Every week I check the list of companies that raise dividends. There are several reasons for that. The most of important reasons include checking whether companies I own keep raising distributions, as well as to identify companies which could be a potential addition to my portfolio at some point in time. The companies which announced increases in their dividend payments include:
Altria Group, Inc. (MO), through its subsidiaries, engages in the manufacture and sale of cigarettes, wine, and other tobacco products in the United States and internationally. The company announced an 8.60% increase in its quarterly dividend to 38 cents/share. This was the second dividend increase this year. The company announced that the increase reflects the company's intention to return a large amount of cash to shareholders in the form of dividends, and is consistent with the company's dividend payout ratio target of approximately 80% of its adjusted diluted earnings per share. This is the 43rd consecutive dividend increase for Altria Group. The only reason why the company is not on the dividend aristocrat list is because its dividend payment is lower due to the spin-off of Phillip Morris International (PM) in 2008 and Kraft Foods (KFT) in 2007. The stock yields 6.70%. Check my analysis of the stock.
MGE Energy, Inc. (MGEE), through its subsidiaries, operates as a public utility holding company. It engages in generating, purchasing, transmitting, and distributing electricity. The company raised its quarterly dividend from $0.3684 to $0.3751 per share. The company has increased its dividend annually for the past 35 years and is part of the dividend achievers index. Yield: 4.10%
Bob Evans Farms, Inc. (BOBE), a full-service restaurant company, owns and operates Bob Evans Restaurants and Mimi’s Cafes in the United States. The company’s Board of Directors approved an 11.1% increase in the quarterly cash dividend from 18 cents/share to 20 cents/share. The company has consistently raised distributions since 2001. Yield: 3.10%
Westlake Chemical Corporation (WLK) manufactures and markets basic chemicals, vinyls, polymers, and fabricated products. It operates in two segments, Olefins and Vinyls. The company’s Board of Directors raised quarterly distributions by 10% to 6.35 cents/share. The company has consistently raised dividends every year since going public in 2004. Yield: 1%
G&K Services, Inc. (GKSR) provides branded identity apparel and facility services programs in North America. The company’s Board of Directors announced a 27% increase in its quarterly dividend to 9.5 cents/share. The company has raised distributions for five consecutive years.
Lorillard, Inc. (LO), through its subsidiaries, engages in the manufacture and sale of cigarettes in the United States. The company’s board of directors approved a 12.5% increase in the quarterly dividend on its common stock from $1.00 per share to $1.125 per share. This was the second consecutive dividend increase since the company began trading on NYSE in 2008. Yield: 6%
Todd Shipyards Corporation (TOD), a private shipyard operator, engages in the ship repair, construction, conversion, and maintenance work on commercial and federal government vessels that offers various maritime activities in the Pacific Northwest. The company’s Board of Directors declared an increase in its dividend of two and one-half cents per share, bringing its quarterly dividend to ten cents per share. While this is the second dividend increase this year, bringing the total dividend increase to 100%, the new dividend is still 33% lower than the distribution paid in 2008. The company has cut distributions in 2009. Yield: 2.70%
Stage Stores, Inc. (SSI) operates as a specialty department store retailer in the United States. The company’s Board of Directors raised the quarterly dividend by 50% to 7.5 cents/share. This was the first dividend increase since 2006. Yield: 2.70%
The companies, which seem worthy for further research include utility MGE Energy, Inc. (MGEE) and restaurant operator Bob Evans Farms, Inc. (BOBE). Both companies seem to have an adequately covered dividend, a price/earnings ratio that is below 20, a dividend yield that is higher than 2.50% and also have a history of raising dividends for 10 years or more. Westlake Chemical Corporation (WLK), G&K Services, Inc. (GKSR) and Lorillard, Inc. (LO) are a few years away from reaching a status of dividend achiever, which requires ten years of consecutive annual dividend increases. Nevertheless I would keep monitoring whether they keep rewarding shareholders with higher dividends.
