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Ideas for Income Investors. High Dividend Stocks, Mutual Funds etc.
Dividend Growth: Recent Dividend Increases
Posted by: Jason Fieber (IP Logged)
Date: November 6, 2013 07:03AM
As a dividend growth investor, one of the primary objectives I seek is passive dividend income from my investments that increases over the rate of inflation, annually. It's always wonderful news when companies decide to reward loyal long-term shareholders with a dividend raise. Dividend raises typically mean operations are doing well and management is confident enough about cash flows to give shareholders a raise. All in all, it's a good sign.
I try to keep my eyes peeled for dividend raises from companies I'm invested in, as well as companies on my watch list. Some recent dividend increases include:
Aflac Incorporated (AFL) recently increased its dividend 5.7%, increasing the quarterly payout to $0.37 per share from the old rate of $0.35 per share. The yield on shares is now 2.3%. Although this raise was a bit lower than I had anticipated, it's still a healthy boost and puts AFL into rarefied territory with 31 years of consecutive dividend growth. Although I still think AFL is a smart pick for a dividend growth investor seeking exposure to an insurance company, my current position in AFL is about as large as I'd like it to be since I loaded up on shares at much lower prices and the run-up has pushed AFL into a major holding for me.
Abbott Laboratories (ABT) surprised investors with a huge dividend raise, boosting the quarterly dividend by a full 57%. The company now has a quarterly dividend of $0.22 per share, which is a big jump over the old rate of $0.14. Shares now yield 2.36%. I didn't think ABT would raise the dividend that much right out of the gate, as they now operate separate from the legacy pharmaceutical business that was spun-off intoAbbVie Inc. (ABBV). It looks like I'm going to end up regretting selling my ABT shares earlier in the year, but I'm comforted by the knowledge that I can always initiate a position in the company again (and may do so).
Kraft Foods Group Inc. (KRFT) recently raised its quarterly dividend to $0.525 per share, an increase of5% over the old quarterly dividend of $0.50 per share. Not a bad raise at all, considering that shares in KRFT currently yield 3.88%. I personally go back and forth on KRFT. The business model is attractive and easy to understand, but they operate solely in a mature U.S. market and they also have a fair amount of debt. Shares aren't overly expensive with a P/E ratio of 17.25, but they're not cheap either.
Phillips 66 has been an outstanding serial dividend grower since being spun-off from ConocoPhillips (COP) in 2012. They recently raised their quarterly dividend by 24.8%, now paying out $0.39 per share over the old rate of $0.3125. They've now raised their dividend three times since their initial dividend was paid out in September of 2012. Shares now yield 2.43%. I continue to be pleasantly surprised by PSX and I'm surely glad I held on to shares after the spin-off was completed. PSX is now the largest independent refiner in the U.S. and operations continue to do well.
United Technologies Corporation (UTX) recently gave shareholders a nice raise, increasing its dividend by 10%. The new quarterly payout of $0.589 per share supersedes the old rate of $0.535. UTX shares currently yield 2.19% after factoring in the raise. UTX is one of those steady companies that just continues to hum along. I regret never buying shares in this industrial titan, but for one reason or another always found other companies with which to invest my capital. As I like to say: so many companies, so little capital! However, I once again find myself with a reason to not invest in UTX; shares currently sport a P/E ratio of 19 with a fairly low yield.
BP plc (BP) boosted their dividend recently by 5.6%, raising the quarterly payout by $0.03 from $0.54 per share to $0.57 per share. The yield on the new rate is 4.85%. This raise isn't bad at all considering the high yield, and I personally find BP shares fairly attractive here as evidenced by my recent investment in the company. The P/E is currently south of 6 and I believe that as BP moves past the ongoing litigation surrounding the Deepwater Horizon incident the shares will recover. BP has been actively raising the dividend since the spill, and this is now the fourth dividend increase since the dividend was temporarily suspended in 2010. I'm confident they'll continue increasing it at a modest pace going forward.
Emerson Electric Co. (EMR) just today announced their 57th consecutive annual dividend raise, increasing shareholders' quarterly per share dividend from $0.41 to $0.43 - an increase of 4.9%. Although dividend raises have never been outstanding with EMR, you can count on them like clockwork. This raise is still well above inflation, and hence increases purchasing power if you're a shareholder. The yield on shares is now 2.57%. Although I'm not particularly enamored with EMR at current prices as a new investment, I'm a happy shareholder who's content to continue holding long.
Own any of these companies? What's your thoughts on these raises?
Full Disclosure: Long AFL, PSX, COP, BP, EMR
Thanks for reading.
Photo Credit: FreeDigitalPhotos.net
Stocks Discussed: AFL, PSX, COP, BP, EMR,