Recent Dividend Increases

moneytruckAs 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. A dividend raise typically means operations are doing well, and management is confident enough about cash flow to give shareholders a raise. All in all, it’s a very good sign.

In addition, dividend raises from companies I own a stake in means my personal dividend income is increasing, thereby speeding the effects of compounding since I’ll be able to reinvest larger dividend payouts back into dividend growth stocks that are also regularly paying and raising dividends. It’s a truly wonderful cycle. And it just brings me that much closer to financial independence.

I try to keep my eyes peeled for dividend raises from companies I’m invested in, as well as companies on my watch list. Some recent dividend increases include:

Phillips 66 (PSX) has been on an absolute tear since being spun off from ConocoPhillips (COP) in April 2012. They’ve raised their dividend four times since then, and most recently raised their dividend by a whopping 28.2%. The new quarterly payout of $0.50 per share is a nice boost over the old dividend of $0.39. This refiner has been a dividend growth investor’s dream, and I’m a very happy shareholder here. The yield on shares after accounting for the new dividend is 2.39%.

Baxter International Inc. (BAX) recently boosted their quarterly dividend by 6.1%, upping it by $0.03 from $0.49 per share to $0.52. The yield now stands at 2.76%. I’m a huge fan of this healthcare company, and they’ve now managed to raise their dividend for eight consecutive years. Although shares aren’t overly cheap here, I’m happy to continue holding a position in the company. They plan on spinning off their biotech business in 2015, and I plan on remaining a shareholder in both companies post spin-off.

The Clorox Co. (CLX) just gave shareholders a 4.2% raise, increasing the quarterly per share dividend by $0.03 from $0.71 to $0.74. Overall, this was a disappointing increase, but not completely surprising considering some of the headwinds they’ve faced, specifically relating to currency issues. I initiated a position in the company just before the dividend raise, hoping it would be a little larger. However, I’m still a happy shareholder considering this consumer goods company has managed to raise its quarterly dividend for the past 37 years. The yield on shares is now 3.32%, which is attractive in this market.

Southside Bancshares, Inc. (SBSI) recently announced a 5% dividend increase, raising the quarterly dividend from $0.20 to $0.21 per share. This is now the 20th consecutive year in which the company has raised the dividend. Pretty impressive stuff from a small bank out of Texas. In addition, they traditionally pay a special dividend in December, and also reward shareholders with annual stock dividends. Overall, I’ve been a very pleased shareholder with this bank. And the yield of 3.22% looks pretty good here.

Full Disclosure: Long PSX, COP, BAX, CLX, and SBSI.

Are you a shareholder in any of these businesses? Pleased with these raises? 

Thanks for reading.

Photo Credit: renjith krishnan/FreeDigitalPhotos.net

Similar Posts

29 Comments

  1. Hi Jason, another good month for you. I’m long BAX out of your list, but your other picks look good, too. Truth be told, I previously owned both COP and CLX and probably should have held on to them.

  2. And I forgot to mention that Morningstar is giving CLX 4 stars right now, so your recent purchase might just be better than you thought. 😉

  3. Thanks for the updates Jason. While I don’t own any of the stocks mentioned, PSX, COP, BAX, and CLX are all on my watchlist. What do you think of Baxter at current valuations for a long-term investment? I’ve been looking to add a stock from the medical sector and have been looking at both BAX and Becton Dickinson (BDX). I’d like to see both pullback, since like you mention, BAX doesn’t look too cheap here.

    Regards,
    SFZ

  4. Thanks for the update Jason. I have been watching Baxter for a while. Haven’t pulled the trigger yet. I sold off Phillips 66 shortly after it was spun off from ConocoPhillips. At the time I didn’t think it would be a dividend growth company and I knew I didn’t want to own a refiner. Well, a couple years later and I missed out on a chance to double my money. Oh well!
    -Bryan

  5. I was eyeing CLX as well these past days, but eventually decided to go with CBRL (recently increased their dividend by 33%, giving a nice 4.2% yield, slightly high payout ratio of 70%.)

    And the other one I was pleased about was WDC, also a 33% increase – low yield of 1.41, but also low payout of 15%, so plenty of room to grow.

    If the market pulls back more, I want to buy some CLX, or some more CVX or KMI. Also BP, but they keep going up, perhaps they are eager defensive picks.

  6. KeithX,

    COP has been on a hell of a run lately. I only wish I would have bought more at the $55 level pre-split! What a gift that was.

    And I’m a very happy shareholder in BAX. I thought there was some real value in the mid-$60s, but I didn’t think it would pop so quickly. Of course, the spin-off talk prompted that.

    And I noticed Morningstar’s rating on CLX. I referenced that rating in my last article on CLX. Josh Peters from Morningstar’s Dividend Investor newsletter is quite keen on CLX as well, which I found out by accident when compiling data on the company. But he’s a pretty intelligent guy, so that might count for something.

    Best wishes!

  7. SFZ,

    Thanks for stopping by.

    I think BAX still looks good here for the long-term investor. You have to remember what happened to ABT both before the spin-off and after. I anticipate something similar happening with BAX. I certainly liked it better in the mid-$60s where I loaded up, but it’s not bad here if you’re in it for the long haul.

    BDX is another fantastic healthcare company. I totally hate myself for not buying below $80. What a mistake! But we can’t win them all. It’s a good thing we don’t have to. 🙂

    Cheers.

  8. Bryan,

    Good to hear from you! Hope all is well with the family. 🙂

    Man, I’m sorry to hear about you selling off PSX. I made a somewhat similar mistake of selling off ABT and ABBV post spin-off. I wish I would have kept now, but I used much of those funds to buy more JNJ, which has also done very well for me. Live and learn!

