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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I’ve been meaning to look more into ITW but just haven’t found the time yet. As far as the KO split as you mentioned it really means nothing. As long as the dividend increases keep coming it’s fine by me.
There is nothing better than seeing your payouts go up. I was most surprised with CSCO’s hike this week. Big move by them and I’m glad to see it.
jonathan,
ITW is a very well-run company. Yield isn’t the best right now, but this is still a solid long-term investment.
The KO split is interesting. We’ll see if it proves to be fruitful and unlocks value due to the perceived “cheaper” stock price.
Best wishes!
Zach,
Thanks for stopping by!
CSCO’s recent move was definitely interesting. They’ve become a dividend grower lately and seem to be committed to rewarding shareholders. It’s one to watch.
Best wishes!
First off, nice to see you are back.
I would wait on LEG. Their payout ratio has been close to 100% for a while now. Looking at their last few quarters of cash flow statements on Yahoo, it looks like they might be developing a bit of a cushion. But for now I say wait.
Everyday Freethought,
Thanks for stopping by. It’s good to be back!
LEG is interesting. Certainly, if you’re looking at the earnings it’s a little scary. Cash flow wise, they have more than enough to cover the dividend. FCF payout ratio has never exceeded 100% from what I can see, but the cash flow situation is not as good as it was a few years ago. I know LEG is fairly popular as a high yield play, but I just have not convinced myself to purchase it yet.
Take care.
Welcome back!
CSCO has tried to reward shareholders for quite some time through their stock buyback program. Now, they are rewarding shareholders through stock buyback AND a dividend.
BTW, in January of 2012, CSCO rewarded us with a $0.06/sh divy. Now, at $0.14/sh, they have more than doubled (133%) their reward!
The payout ratio from earnings is close to 100% but payout ratio from FCF is only around 60%. Good article on LEG here even though its kind of dated now:
http://dividendmonk.com/leggett-and-platt-the-profitable-transformation/
Long LEG
fiveoh,
LEG is one of those rare instances where you have an earnings payout ratio that exceeds 100%, but the FCF payout ratio is still well under control. Dividend Monk posted a fantastic analysis on the company. I don’t know if I’m a huge fan of the business, but the solid yield that’s growing is certainly nothing to sneeze at in today’s environment.
Best wishes!
Mantra,
Good to see you back. Hope your refreshed from your break. I knew you wouldn’t be gone long. Hope your portfolio is chugging right along as to be expected. I’ll be checking back in more often now that I know your back. Oh, nice article, what’s not to like about dividend increases? That’s why we play the game right!
DPS
DPS,
Thanks for the kind welcome back! It’s good to be writing again and I’m definitely refreshed.
The portfolio is definitely chugging along, mostly due to the fact that the companies I’ve invested capital in continue to do the right things.
Dividend increases are definitely why we’re all here.
Best wishes!