Sunday, November 25, 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:
Union Pacific Corporation (UNP) recently increased its quarterly dividend from $0.60 per share to a new rate of $0.69 per share. This is a raise for shareholders on the order of a full 15%. When's the last time you got a 15% raise at work? I like UNP. It operates the largest North American railroad, and as such enjoys many competitive advantages. Not the cheapest railroad right now, as Norfolk Southern Corp. (NSC) and CSX Corporation (CSX) are both significantly cheaper by a number of valuations, UNP is a high quality company and one I would like to own at some point to complement my only railroad holding in NSC. UNP now has 7 years of distribution growth.
National Bankshares Inc. (NKSH) raised its dividend 7.5%, going from an old semi-annual payout of $0.53 per share to a new rate of $0.57 per share. This is the 4th dividend raise in as many payouts. They typically raise it every 6 months, to coincide with the upcoming dividend. The new yield of 3.64% is quite attractive, but the semi-annual nature of their dividend payouts isn't quite as desirable as a more conventional quarterly schedule. As a holding company primarily operating 24 bank branches throughout southwest Virginia, this cold make a nice complimentary holding to my Southside Bancshares, Inc. (SBSI) position. This marks the 13th year of dividend raises for NKSH, as they already raised it earlier this year.
Becton, Dickinson and Co. (BDX), a leading medical device manufacturer, recently increased its dividend 10%. It no longer pays out $0.45 per share quarterly, but rather $0.495 per share. BDX has been rewarding shareholders a long time, with now 41 years of dividend increases under its belt. BDX has averaged a 15.7% dividend growth rate over the last decade. I really like this company, and do plan on initiating a position with it at some point in the near future.
Sysco Corporation (SYY), the largest food service distributor in the United States and Canada, increased its dividend payout from $0.27 per share quarterly to a new quarterly per share rate of $0.28. This raise of 3.7% was not outstanding, but was expected. Usually I love investing in a company that has the largest market share of its respective industry, but SYY operates in a very competitive industry with low margins. Their business model is great, but the dynamic of food distribution forces it to absorb input increases regularly to avoid losing market share. The yield of 3.61% is fantastic, and SYY now has 43 years of dividend increases, but the growth rate of the dividend is less than satisfactory. For now, I'm holding on my meager position.
What do you think of these moves?
Full Disclosure: Long NSC, SBSI, SYY
Thanks for reading.
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