    Best regards.

  9. AlphaTarget,

    Nice buy there with CBRL. That stock was mentioned here not long ago, and I have to look into it. Really impressive stuff there with the recent dividend growth.

    I was very close to picking up more KMI this month, but I’m just already so loaded up on it. And I anticipate a rise in the stock at some point (it looks like it already started) which will only increase my weighting to the company on a value basis. As is, it’s already one of my largest dividend payers, and I have to try and keep things balanced. You never know…

    Stay in touch!

    Take care.

  10. Do you invest in any of the higher paying dividend stocks such as SDRL (which currently is at $0.98/shr/qtr)? I still have to poke around the rest of your website a little bit at a time. 🙂

  11. Chris,

    I responded to your question earlier. I’d be careful with some of the stocks you’re interested in. NLY continues to cut its dividend as the share price craters. The payout was never growing or sustainable. And SDRL is taking on a lot of debt to modernize its fleet, and the negative FCF is concerning. High yield usually equates to high risk. Be careful!

    Cheers.

  12. What’s your opinion on Bank of America? It’s sinking quite rapidly and all those years with $0.01 quarterly dividend looks absolutely horrible – indication to buy? 🙂 Surely they’ll become a better dividend in the future. I hope…

  13. just a suggestion but, ARCP looks rather good this morning! Exceptional growth ahead would definitely warrant a look. What are your thoughts on todays acquisition from Darden (GGC). Thank, for your reply!

  14. Anonymous,

    I’ll be honest and admit I’ve never taken a good look at that bank. And to be honest, it’s incredibly hard/impossible to fully analyze a bank. However, I’ve never really heard/seen anything that impressed from me from BAC, and I have no reason to go out of my way to convince myself otherwise. However, I wish you luck if you decide to invest. I’d rather just stick with banks with much better track records like WFC and the Canadian banks.

    Cheers!

  15. Spoonman,

    I feel your pain in regards to PSX. I got lucky and just decided to see where it would go. It took off pretty quickly so it became an easy decision for me. Of course, I didn’t do that with ABT and ABBV, so I regret that choice a bit. Can’t win them all.

    Thanks for stopping by!

    Best regards.

  16. jharr,

    I’m already invested in ARCP, and I just picked up more shares not long ago.

    However, I’m not sure about this sale-leaseback transaction with Red Lobster. Those restaurants aren’t performing very well, and I wonder how much longer they’ll be around. It’s still real estate, however, but I just don’t know if I’m a big fan of this acquisition. We’ll see how it turns out. I trust management is much smarter than me.

    Best regards.

  17. I agree, banks are tough….holding WFC,BMO,BNS myself but I’m at my max for this sector. Learned a costly lesson a few years back, so my allocation is very light.

  18. Thank you Jason for the update. I like CLX and COP, hopefully, I will initiate the positions by end of this year. I am from Canada, we have to pay withholding tax and regular tax and if I hold U.S/international stocks in our non-registered accounts. So, I need to wait until room available in our registered accounts.

  19. This is why I love dividend growth investing…4 raises in one month! I challenge anyone to see if they can get that at their day job. 🙂 We don’t currently own any shares in the companies mentioned but have our eye on BAX and CLX. Way to go…wish you continued success in your journey!

  20. S Arun,

    I can understand the desire to avoid extra taxation. I’m totally with you on that one!

    I hope that stocks are more attractively valued when you’re ready to allocate positions to your registered accounts. 🙂

    Cheers.

  21. AFFJ,

    Absolutely! Not only did I not receive a raise from my former day job this year, but I actually received a pretty significant pay cut. I guess since I’d be tempted to sell a stock when that happens, I was inclined to “sell” the job. And that’s what I did. 🙂

    BAX and CLX are both great companies. Both are similarly valued here, and they should serve you well over the long haul. BAX might have more catalysts in the short term due to the spin-off, but it’s also had a run lately.

    Best regards.

  22. Sadly I don’t own any of these. I’d really love to get into CLX as I think this has real staying power for the long term. COP (and the rest of the energy market) is undervalued right now and seems like a good deal. It’s hard to find good deals right now.

  23. All good companies. I am in the process of considering adding to my SBSI stake. I like the bank and am investigating their purchase of OMNI American. I think it will work out great considering the Dallas-Fort Worth area is doing well.

    Take care!

  24. WE,

    Yeah, it’s definitely tough to find deals right now. I’d say fairly valued high-quality stocks are abound, but not much more than that. I think KMI is still a great opportunity, although even that one has popped quite a bit recently.

    Thanks for stopping by!

    Cheers.

  25. ILG,

    I’m also considering SBSI here. It’s taken quite a tumble and both the valuation and yield are looking much more attractive than they were just a few weeks ago. SBSI has been one of my better holdings thus far, and I’m not complaining. And I invested in them specifically because they’re in an area that’s doing particularly well, and that thesis has seemed to work out.

    Cheers!

  26. Also just on the side, you might want to keep an eye on WEC, it’s pulling back from that little run up and they seem to increase their dividend two times a year, the next dividend might be another increase. I’ve been switching my FRIP between WEC and BP, now back to WEC.

  27. AlphaTarget,

    Thanks for the suggestion! I looked at WEC a while back and concluded that it’s a fantastic utility. Unfortunately, I invested elsewhere (can’t remember what I bought instead now). It’s had a hell of a run, as many utilities have. I’ll have to take another look at it. Looks like it has pulled back just a tad. Rather unique utility with the yield and growth profile.

    Take care!

Leave a Reply