Archive for the ‘Dividend Hikes’ Category
Wednesday, July 30th, 2008 |
Insurance and wealth-management company Great-West Lifeco Inc. recently reported that its second-quarter profit more than doubled due to a large gain connected to the sale of its U.S. health care business.
Even without the gain, Great-West’s results exceeded expectations set by the street. Most importantly for us dividend growth investors, Great West Lifeco managed to raise its dividend by 5 per cent to 30.75 cents a share in spite of a tough financial environment. The inherent profitability, due to more conservative and principal guaranteed investments, is one of the reasons that I was touting insurance companies back at the beginning of the “Bank meltdown”.
Following the announcement, the company’s shares increased by 3.1 per cent to $29.82 on the Toronto Stock Exchange later in the session .
Net income in the April-June quarter was $1.21-billion, or $1.36 a share, the company said. That was up from $544-million, or 61 cents a share, in the same 2007 period.
Excluding the $649-million gain on the U.S. health care business, adjusted net income was $564-million, or 63 cents a share, up 4 per cent from a year earlier.
Analysts expected that the company would announce a profit of 61 cents a share, at least according to the estimates by Reuters.
In its Canadian business alone, the net income increased 7 per cent to $275-million.
With a Dividend yield of 3.94% and a Beta of just 0.47, Great West Lifeco could be an investors dream stock in a rocky market.
Couple those two statistics with an average dividend growth rate of 17.5% over the last 5 years and a payout ratio of less than 50% and we have a fantastic candidate for a long-term dividend growth portfolio.
Company Quick Facts
Great-West has various insurance and asset-management companies in Canada, the United States, Europe and Asia and is a is a financial services holding company with interests in the life insurance, health insurance, retirement savings, investment management and reinsurance businesses.
Great-West is controlled by Power Financial Corp., a Montreal-based financial holding company that is also one of my favorite non-bank Canadian dividend stocks.
Full Disclosure: The author owns shares of Power Financial Corp.
Friday, July 4th, 2008 |
As a spin-off of the successful Duke Energy, Spectra Energy Corp (NYSE:SE) has had a rather successful first 16 months in business and has recently declared an 8.7 percent increase in its quarterly cash dividend
on its common stock, from $0.23 to $0.25 per share. The dividend is payable September 15, 2008, to shareholders of record at the close of business August 15, 2008.
Spectra has what appears to be a very assertive, yet stable, long term growth plan that is focused on organic growth and project development. This includes a very lucrative joint venture with Conaco Phillips and already transports some 12% of the natural gas consumed in the United States.
With these facts in mind, let’s take a look at what the Chief Financial Officer (Soon to be CEO at the end of 2008) of Spectra Energy, Greg Ebel has to say to investors looking to purchase stock in the company:
I think the key reasons are, first and foremost, a home grown stable of expansion projects that give visibility on earnings growth to the better-than-the-pack earnings growth and opportunities they see. Also, solid dividend growth opportunity, sound financial management and overall a relatively safe harbor in what is a somewhat dodgy financial market situation and economic situation we see out there today.
A Closer Look At Spectra Energy
Spectra Energy is one of North America’s premier natural gas infrastructure companies serving three key links in the natural gas value chain: gathering and processing, transmission and storage, and distribution. With very solid transportation contracts into the foreseeable future, there is little concern for profitability and optimism for increasing shareholder value. However, any lagging demand for natural gas would certainly be a concern for the company moving forward.
Spectra Energy owns and operates critically important pipelines and related infrastructure connecting natural gas supply sources to premium markets. Based in Houston, Texas, the company operates in the United States and Canada approximately 18,000 miles of transmission pipeline, 265 billion cubic feet of storage, natural gas gathering and processing, natural gas liquids operations and local distribution assets.
Spectra Energy Corp also has a 50 percent ownership in DCP Midstream, the largest natural gas gatherer and processor in the United States.
Why Pipeline Stocks?
It has been said before, but pipeline stocks are like railroads for natural gas. Simply put, the demand for natural gas is up and correlates somewhat with oil prices, but the upside with pipelines is that they do not have the competition from other forms of transportation. In order to move and significant volume of natural gas a pipeline must be used.