Altria Group on the other hand also seems like an interesting play on tobacco. Some readers however might have something against the type of product the company is selling. In addition to that the high payout ratio is a little troubling, despite the assurance that management intends to share 80% of the profits with shareholders. Analysts do expect FY 2010 EPS to be $1.90 and then to increase to $2 by FY 2011. This means that future dividend increases will be more exposed to earnings fluctuations. As always, tread cautiously.
Full Disclosure: Long KFT, MO and PM
Relevant Articles
- Altria (MO) - a recession proof high yield dividend stock
- Six Notable Dividend Increases for the week
- Six Significant Dividend Increases
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Monday, August 30, 2010
Friday, August 27, 2010
Aflac (AFL) Dividend Stock Analysis
Aflac Incorporated (AFL), through its subsidiary, American Family Life Assurance Company of Columbus (Aflac), provides supplemental health and life insurance. The company offers cancer plans, general medical indemnity plans, medical/sickness riders, care plans, living benefit life plans, ordinary life insurance plans, and annuities in Japan. This dividend aristocrat has raised dividends for 46 years in a row. The company most recently announced a 9.70% dividend increase to 34 cents/share.
Over the past decade, this dividend stock has delivered an annual total return of 8.10%.
At the same time the company has managed to increase earnings per share by 10.90% per year. In 2009, earnings per share increased by 21.70% to $3.19. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $5.46 and $5.99 respectively. The company’s Japanese Operations, which contributed 75% of its revenues, are expected to post strong near term revenue increases due to distribution agreements with Japan Post. Introduction of new products should also add to increased revenues. The expectations for US revenues are for a slowdown in the near term due to challenging economic situation. The company’s investment portfolio is riskier than peers, as it includes bank hybrid bonds and sovereign debt issued by European companies and countries. The company’s strong cash position and ability to grow sales and earnings should be a stabilizing factor however, which could fuel future dividend growth.
Return on Equity has increased from 16% in 2000 to 20% in 2009. In addition to that this indicator has remained between 16 and 20 since 2004.
The annual dividend per share has increased by 23.30% annually over the past decade. A 23% increase in dividends translates into the dividend payment doubling every 3 years on average. Sicne 1984 the company has managed to double dividends every four years on average.
The dividend payout ratio has almost tripled over the past decade, from 13.50% in 2000 to 35% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
Currently Aflac trades at a P/E of 12.60, yields 2.50% and has an adequately covered dividend payment. I would be adding to my position on dips below $48.
Full Disclosure: Long AFL
- Dividend Investing Works in All Markets
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Wednesday, August 25, 2010
1991 Dividend Achievers additions- Where are they now?
The Dividend Achievers index includes companies that have increased annual dividends for at least 10 consecutive years and have met specific liquidity screening criteria. Companies that are included in the Dividend Achievers index typically generate strong cash flows, have solid balance sheets and a proven record of consistent earnings growth. These characteristics typically make these companies attractive takeover targets.
I was recently able to find the 1991 Dividend Achiever’s list. I checked the new additions for 1991 in order to investigate what happened to the companies after they have been added to the index. There were some limitations to the research, since companies changed their names, or were acquired, which made it difficult to track them down since current stock databases might not have freely available information on them. The companies which were added to the index in 1991 include:
First Empire State Corp later changed its name to M&T Bank (MTB). M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. The company stopped raising dividends in 2008 and was deleted from the index in 2009. The yield on cost today of a December 1990 investment in the stock would be 51.10%. One dollar invested in 1991 would be worth 13.30 dollars today. (analysis)
American General (AGC), which was acquired by American International Group (AIG) in 2001. The company had increased dividends up until the merger was finalized.
Rouse Co (ROUS) was acquired by General Growth Properties in 2004. The company had increased dividends up until the merger was finalized.
Bank South Corp (BKSO) was acquired by Bank of America (BAC) in 1996. The company suspended its dividends July 1991, after suffering from large losses. The dividend was reinstated in 1993.
Pall Corporation (PLL) manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. Pall Corp (PLL) stopped raising dividends in 2002 and then cut distributions by almost 50%. The yield on cost today of an early 1991 investment in the stock would be 4%. One dollar invested in December 1990 would be worth 3.29 dollars today.
