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.

Photo Credit: FreeDigitalPhotos.net

Comments

    • says

      Aspenhawk,

      Thanks for stopping by.

      I like BDX as well. It’s a high quality company that enjoys a nice recurring revenue stream from its surgical tool and needle businesses. Although the entry yield is a little low, the growth rate is wonderful.

      Best wishes!

  1. says

    I’ve wanted to add BDX to my portfolio for some time now. In the various healthcare facilities I’ve been in during my oveseas sent, BDX products were always there. That impressed me.

    • says

      The Stoic,

      Nice! That’s one benefit of working overseas: you get to see these multinational companies in action for yourself. That’s awesome!

      I also want BDX in my portfolio at some point. A very high quality company. I’d really like to initiate a position at a slightly cheaper price than what it’s trading for now. Below $75 would be nice.

      Best regards.

    • says

      Kanwal,

      Thanks for stopping by.

      Great example there! MCD has been a model dividend growth stock over the last decade. A true textbook example. If it stays below $88 per share I plan on adding to my position further in the near-term.

      Best wishes.

    • says

      Mark,

      Gotta love raises! I think SYY will continue this pattern for a little while, as food costs have hurt them recently. Still, a raise is a raise and it’s more money in our pockets. :)

      Best wishes.

    • says

      Pursuit,

      I’m with you. I’d love to have BDX in the fold, but I would like it to come down slightly before I become a part-owner in this company. The valuation is just a tad strong right now, but still reasonable.

      Best wishes!

  2. says

    UNP and BDX intrigue me. I’ll be patient and wait for UNP to come down a bit, since it has had such a run up this year. Gotta love the dividend growth though, and they are clearly the juggernaut of the West Coast.

    BDX’s dividend track record kind of speaks for itself. I like this one as a more defensive play, which is how I want to shape the majority of my portfolio.

    Just gotta wait for that next pullback before deploying some more capital.

    • says

      FI Fighter,

      UNP is definitely a high quality company, and would make a nice compliment to both NSC and CSX. All are attractively prices, although UNP is the most expensive of the trio.

      BDX is definitely a nice defensive play. Their needle business ensures a nice revenue stream for many years to come. I’d certainly like to be a part-owner in the company sooner rather than later.

      I do hope a pullback occurs. I’m actually surprised the market is as strong as it is right now. Just goes to show you that you just can’t predict market moves. I would have thought the DOW would be in the mid-12,000 range or less based on the fiscal cliff issues, euro concerns and all the uncertainty regarding our own economy.

      Best regards!

  3. says

    HI DM! Thank you for the update. I hold UNP and I’m very happy about the raise. Though a bit expensive currently, I think UNP is best positioned to gain from the US recovery. I’m also watching BDX. I may initiate a small position in it in the short term. I’ll keep watching. Cheers!

    • says

      Engineer,

      Thanks for stopping by.

      UNP is a bit expensive here, in relation to its peers, but it’s definitely the elephant in the room. Size and scale matter. That bodes well for this railroad.

      I’m with you on BDX. I wouldn’t mind initiating a small position and waiting for future prices to sag to add on. High quality company.

      Best wishes!

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