Thursday, August 16, 2012
Recent Dividend Increases
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. Some recent dividend increases include:
Illinois Tool Works Inc. (ITW) raised its quarterly dividend by 5.6%, from $0.36 per share to $0.38 per share. ITW now has 49 years of dividend growth under its belt, which is extremely impressive and in rarefied company. Although 5.6% is a bit low, considering its 12.9% 10-year DGR, it's still well above inflation and is a welcome raise in tough economic times. ITW's forward yield is now at 2.55%. Illinois Tool Works is a multinational manufacturer of a diversified range of industrial products and equipment with operations in 58 countries.
Cisco Systems, Inc. (CSCO), although not a dividend growth stock, recently raised its quarterly dividend by a whopping 75 percent from $0.08 per share to $0.14 per share. Certainly not a stock I follow very closely, but anytime you read about a dividend being increased by such a large amount it's hard not to take notice. This reminds me of the recent strong dividend raise by Visa Inc. (V). The forward yield is now 2.94%. Cisco Systems designs, manufactures, and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry and provide services associated with these products and their use.
Norfolk Southern Corp. (NSC), a Virginia-based railway company, recently increased its quarterly dividend by 6.4%. It used to pay $0.47 per share and now pays $0.50 per share. Not only is 6.4% fairly generous, but it's the second dividend increase this year after a raise of 9.3% in January. The forward yield is now at 2.68%. Although NSC isn't the deal it was a few months ago, there is still some solid value here.
Leggett & Platt, Inc. (LEG) has increased its quarterly dividend 3.6%, from $0.28 to $0.29. Not a huge raise, but considering the stout forward yield of 4.91%, it seems to be pretty strong. Not one of my favorite dividend growth stocks, but I still watch it. Leggett & Platt is an international diversified manufacturer of engineered components.
Although not a dividend increase, but still big news...The Coca-Cola Company (KO) recently completed a 2-for-1 stock split. Stock splits for Coca-Cola don't happen often, as the last one was 16 years ago. With this split the number of shares you own are doubled, with the share price halved. Essentially you are left with the same value in terms of investment amount after the split. We'll see if this serves the shareholders well over the long-term. Coca-Cola is the largest beverage company in the world.
What do you think of these recent moves?
Full Disclosure: Long KO, ITW, NSC
Thanks for reading.
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