State Street Corporation (STT), through its subsidiaries, provides various products and services for the institutional investors worldwide. The company cut its dividend payment in 2009 to 1 cent/share, from 24 cents/share. The yield on cost had reached 24.70% by 2008; after the cut it went down to 1%. One dollar invested in December 1990 would be worth 12.68 dollars today. (analysis)
Crawford & Company (CRD-B) provides claims management solutions to insurance companies and self-insured entities worldwide. The company cut dividends in 2002 and eliminated the dividend payment in 2006. One dollar invested in December 1990 would be worth 64.40 cents today.
Wrigley Wm Jr (WWY) was acquired in 2008. The company had increased dividends up until the merger was finalized. Berkshire Hathaway (BRK.B) provided financing for the acquition.
Black Hills Corporation (BKH), together with its subsidiaries, operates as a diversified energy company. It operates through two groups, Utilities and Non-regulated Energy. The company is still a member of the dividend achievers index. The yield on cost today of a December 1990 investment in the stock would be 17.10%. One dollar invested in December 1990 would be worth 10.92 dollars today.
Central Fidelity Banks (CFBS) was acquired by Wachovia (WB) in 1997. The company had increased dividends up until the merger was finalized.
American Precision Industries (APR) was acquired by Danaher (DHR) in 2001. The company was deleted from the index in 1997 after it failed to increase dividends.
The Laclede Group, Inc. (LG) operates as a public utility holding company providing natural gas service to approximately 630,000 users in St. Louis. The company failed to increase its dividend in 1992, just one year after being admitted in the index. The yield on cost today of a December 1990 investment in the stock would be 10.50%. One dollar invested in December 1990 would be worth 6.48 dollars today.
KeyCorp (KEY) operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company cut dividends in 2008, amidst the worst financial crisis since the Great Depression. The yield on cost had reached 27.10% by 2008; after the cut it went down to 0.70%. One dollar invested in December 1990 would be worth 3.32 dollars today.
Boatmen’s Bancshares (BOAT) was acquired in 1996 by Bank of America (BAC). The company had increased dividends up to the merger was finalized.
St. Joseph Light & Power (SAJ) was acquired by Utilicorp (UCU) in 1999. The company had increased dividends up to the merger was finalized.
CLARCOR Inc. (CLC) provides filtration products and services to customers worldwide. It operates in three segments, including Engine/Mobile Filtration, Industrial/Environmental Filtration, and Packaging. The yield on cost today of a December 1990 investment in the stock would be 10.80%. One dollar invested in December 1990 would be worth 15.70 dollars today.
OGE Energy Corp.(OGE) , together with its subsidiaries, operates as an energy and energy services provider offering physical delivery and related services for electricity and natural gas primarily in the south central United States. The company failed to increase distributions in 1992, just one year after being admitted in the dividend achievers index. The Oklahoma Gas & Electric utility didn’t start raising dividends again until 2007. The yield on cost today of a December 1990 investment in the stock would be 13.50%. One dollar invested in December 1990 would be worth 15.00 dollars today.
Source Capital, Inc. (SOR) is a close-ended equity fund launched and managed by First Pacific Advisors, LLC. The fund invests in the public equity markets of the United States. The yield on cost today of a December 1990 investment in the stock would be 6.60%. One dollar invested in December 1990 would be worth 6.50 dollars today. The company failed to increase dividends in 1991.
IE Industries was acquired in 1997 by WPL. The company had increased dividends up until the merger was finalized.
Colonial Gas was acquired in 1999. The company had increased dividends up until the merger was finalized.
The results of the 1991 additions are really stunning. Out of 20 companies that were added to the dividend achievers index only 2 are still its members - CLARCOR Inc. (CLC) and Black Hills Corporation (BKH). However, half of those additions became takeover targets. Of those ten acquired companies, only two stopped paying distributions before they were acquired. Five companies eventually cut distributions – State Street (STT), Key Corp (KEY), Source Capital, Inc. (SOR), Crawford & Company (CRD-B) and Pall Corporation (PLL). The remaining companies either maintained distributions or raised them sporadically over the next 19 years. Stay tuned for my article next week, when I will discuss how to profitably exploit the findings of this research.