Pipelines are traditionally managed very conservatively, as is Spectra Energy, and make their money through cost-of-service contracts and other required services. This means that cash flow is relatively stable and predictable when compared to the market as a whole. This can be referenced by viewing the Beta coefficients of pipeline stocks which show significantly less volatility than the broader markets.
I have stated before, and I will state again that pipelines are great recession proof stocks.
On top of preserving and likely growing capital, investors can collect a healthy (and growing) dividend yield.
Spectra’s current yield is 3.28%.
Spectra also boasts Return on Equity and Return on Investment numbers that are markedly abov ethe industry average at 17.1% and 5.76 % respectively.
For those of you looking to preserve capital during these rough market times and collect a solid dividend, I highly recommend pipeline stocks. Along, with Spectra Energy I suggest looking at Trans Canada Pipeline (TRP).
Full Disclosure: The Author does not own shares of Spectra Energy, but does own some Trans Canada Pipeline.
Wednesday, January 9th, 2008 |
Rogers Communications recently announced that it is doubling its annual common share dividend to $1 from 50 cents, effective immediately.
The Toronto-based cable TV, broadcasting and publishing company also announced that it plans to buy back up to 15 million of its Class B shares or $300-million worth, whichever is less.
Rogers Communications shares closed down -5.75% Monday and analysts believe investors misinterpreted the results and put too much emphasis the slightly lower wireless adds, while the focus should be on a more important milestone:
Rogers doubling its dividend from $0.50 to $1.00/share (2% yield) and announcing a $300 million share buyback, the first in company history.
It is believed that the wireless business is still in great shape and investors should look to RCI’s trend of returning capital, growing free cash flow and providing shareholder value.
Rogers is trending away from being a higher risk investment into a blue-chip stock:
- Return capital (as evidenced by this announcement)
Although wireless results were less than expected, the business is still in strong shape.
With the advent of “number portability” in Canada in March of 2007, Rogers has gained over 50% market share.
What do you think?
Friday, January 4th, 2008 |
Standard & Poor’s, the world’s leading index provider, announced that it is raising the dividend rate on the S&P 500 from $26.55 to $28.75, and that cash dividends set another record paying out $27.73 per share in 2007 versus $24.88 in 2006.
The 11.5% increase in dividend payments translates into a $246.6 billion aggregate payment for the S&P 500 companies in 2007 compared to $224.8 billion in 2006.
“While we have concern over the deterioration within the Financials sector, we believe that the vast majority of S&P 500 companies will continue their long history of dividend increases in 2008,” says Howard Silverblatt, Senior Index Analyst at Standard & Poor’s. “As a result, we are expecting a 9.3% gain in the actual cash dividends paid in 2008 over that of 2007 which equates to $30.30 per share.”
Standard & Poor’s data also shows that corporate buybacks have continued to far outpace dividends in both aggregate dollars and growth. This data indicates taht companies feel that they can create shareholder value by buying back their own shares as well as paying dividends to their shareholders.
“The growth in dividends appears to be negatively impacted by the large expenditures on buybacks in 2007,” continues Silverblatt. “However, we are encouraged that 11 companies in the S&P 500 chose to initiate a dividend payment in 2007, bringing the total to 389, a level not seen in seven years.”
Silverblatt points out that the tendency for index issues to pay and increase cash dividends is much greater than that of the general market with 77.8% of the S&P 500 constituents paying cash dividends versus just 38.7% for the non-S&P 500 companies.
For 2007, Silverblatt calculates that over 60% of the S&P 500 increased their dividend payout compared to less than 28% for the non-S&P 500 companies.
Standard & Poor’s also announced its annual update of the S&P 500 DividendAristocrats. The list consists of S&P 500 members that have increased their actual dividend payments in each of the last 25 years.
For 2008, five issues were added (AFLAC Inc, Avery Dennison Corp, Exxon Mobil, Integrys Energy Group, and Pitney Bowes) to the current list of 58, while three (Altria Group, First Horizon National, and SLM Corp) were deleted.