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. Dividend raises typically mean operations are doing well and management is confident enough about cash flows to give shareholders a raise. All in all, it’s a good sign.
I try to keep m eyes peeled for dividend raises from companies I’m invested in, as well as companies that are on my watch list. Some recent dividend increases include:
Illinois Tool Works Inc. (ITW) recently boosted its quarterly dividend by a full 10.5%. The new payout is $0.42 per share over the old rate of $0.38 per share. A very nice boost, indeed. ITW, the manufacturer of industrial products and equipment, has been one of my best investments to date and I think it’s a fantastic company and one that’s fairly valued right now. The yield on the new payout is 2.26%, based on today’s price and on top of the increased dividend ITW also announced a $6 billion share buyback program to be commenced after the current $4 billion buyback program has ended. Good stuff! ITW now has 39 years of consecutive dividend growth.
Marathon Petroleum Corporation (MPC) increased its dividend to $0.42 per share quarterly over the old rate of $0.35 quarterly per share. This is an increase of 20%. MPC is a well-run petroleum refiner and I think it’s attractively valued here at a P/E of 7.31 with an entry yield on the new payout of 2.34%. MPC has been actively boosting the dividend ever since it was spun-off from parent company Marathon Oil Corp (MRO) in July, 2011.
Union Pacific Corporation (UNP) recently hiked its dividend by 14.5%. The old payout of $0.69 has been superseded by a brand new quarterly per share dividend of $0.79. UNP now has 8 years of dividend growth under it’s belt. I really love UNP, among most of the big railroads. However, it’s a bit richly valued for me here today but I would be highly interested in investing in this company at a better valuation.
Norfolk Southern Corp. (NSC), another big U.S. railroad company, raised its dividend recently by 4%. The new payout of $0.52 per share quarterly is a boost over the old rate of $0.50 quarterly per share. I’m a bit disappointed by the size of this raise, but rather unsurprised. This is a prudent move by management to still reward shareholders through additional income, but also stay conservative as earnings have been hurt by reduced coal demand. I hope that improvements in other aspects of operations allow NSC to raise the dividend by a larger margin next year. With this raise, Norfolk has now raised the dividend for 12 consecutive years.
Own any of these companies? Think these raises are appropriate?
Full Disclosure: Long ITW, NSC
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