Full Disclosure: Long MTB
Relevant Articles:
- Dividend growth stocks are attractive buyout targets
- Where are the original Dividend Aristocrats now?
- Buy and hold dividend investing is not dead
- Strong Brands Grow Dividends
I was recently able to find the 1991 Dividend Achiever’s list. I checked the new additions for 1991 in order to investigate what happened to the companies after they have been added to the index. There were some limitations to the research, since companies changed their names, or were acquired, which made it difficult to track them down since current stock databases might not have freely available information on them. The companies which were added to the index in 1991 include:
First Empire State Corp later changed its name to M&T Bank (MTB). M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. The company stopped raising dividends in 2008 and was deleted from the index in 2009. The yield on cost today of a December 1990 investment in the stock would be 51.10%. One dollar invested in 1991 would be worth 13.30 dollars today. (analysis)
American General (AGC), which was acquired by American International Group (AIG) in 2001. The company had increased dividends up until the merger was finalized.
Rouse Co (ROUS) was acquired by General Growth Properties in 2004. The company had increased dividends up until the merger was finalized.
Bank South Corp (BKSO) was acquired by Bank of America (BAC) in 1996. The company suspended its dividends July 1991, after suffering from large losses. The dividend was reinstated in 1993.
Pall Corporation (PLL) manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. Pall Corp (PLL) stopped raising dividends in 2002 and then cut distributions by almost 50%. The yield on cost today of an early 1991 investment in the stock would be 4%. One dollar invested in December 1990 would be worth 3.29 dollars today.
State Street Corporation (STT), through its subsidiaries, provides various products and services for the institutional investors worldwide. The company cut its dividend payment in 2009 to 1 cent/share, from 24 cents/share. The yield on cost had reached 24.70% by 2008; after the cut it went down to 1%. One dollar invested in December 1990 would be worth 12.68 dollars today. (analysis)
Crawford & Company (CRD-B) provides claims management solutions to insurance companies and self-insured entities worldwide. The company cut dividends in 2002 and eliminated the dividend payment in 2006. One dollar invested in December 1990 would be worth 64.40 cents today.
Wrigley Wm Jr (WWY) was acquired in 2008. The company had increased dividends up until the merger was finalized. Berkshire Hathaway (BRK.B) provided financing for the acquition.
Black Hills Corporation (BKH), together with its subsidiaries, operates as a diversified energy company. It operates through two groups, Utilities and Non-regulated Energy. The company is still a member of the dividend achievers index. The yield on cost today of a December 1990 investment in the stock would be 17.10%. One dollar invested in December 1990 would be worth 10.92 dollars today.
Central Fidelity Banks (CFBS) was acquired by Wachovia (WB) in 1997. The company had increased dividends up until the merger was finalized.
American Precision Industries (APR) was acquired by Danaher (DHR) in 2001. The company was deleted from the index in 1997 after it failed to increase dividends.
The Laclede Group, Inc. (LG) operates as a public utility holding company providing natural gas service to approximately 630,000 users in St. Louis. The company failed to increase its dividend in 1992, just one year after being admitted in the index. The yield on cost today of a December 1990 investment in the stock would be 10.50%. One dollar invested in December 1990 would be worth 6.48 dollars today.
KeyCorp (KEY) operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company cut dividends in 2008, amidst the worst financial crisis since the Great Depression. The yield on cost had reached 27.10% by 2008; after the cut it went down to 0.70%. One dollar invested in December 1990 would be worth 3.32 dollars today.
Boatmen’s Bancshares (BOAT) was acquired in 1996 by Bank of America (BAC). The company had increased dividends up to the merger was finalized.
St. Joseph Light & Power (SAJ) was acquired by Utilicorp (UCU) in 1999. The company had increased dividends up to the merger was finalized.
