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.
Thursday, December 27th, 2007 |
Commercial Metals Company (CMC) has recently increased their quarterly cash dividend from 9 to 12 cents per share, an increase of 33-1/3%. This new dividend rate is effective with the regular quarterly cash dividend which is to be paid January 24, 2008 to shareholders of record January 10, 2008.
- This is the 173rd consecutive quarterly cash dividend paid by Commercial Metals Company.
CMC Chief Executive Officer and President Murray McClean noted:
“This increase reflects CMC’s confidence in our business prospects. Rewarding and sustainable increases in our cash dividend rate, as evidenced by this significant increase, are an important element of that continuing effort and demonstrates our continuing aggressive focus on stockholder value.”
Recent Dividend History
This announcement represents CMC’s fourth recent cash dividend increase.
- In April 2006, CMC’s dividend was increased 67%.
- Following CMC’s two-for-one stock dividend in May 2006 the cash dividend was again increased by 20% in July 2006 and 50% in November 2006.
As a result of these increases, the cash dividend increased four fold over the past two years.
Commercial Metals has a paltry dividend payout ratio of less than 15% which allows the company to reinvest the majority of profits back into the company…which isn’t a bad idea as CMC currently boasts a Return on Equity of nearly 23%.
About Commercial Metals
Commercial Metals Company and subsidiaries manufacture, recycle and market steel and metal products, related materials and services through a network including miniature steelmills, steel fabrication and processing plants, construction-related product warehouses, a copper tube mill, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets.
Like many of you, I was wondering what the demand for steel would be as we move forward and see declines and weakness in the automotive market throughout the United States.
Analyst, Carol Cowan of Moody’s recently stated that:
“Strong overall global demand has supported pricing in every region throughout 2007, with China again providing tremendous support for global steel consumption”
“Demand in the U.S. has also remained solid, despite weakness in the appliance and automotive markets, largely driven by high levels of commercial construction activity.”
Cowan also singled out several steel companies including Commercial Metals as strong players in the market with a lot of potential to benefit in 2008 because of strong demand for their products.
Wednesday, December 12th, 2007 |
AT&T recently announced a share buyback program pushing $16 billion at its current price. This news comes with one of our favorite announcements, a huge dividend increase! The shareholder value for AT&T is now much larger than expected. This, accompanied by forecasts for long-term revenue growth in the 4-7% range or better is excellent news for AT&T shareholders. This news was even stronger than most analysts had anticipated.
“The dividend and buyback will give the stock a lot of support if we do enter a recession,” said UBS analyst John Hodulik. “They’re just producing a lot of cash.”
Reports are coming in showing double-digit percentage growth in adjusted earnings per share for 2008 and greater than that is expected from its wireless business.
AT&T also expects annual consolidated revenue growth in the mid-single-digit percentage range for 2008 and beyond.
“The big change today is we’re looking at meaningful long-term revenue growth … that should result in multiple expansion,” said JP Morgan analyst Jonathan Chaplin, adding that AT&T’s share-price trading multiple could increase by 15 to 20 percent as a result of the outlook.
If you are looking to diversify with dividend stocks, especially if you have a financial heavy portfolio, AT&T may be worth a look. With growth in the expanding wireless industry, a current yield of 3.70% and a steadily increasing dividend, this may be one time you might want to pick up the phone!
Thursday, September 27th, 2007 |
Lockheed Martin Corporation (NYSE: LMT) today announced its quarterly dividend will increase by 20% to 42 cents per share. This is the sixth increase in the company’s quarterly dividend since 2003. The dividend is payable Dec. 28, 2007 to holders of record on Dec. 3, 2007.
With this announcement, the dividend rate of the company has gone from $0.12/ quarter to $0.42/quarter over the past 4 years. This substantial dividend growth rate, of nearly 24% over the past 5 years, is certainly worthy of further investigation.
The company also announced its Board of Directors has authorized the repurchase of an additional 20 million shares under its share repurchase program. The share repurchase program was initiated in October 2002. Through June 30, 2007, the company had repurchased a total of 88.1 million shares, out of the prior share authorization of 108 million shares.
In the first six months of 2007, Lockheed Martin repurchased 14.4 million shares. As of June 30, 2007, approximately 412 million shares of common stock were outstanding on the company’s balance sheet. Shares may be purchased in the open market or in privately negotiated transactions.
We have previously discussed, at length, about who benefits from stock repurchase programs and how a company can create shareholder value, this makes Lockheed’s repurchase and dividend growth numbers are fairly intriguing.
In addition, Lockheed’s dividend payout ratio at 20.25% is below that of the industry, leaving room for reinvestment into the company in order to fund future growth.
Speaking of growth, Lockheed Martin has grown its earnings per share at an astounding 125 % over the past 5 years. Couple that with a return on equity of 38.15 versus the S&P 500 average ROE of 21.5, and it looks like Lockheed is destined for even more growth.
Disclosure: The author does not own shares of LMT.
Sunday, September 16th, 2007 |
Harley-Davidson, Inc. (NYSE: HOG) has announced that its Board of Directors approved a cash dividend of $0.30 per share for the third quarter of 2007. The dividend is payable October 11, 2007 to the holders of record of the Company’s common stock on October 1, 2007. This represents an increase of 20% over the previous dividend paid on June 19, 2007.
Let’s have a quick look at some numbers and see if this dividend increase is a sign of better things to come from Harley Davidson!
P/E Ratio (TTM) 11.52
P/E High – Last 5 Yrs. 32.34
P/E Low – Last 5 Yrs. 14.07
Price to Sales 1.85
Price to Book 4.53
Price to Cash Flow 9.33
Price to Free Cash Flow 21.09
Dividend Yield 2.14
Dividend Yield – 5 Year Avg. 0.75
Dividend 5 Year Growth Rate 47.76
Payout Ratio (TTM) 21.67
The numbers that most strike me are the average dividend yield and the dividend payout ratio.
Harley Davidson is currently paying a dividend yield that is very much greater than its average and their dividend payout ratio is still very low.
This means that even though they have a healthy dividend yield, there is still room to grow the dividend and re-invest profits into the company.
This is good news for investors who might want to add a little HOG to their portfolio!!!
Disclosure: I do not own shares of Harley Davidson.