soft drinks. The company’s innovation in the area has been successful with the introduction of Aquafina , Gatorade and Propel, Lipton teas and Tropicana. Pepsi has also started to emphasize on health and wellness, and has worked to minimize the amount of trans fats in its snack foods. Future earnings growth could also come from synergies associated with the acquisitions of its bottlers, streamlining of operations and cost cutting. The distribution networks of the bottlers acquired could be used to push some of PepsiCo’s non-beverage products such as snacks and other foods. Earnings growth could also come from strategic acquisitions, as well as product innovations in health and wellness food and beverage section. The company has recently announced its plans to acquire the leading Russian food and beverage company Wimm-Bill-Dann (WBD), in an effort to position itself in the growing emerging market in Russia and to build its nutrition business.
The company has a high return on equity, which has remained above 30%, with the exception of a brief decrease in 2004. Rather than focus on absolute values for this indicator, I generally want to see at least a stable return on equity over time.
The annual dividend payment in US dollars has increased by 13.70% per year since 2000. A 14% growth in distributions translates into the dividend payment doubling every five years. If we look at historical data, going as far back as 1978, we see that PepsiCo has actually managed to double its dividend every six and a half years on average.
Over the past decade the dividend payout ratio has remained above 50% only in 2008. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently, PepsiCo is attractively valued at 16.50 times earnings, yields 2.90% and has a sustainable dividend payout. In comparison Coca Cola (KO) yields 2.70% and trades at a P/E of 20. I would continue monitoring PepsiCo and will consider adding to my position in the stock on dips.
Full Disclosure: Long PEP and KO
Relevant Articles:
- Lowe’s Companies (LOW) Dividend Stock Analysis
- Why dividend investing beats US Treasuries today?
- Commerce Bancshares (CBSH) Dividend Stock Analysis
- Genuine Parts (GPC) Dividend Stock Analysis
Subscribe to:
Posts (Atom)