CLARCOR Inc. (CLC) provides filtration products and services to customers worldwide. It operates in three segments, including Engine/Mobile Filtration, Industrial/Environmental Filtration, and Packaging. The yield on cost today of a December 1990 investment in the stock would be 10.80%. One dollar invested in December 1990 would be worth 15.70 dollars today.
OGE Energy Corp.(OGE) , together with its subsidiaries, operates as an energy and energy services provider offering physical delivery and related services for electricity and natural gas primarily in the south central United States. The company failed to increase distributions in 1992, just one year after being admitted in the dividend achievers index. The Oklahoma Gas & Electric utility didn’t start raising dividends again until 2007. The yield on cost today of a December 1990 investment in the stock would be 13.50%. One dollar invested in December 1990 would be worth 15.00 dollars today.
Source Capital, Inc. (SOR) is a close-ended equity fund launched and managed by First Pacific Advisors, LLC. The fund invests in the public equity markets of the United States. The yield on cost today of a December 1990 investment in the stock would be 6.60%. One dollar invested in December 1990 would be worth 6.50 dollars today. The company failed to increase dividends in 1991.
IE Industries was acquired in 1997 by WPL. The company had increased dividends up until the merger was finalized.
Colonial Gas was acquired in 1999. The company had increased dividends up until the merger was finalized.
The results of the 1991 additions are really stunning. Out of 20 companies that were added to the dividend achievers index only 2 are still its members - CLARCOR Inc. (CLC) and Black Hills Corporation (BKH). However, half of those additions became takeover targets. Of those ten acquired companies, only two stopped paying distributions before they were acquired. Five companies eventually cut distributions – State Street (STT), Key Corp (KEY), Source Capital, Inc. (SOR), Crawford & Company (CRD-B) and Pall Corporation (PLL). The remaining companies either maintained distributions or raised them sporadically over the next 19 years. Stay tuned for my article next week, when I will discuss how to profitably exploit the findings of this research.
Full Disclosure: Long MTB
Relevant Articles:
- Dividend growth stocks are attractive buyout targets
- Where are the original Dividend Aristocrats now?
- Buy and hold dividend investing is not dead
- Strong Brands Grow Dividends
Monday, August 23, 2010
Exxon Mobil’s Stingy Dividend Payout
Exxon Mobil (XOM) is one of the largest oil companies in the world. Its roots could be traced to Standard Oil, which was broken into several separate companies in 1911. Eventually two of those companies merged in 1999 to form Exxon Mobil. The company has benefited tremendously over the past decade, as the price of oil has increased over 8 times since 1999. This dividend aristocrat has paid dividends since 1911 and has consistently raised them for 28 years in a row. Despite the fact that many believe so called alternative energy sources would replace fossil fuels in the future, oil and gas would still be around at least for the next few decades. As a result investing in oil companies makes sense for income investors. Check my analysis of the stock.
The largest oil companies in the world include Exxon Mobil (XOM), Royal Dutch (RDS-B), Chevron (CVX), Total (TOT), Conoco Phillips( COP), and British Petroleum (BP).
(Source: Yahoo Finance from Aug 16, 2010)
Of all oil companies, Exxon Mobil has the lowest yield and one of the lowest dividend payouts. BP had a higher dividend payout and a higher dividend yield before it cut dividends this year. Exxon seems to be plowing most of its earnings into stock buybacks. Historically share buybacks have not been one of the smartest ways for management to allocate cash, as most buybacks occur when the price of the underlying is at its highest.
For example General Electric (GE) repurchased stock worth billions of dollars when the price was above $30, only to sell it back at $22 during the global financial crisis of 2007-2009. Exxon has been raising dividends, but the disproportionate amount of share buybacks to dividends suggests that management is not certain about the future profitability of the company. If they believed that oil prices would stay higher over the next few decades, this would mean that earnings per share could only go higher from here. This would support a higher dividend than the one we have today. Of course if oil prices plunge below $50 and stay there, then profitability would suffer and if dividends are too high, they might be cut. This could lead to angry shareholders and depressed stock price for some time. With buybacks however this could all be avoided, since they could be canceled at any time, without much publicity.
Other than that, Exxon Mobil (XOM) could afford to be more generous with shareholders, and raise dividends at a pace that is higher than the 5% annual dividend growth it has delivered over the past decade. That being said, Exxon Mobil (XOM) does appear to be attractively valued, as it could deliver not only decent dividend growth but solid price returns as well. Other oil companies which have stable and growing dividend payments include:
Chevron Corporation (CVX) operates as an integrated energy company worldwide. Chevron Corporation is a component of the S&P 500 and Dow Jones Industrials Indexes. The company is also a dividend achiever, which has consistently raised its dividends for 23 years in a row. Chevron trades at a P/E of 9.30, yields 3.70% and has an adequately covered dividend payment. (analysis)
Royal Dutch Shell Plc (RDS.B) operates as an oil and gas company worldwide. The company explores for, and extracts crude oil and natural gas. Royal Dutch Shell has managed to boost distributions at least since 1993. Currently the company is trading at a P/E of 11.10 and yields 6.30%. (analysis)
ConocoPhillips operates as an integrated energy company worldwide. It operates through six segments: Exploration and Production (E&P), Midstream, Refining and Marketing (R&M), LUKOIL Investment, Chemicals, and Emerging Businesses. ConocoPhillips has raised dividends for ten years in a row. Currently the company is trading at a P/E of 8.90 and yields 4%.
Full Disclosure: Long CVX RDS.B and XOM
Relevant Articles:
- Three Dividend Stocks to Capitalize on BP’s weakness
- Chevron Corporation (CVX) Dividend Stock Analysis
- Exxon Mobil (XOM) Dividend Stock Analysis
- Dividends versus Share Buybacks/Stock repurchases
The largest oil companies in the world include Exxon Mobil (XOM), Royal Dutch (RDS-B), Chevron (CVX), Total (TOT), Conoco Phillips( COP), and British Petroleum (BP).
(Source: Yahoo Finance from Aug 16, 2010)
Of all oil companies, Exxon Mobil has the lowest yield and one of the lowest dividend payouts. BP had a higher dividend payout and a higher dividend yield before it cut dividends this year. Exxon seems to be plowing most of its earnings into stock buybacks. Historically share buybacks have not been one of the smartest ways for management to allocate cash, as most buybacks occur when the price of the underlying is at its highest.
For example General Electric (GE) repurchased stock worth billions of dollars when the price was above $30, only to sell it back at $22 during the global financial crisis of 2007-2009. Exxon has been raising dividends, but the disproportionate amount of share buybacks to dividends suggests that management is not certain about the future profitability of the company. If they believed that oil prices would stay higher over the next few decades, this would mean that earnings per share could only go higher from here. This would support a higher dividend than the one we have today. Of course if oil prices plunge below $50 and stay there, then profitability would suffer and if dividends are too high, they might be cut. This could lead to angry shareholders and depressed stock price for some time. With buybacks however this could all be avoided, since they could be canceled at any time, without much publicity.
Other than that, Exxon Mobil (XOM) could afford to be more generous with shareholders, and raise dividends at a pace that is higher than the 5% annual dividend growth it has delivered over the past decade. That being said, Exxon Mobil (XOM) does appear to be attractively valued, as it could deliver not only decent dividend growth but solid price returns as well. Other oil companies which have stable and growing dividend payments include:
Chevron Corporation (CVX) operates as an integrated energy company worldwide. Chevron Corporation is a component of the S&P 500 and Dow Jones Industrials Indexes. The company is also a dividend achiever, which has consistently raised its dividends for 23 years in a row. Chevron trades at a P/E of 9.30, yields 3.70% and has an adequately covered dividend payment. (analysis)
Royal Dutch Shell Plc (RDS.B) operates as an oil and gas company worldwide. The company explores for, and extracts crude oil and natural gas. Royal Dutch Shell has managed to boost distributions at least since 1993. Currently the company is trading at a P/E of 11.10 and yields 6.30%. (analysis)
ConocoPhillips operates as an integrated energy company worldwide. It operates through six segments: Exploration and Production (E&P), Midstream, Refining and Marketing (R&M), LUKOIL Investment, Chemicals, and Emerging Businesses. ConocoPhillips has raised dividends for ten years in a row. Currently the company is trading at a P/E of 8.90 and yields 4%.
Full Disclosure: Long CVX RDS.B and XOM
Relevant Articles:
- Three Dividend Stocks to Capitalize on BP’s weakness
- Chevron Corporation (CVX) Dividend Stock Analysis
- Exxon Mobil (XOM) Dividend Stock Analysis
- Dividends versus Share Buybacks/Stock repurchases
Friday, August 20, 2010
Illinois Tool Works (ITW) Dividend Stock Analysis
Illinois Tool Works Inc. manufactures a range of industrial products and equipment worldwide. This dividend champion has raised dividends for 46 years in a row. The company most recently announced a 9.70% dividend increase to 34 cents/share.
Over the past decade, this dividend stock has delivered an annual total return of 5.70%.
At the same time the company has managed to increase earnings per share by 2.30% per year. In 2009, earnings per share declined by 36% due to weak revenues caused by the global recession. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $3.05 and $3.60 respectively. The company derives over 57% of its revenues from international operations. In addition to that it is operating under eight segments: Industrial Packaging, Power Systems & Electronics, Transportation, Construction Products, Food Equipment, Decorative Surfaces, Polymers & Fluids and All Other.
Return on Equity has decreased from 19% in 2000 to 12% in 2009.
Dividends per share have increased by 14% annually over the past decade. A 14% increase in dividends translates into the dividend payment doubling every 5 years on average. Since 1989 the company has indeed managed to raise dividends every 5 years on average.
The dividend payout ratio has more than doubled over the past decade, from 24% in 2000 to 64% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
Currently Illinois Tool Works trades at a P/E of 14.40, yields 2.70% and has an adequately covered dividend payment based off next year’s earnings. I would add to my position there subject to availability of funds in my portfolio.
Full Disclosure: Long ITW
Relevant Articles:
- Automatic Data Processing (ADP) Dividend Stock Analysis
- Wal-Mart (WMT): A High Dividend Growth Stock
- Chubb Corporation (CB) Dividend Stock Analysis
- Family Dollar Stores (FDO) Dividend Stock Analysis...
Over the past decade, this dividend stock has delivered an annual total return of 5.70%.
At the same time the company has managed to increase earnings per share by 2.30% per year. In 2009, earnings per share declined by 36% due to weak revenues caused by the global recession. Analysts are estimating FY 2010 and FY 2011 EPS to increase to $3.05 and $3.60 respectively. The company derives over 57% of its revenues from international operations. In addition to that it is operating under eight segments: Industrial Packaging, Power Systems & Electronics, Transportation, Construction Products, Food Equipment, Decorative Surfaces, Polymers & Fluids and All Other.
Return on Equity has decreased from 19% in 2000 to 12% in 2009.
Dividends per share have increased by 14% annually over the past decade. A 14% increase in dividends translates into the dividend payment doubling every 5 years on average. Since 1989 the company has indeed managed to raise dividends every 5 years on average.
The dividend payout ratio has more than doubled over the past decade, from 24% in 2000 to 64% in 2009. This is a direct result of the fact that dividends have been increasing much faster than earnings over the past decade.
Currently Illinois Tool Works trades at a P/E of 14.40, yields 2.70% and has an adequately covered dividend payment based off next year’s earnings. I would add to my position there subject to availability of funds in my portfolio.
Full Disclosure: Long ITW
Relevant Articles:
- Automatic Data Processing (ADP) Dividend Stock Analysis
- Wal-Mart (WMT): A High Dividend Growth Stock
- Chubb Corporation (CB) Dividend Stock Analysis
- Family Dollar Stores (FDO) Dividend Stock Analysis...
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